Mortgage of movable assets in the UAE

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Published October, 2019

In our previous article “Security over movable assets in the UAE” (read it here), we discussed the salient features of  Federal Law Number 20/2016 on Mortgaging of Movable Assets as Security for Debts (the Mortgage Law).

While the Mortgage Law became effective on 12th March, 2017, the supporting regulations setting out the procedures for creating, perfecting and enforcing security over movable assets in the UAE were issued in March, 2018. The Mortgage Law has the following three (3) key supporting legislation:

  • Cabinet Decision Number 5/2018 concerning the Implementing Regulations of the Mortgage Law issued on 1st March, 2018 (the Implementing Regulations);
  • Cabinet Decision Number 6/2018 concerning the Establishment of the Registry on Movable Assets Promulgation issued on 1st March, 2018 (the Register Establishment Regulations); and
  • Ministerial Decision Number 42/2018 issued on 19th March, 2018 (the Ministerial Decision).

In this Q&A Guide, we answer some of the frequently asked questions relating to the mortgage of movable assets in the UAE and the formalities for creating, perfecting and enforcing security over movable assets in UAE.

Scope of the Mortgage Law

1. Which movable assets can be mortgaged?

The Mortgage Law provides that any current or future movable assets may be mortgaged including:

  • accounts receivables;
  • accounts and deposits with banks and other licensed financial institutions, including current and deposit accounts;
  • written bonds and documents which ownership is transferable by delivery including commercial papers, certificate of deposits, bills of lading and warehouse bonds;
  • stock ready for sale;
  • raw materials, equipment and tools;
  • crops, livestock and their by-products; and
  • fixtures provided that they can be removed without causing damage.

2. Are there any movable assets which cannot be mortgaged under the Mortgage Law?

Yes. The Mortgage Law does not apply to:

  • movable assets which are already subject to possessory pledges. The provisions of the UAE Federal Law Number 5 of 1985 on Civil Transactions and UAE Federal Law Number 18 of 1993 on Commercial Transactions (UAE Civil Transactions Law) will continue to apply for such movable assets;
  • movable assets in relation to which interest is recorded in a “special register” under applicable UAE laws. Such movable assets with “special registers” include motor vehicles, ships and aircrafts;
  • the following movable assets (which have been specifically carved out from the scope of the Mortgage Law):

- personal and household items (except where the mortgage is for the purchase of such items);
- entitlements under insurance policies unless these entitlements are considered proceeds of mortgaged movable assets;
- salaries and wages of employees and workers;
- public funds, endowment funds, foreign diplomatic and consular funds and funds of government’s international organisations; and
- future rights arising from inheritance or wills.

 3. Is the pledge of shares of a company covered by the Mortgage Law?

No. As stated in response (b) to question 2 above, the Mortgage Law does not apply to movable assets in relation to which dispositions are registered in a “special register” under applicable UAE laws.

Article 79 of the UAE Federal Law Number 2 of 2015 on Commercial Companies Law provides that shares in a company may be pledged and such pledge shall only be valid against the company and third parties on the date it is entered in the Commercial Registry with the competent authority (such competent authority being the relevant Emirate’s Department of Economic Development).

4. Does the Mortgage Law apply to movables located in free zones?

Pursuant to Article 3(2) of Federal Law Number 8 of 2004 on Financial Free Zones, UAE’s civil and commercial federal laws do not apply to financial free zones in the UAE. As such, the Mortgage Law does not apply to movable assets located in Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), which are the only financial free zones in the UAE at the date of publishing of this Q&A Guide.

5. Which other rights can be registered?

In addition to the ability to mortgage movable assets, it is also possible to register an interest over the following rights under the Mortgage Law:

  • the rights of a lessor on leased assets under an operating lease contract, provided that lease has a term of one (1) year or more;
  • the rights of an owner on goods placed for sale; and
  • the rights of a lessor under a finance lease.

The ability to create interest over the rights set out above will be useful for businesses which heavily rely on operating and financial leases (particularly in the context of project finance transactions).

Validity of a Mortgage

1. What conditions must a mortgage contract satisfy?

The following conditions must be satisfied for a mortgage contract to be valid:

  • Written - A mortgage contract must be in writing either in the form of a formal or an informal instrument (this also includes instruments exchanged by email or fax);
  • Capacity – The mortgagor must: (i) be competent to dispose off the mortgaged assets; or (b) have the express authority to create a mortgage over the assets;
  • Description of assets – The mortgage contract must contain a specified description of the mortgaged asset. The Implementing Regulations provide flexibility in the description of the mortgaged assets that can be included in the mortgage contract;
  • Declaration of third party rights - The mortgage contract must contain a declaration by the mortgagor on any third party rights on the movable assets which are subject to the mortgage;
  • Notification – The owner of the mortgaged property must be notified if the mortgaged property is not in the possession of the owner; and 
  • Consideration – The mortgagee must agree to advance the loan or commit to advance the loan. Typically, this would be contained in the facility agreement.

2. When does a mortgage contract become effective?

A mortgage on movable assets is effective between the parties to the mortgage contract upon execution of such contract. However, the mortgage will only become effective against third parties upon its registration in the register (Mortgage Register) established under the Mortgage Law.

