What happens if I can’t continue paying installments?

Buying property in Dubai is exciting, whether you're choosing a cosy apartment or a luxury villa. Dubai’s real estate market is one of the strongest in the world, due to solid infrastructure, stable ROI, flexible visa reforms, and strong buyer-protection laws. And to make buying easier, many people choose mortgage payments or installment plans instead of paying the full amount up front.

But what if life happens, job loss, cash flow issues, or unexpected financial stress, and you can’t continue paying the installments? Here’s a simple, practical guide explaining exactly what will happen if you can’t continue paying installments, what the law says, and what options you may still have.

Why People Buy on Installments or Mortgage?

People often choose to buy on installments or a mortgage because it makes buying property in UAE more affordable and manageable. Instead of paying the full amount upfront, buyers can spread the cost over several years, protect their cash flow, and invest in better properties without financial strain. It’s a practical way to enter Dubai’s growing real estate market while keeping savings free for other goals.

What Happens If You Stop Paying Installments in Dubai?

Now that you understand why people prefer buying property in Dubai through installments or mortgages, it’s important to know what happens if you stop paying. If you fail to continue making your property installment payments, the developer has the legal right to terminate your purchase agreement, regardless of the reason for non-payment.

However, the process and consequences differ between:

• Ready properties
• Off-plan properties

The strict rules mainly apply to off-plan properties, and they’re explained under Article (11) of Law No. (19) of 2017. Let’s break it down.

What is the SPA (Sale and Purchase Agreement)?

The SPA is the legal contract between you and the developer.
It includes:

• Your and the developer’s details
• Payment plan
• Total price
• Construction timeline
• Completion and handover conditions
• Penalties for late payments

The SPA usually gives the developer full legal right to cancel the agreement if you default on installments.

What If You Fail to Meet Your Contractual Obligations?

If you stop paying installments on an off-plan property in Dubai, the process is very structured. Here’s exactly how it unfolds according to the law:

1. Developer Notifies the Dubai Land Department (DLD)

The moment you default, the developer reports the non-payment to the DLD.

2. DLD Issues a 30-Day Notice

• After reviewing the case, the DLD sends you a 30-day written notice through email, registered mail, or personal delivery.
• During this period, you must clear your outstanding dues and meet your contractual obligations.
• In many cases, the DLD may also step in to mediate and help both parties reach a friendly settlement.

3. If You Still Don’t Pay After 30 Days
If no payment or agreement is made within the notice period, the DLD issues an official document confirming:

• You are in breach of contract
• The percentage of project completion

This completion percentage determines what action the developer is legally allowed to take next.

Consequences Based on Construction Completion Percentage

What happens next depends entirely on how much of the project is completed at the time of your default. The law outlines three clear scenarios:

1. If the project is more than 80% complete:

The developer may:

• Continue the contract
• Request the DLD to sell the property to recover outstanding dues
• Hold you responsible for any selling costs

2. If the project is between 60% and 80% complete:

The developer has the right to:

• Cancel the agreement
• Retain up to 40% of the property’s value

3. If the project is below 60% complete:

The developer can:

• Cancel the agreement
• Keep up to 25% of the property’s value
   

Important Notes:

• These rules do not apply to land-only purchases.
• If you believe the developer is misusing these rights, you can still approach the courts or opt for arbitration to resolve the issue.

What About Ready Properties?

For ready properties, the rules work a bit differently. In most cases, developers follow the terms outlined in the Sales and Purchase Agreement (SPA). While termination rights still exist, the process is usually simpler and less regulated compared to off-plan projects.

Can You Negotiate or Restructure?

In many cases, yes, but only before the DLD notice period expires. During this time, you can request options like:

• Revised payment deadlines
• Temporary payment deferment
• A restructured payment plan

However, once the official legal process begins, the developer is no longer obligated to accept or negotiate any changes.

Final Thoughts

Missing installment payments in Dubai comes with serious consequences. Developers can legally terminate your SPA, and the DLD will issue a 30-day notice before action is taken. The penalties depend on how much of the project is completed, and in many cases, you may lose 25%–40% of the property value. Your credit score, future loan eligibility, and, if it’s a mortgage, your relationship with the bank can also be affected.

In short, stopping payments can lead to losing money, contract cancellation, and potential legal escalation. If you’re facing financial difficulty, the best move is to contact your bank or developer early, discuss your situation, and try to negotiate new terms. Acting quickly can help prevent complications and protect your investment.

FAQs

1. What happens if you stop paying installments?

You risk legal action, asset seizure, a travel ban, and your outstanding loan may be called in immediately. 

2. What is the punishment for not paying a loan in the UAE?

You could face civil lawsuits, bounced security cheques (which are criminal), fines, and even jail time, depending on the case.

3. Is it true that after 7 years your credit is clear in the UAE?

No, negative credit entries typically stay on your UAE credit report for five years, not seven.

4. What happens if you leave Dubai with debt?

A criminal complaint may be filed; you could be banned from travel, detained if you return, and your credit record will remain damaged.