UAE: Man sells bank-mortgaged car, buyer alters it for resale; court annuls deal

An Abu Dhabi man sold his car while it was still under a bank mortgage, only to discover that the buyer allegedly hid the vehicle, failed to pay the remaining amount, and later displayed it for sale at his own dealership after altering its features.

The dispute was settled in court, where the Abu Dhabi Civil Family Court ruled to cancel the contract, ordering the car’s return and the seller to refund the amount already received, according to Emarat Al Youm.

Court documents show the seller filed a lawsuit demanding the termination of the sale contract, the return of the car, and Dh50,000 in compensation for financial and emotional damages. The car had been sold for Dh150,000, with Dh5,000 paid upfront, while the remaining Dh145,000 was to be paid once the bank mortgage was cleared and ownership transferred. The buyer initially took possession of the car and its registration papers after inspecting it in the presence of a witness.

The seller later contacted the buyer to complete the transaction but was told the car had gone missing. It eventually appeared at a car showroom in Mussafah, with some features altered, which was owned by the buyer. The buyer counterclaimed, requesting the cancellation of the contract and the return of the deposit with legal interest.

The court found that the car was still under a bank mortgage and that the contract could not proceed until proof of the mortgage’s clearance was provided. It noted that transferring ownership was legally impossible due to the active restriction on the vehicle. The buyer did not dispute that the car was no longer in his possession.

As a result, the court annulled the contract and restored the situation to its original state. The seller’s claim for compensation was dismissed, as he failed to prove actual loss or that he had fulfilled his obligation to release the mortgage.

The court ordered the buyer to return the car and the seller to refund the Dh5,000 deposit. All other claims were dismissed, with both parties responsible for their own legal fees and court costs.