Registration of Mortgage Rights

1. Is it mandatory for a lender to register its mortgage right in the Mortgage Register?

No. However, it is advisable for lenders to register their mortgage right for the following primary reasons:

  • a lender’s mortgage right is only effective against third parties once it is registered in the Mortgage Register; and
  • the first mortgage right which is registered in the Mortgage Register has priority against all subsequent mortgage rights (whether registered or not).

2. Who maintains the mortgage registry?

Emirates Development Bank (EDB) has been tasked with maintaining the Mortgage Register and the mortgage registry (Registry) pursuant to the Register Establishment Regulations.

EDB has established a wholly owned subsidiary called Emirates Movable Collateral Registry Corporation (EMCRC) which currently maintains the Registry. The Registry website can be accessed by clicking the following link (Registry Website).

3. Who can access the Registry? 

The Registry can be accessed by any individual or corporate entity (whether resident or non-resident in the UAE).

4. How can I access the Registry?

The Registry can be accessed by creating an appropriate account on the Registry Website. At present, there are two (2) types of accounts which can be created:

  • customer account - A customer account is created by any person who wishes to register a mortgage right or obtain a certified report. It is created by submitting the online registration request and the Registry accepting this request. Each person with a customer account is required to appoint an administrator of the account who shall be responsible for administering the customer account; and
  • an inquiry account - An inquiry account is a public user account to allow the conduct of public searches for notices of registered security rights.

5. What are the fees charged by the Registry?

The Registry does not charge a fee for creation of an account or for undertaking a public search using an inquiry account. However, the Registry charges AED 100.00 (circa USD 27.00) for registering a mortgage right and AED 200.00 (circa USD 54.00) for each certified search. There are other fees payable for using multiple services available on the Registry Website. Fees can be paid by using multiple payment channels.

6. How can I register a mortgage right in the Registry?

  • Any person desirous to register a new notice of mortgage right on the Mortgage Register must:
  •  create a customer account on the Registry;
  •  select the option to ‘register a new notice of security right’, which will lead them to the ‘register initial notice form’ (Form);
  •  fill out the Form with all the relevant details which, inter alia, includes the identity of the mortgagor and mortgagee, description of movable assets subject to the mortgage right, mortgage right validity period and names and addresses of interested parties who should be notified about the registered mortgage right;
  •  submit the duly completed Form;
  •  pay the prescribed fees; and
  •  notify third party holders of the mortgaged assets (if any) of the registration.

Upon confirmation of the registration, the Registry will provide the applicant with a unique registration number that is used to identify the record. The registrant will also be provided with an ‘Access PIN number’ that must be entered if the registrant later submits a change notice of amendment, termination or extension for the initial registration.

7. In what instances is the registered mortgage right ineffective?

A registered mortgage may not be effective if:

  • the mortgagee and the mortgagor (or principal debtor) have agreed to deregister the mortgage;
  • if the mortgage has expired as a result of discharge of the mortgagee’s (or principal debtor’s) obligation under the mortgage contract or for any other reason before expiry of the validity period specified in the Mortgage Register;
  • if the applicable requirements under the Mortgage Law for the creation and registration of the mortgage right were not duly complied with;
  • if the mortgagee does not discharge its obligations following registration; and 
  • if a decision is issued by court ordering the deregistration of the registered mortgage.

A mortgagee is required to discharge the mortgage within five (5) working days from the date of occurrence of any of the above events failing which, it shall be liable to compensate the mortgagor, principal debtor and other third parties for any actual damage suffered by either of them as determined by court.

 8. As a lender am I required to obtain physical possession of the movable asset being mortgaged?

No. Unlike the existing movable assets mortgage law contained in the UAE Commercial Transactions Law, the Mortgage Law does not require the lender to obtain physical possession of the movable assets which are being mortgaged.


1. What are the types of searches which can be conducted?

There are two (2) types of searches which can be conducted: (a) a certified search; and (b) an uncertified search.

Rights of a Mortgagee and Execution Formalities

1. What are the rights of a mortgagee?

  •  right of examination of the mortgaged assets;
  •  right of offering the mortgage ownership;
  •  right of conventional execution against the mortgaged assets;
  • right of execution if mortgaged movable assets consist of written bonds and accounts payable; and
  • right of enforcement through the court.

2. Are there any penalties imposed for breach of the Mortgage Law?

A mortgagor, mortgagee, principal debtor or owner of the mortgaged movable assets (or in the case of corporate entities, its directors, general manager, joint partners or employees) shall be subject to imprisonment and/or a fine of not less than AED 30,000.00 if they are convicted of any of the following:

  • deliberately declaring that the mortgaged right is not genuine or in any way violating the Mortgage Law.
  • deliberately damaging or disposing the mortgaged movable assets in breach of the mortgage contract or decreasing the value of the mortgaged movable assets or undertaking any act which results in the prevention of collection of execution proceeds by the concerned parties.
  • deliberately impeding the execution procedures on the mortgaged movable assets including the seizure, sale, distribution of revenues or proceeds of execution according to the Mortgage Law.


The enactment of the Mortgage Law’s subordinate legislation and the establishment of the Registry are significant developments in the movable assets mortgage regime as they have provided the necessary framework for lenders and borrowers to take advantage of the Mortgage Law particularly with the introduction of self help remedies together with the ability to take security over current and future property without taking possession.  



Adil Shafi, Partner (

Edward Macharia, Associate (



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