Between the Legal Protection of Housing and the General Security of Debt The Problem of Selling State-Granted Residential Land at Public Auction in Execution of an Enforceable Title.

First: Introduction

The intersection between the rules of compulsory execution, on the one hand, and the restrictions imposed on the disposal of state-granted real estate, on the other, raises a delicate legal issue concerning the limits of the general security for debt and the extent to which the protection granted to such properties extends against enforcement measures.

This issue appears clearly in the dispute under consideration, which raises a fundamental question regarding the permissibility of attaching undeveloped residential land granted by the state and selling it by public auction in execution of an enforceable title, despite arguments concerning its nature as property designated for housing purposes.

Second: Facts of the Dispute

The facts of the case may be summarized as follows:

The appellant, in his capacity as creditor, submitted a request to the execution judge to attach property owned by the debtor consisting of an undeveloped residential plot granted by the government and mortgaged in his favor under an official mortgage contract.

However, the execution judge rejected the request on the basis that the property subject to execution constituted a government grant designated for housing purposes and therefore could not be disposed of by sale.

The Court of Appeal upheld this ruling, prompting the creditor to challenge it before the Court of Cassation.

Third: The Legal Issue

The central issue concerns whether it is legally permissible to:

Attach undeveloped residential land granted by the state and sell it at public auction in satisfaction of a debt established by an enforceable title, despite the fact that it is designated for residential purposes.

Fourth: The Judicial Approach of the Court of Cassation

The appellant argued in his appeal that the protection granted to a residence does not apply to the property in dispute because it was vacant, undeveloped land, thereby depriving it of the status of a “residence” within the meaning of Article (242) of the Civil Procedures Law.

He further argued that the restriction on disposing of state-granted land applies only to voluntary transactions and does not extend to compulsory sale carried out in execution of an enforceable title, since such sale is a judicial measure intended to satisfy the creditor’s right rather than a disposition arising from the debtor’s own will.

In contrast, the Court of Cassation confirmed that the general principle under Article (391) of the Civil Transactions Law is that all of a debtor’s assets are subject to the general security of creditors unless a specific legal provision excludes them.

The Court also held that the protection granted to a residence under Article (242) of the Civil Procedures Law is conditional upon the property being an actual existing home occupied by the debtor and his family, not merely land designated for future construction.

Since the expert report established that the property was vacant and undeveloped land, the Court ruled that it fell outside the category of assets exempt from attachment.

The Court further distinguished between restrictions on voluntary disposal and compulsory enforcement measures, holding that sale by public auction does not constitute a voluntary act by the debtor but rather an exceptional judicial procedure to satisfy a right established under an enforceable title.

It concluded that the Court of Appeal had erred by equating the prohibition on voluntary disposal with compulsory enforcement procedures, thereby preventing the proper application of the rules governing the general security of creditors. Accordingly, the judgment was overturned and the property was permitted to be sold by public auction.

Fifth: The Philosophy of Property Grants in Light of Compulsory Enforcement Rules — A Different Legal Perspective

In this specific case, Kashwani Law Office adopts a legal perspective different from the prevailing judicial approach, based on a re-examination of the legal nature of government land grants to citizens and the limits of their disposition.

The underlying principle is that land grants made by the government to citizens are based on a gratuitous transfer without consideration. This means that ownership in such cases does not arise from a contractual exchange of obligations between parties, but rather from an exceptional transfer of ownership intended to achieve a public interest , namely, promoting residential and social stability for citizens.

Accordingly, the restriction on disposing of such land should not be understood as merely formal or temporary, but rather as a substantive restriction tied to the very purpose of the grant itself, namely regulating the circulation of real estate wealth and preventing deviation from its social purpose.

Therefore, this prohibition should extend to all forms of disposition, whether voluntary, such as sale, gift, or lease, or compulsory forms arising through enforcement or legal proceedings, in order to prevent attempts at circumvention or abuse of rights, such as indirect disposal or the use of such land as financing security in a manner that strips the grant of its intended substance.

It is also well established in both regulation and law that ready-built government housing , whether granted directly or financed through housing loans   may not be used for any purpose other than that for which it was allocated, namely the citizen’s personal residence.

Accordingly, such property may not be leased, sold, or otherwise disposed of in any legal form except within narrow limits and under strict controls requiring approval from the competent authority, namely the Abu Dhabi Housing Authority, as the body responsible for regulating this sector and ensuring the achievement of the social purpose of housing support.

In this context, Article (2) of Law No. (19) of 2005 concerning Real Estate Ownership in the Emirate of Abu Dhabi, as amended, provides that every property granted by the government to a citizen before or after the enactment of the law shall be deemed owned by that citizen, subject to registration of ownership and granting him the rights of use, exploitation, and disposition within the limits of the law.

This constitutes a substantive restriction that leaves room for regulation and preserves the authority of the legislature and the competent authority to control the scope of disposition.

Article (3), as amended by Law No. (13) of 2019, further confirms that ownership rights are confined to specific categories, foremost among them citizens and those treated as such, while allowing exceptional ownership rights for non-citizens only within investment zones and under special conditions and clear restrictions.

This means that the general principle is the protection of the national character of real estate ownership outside the investment zones.

The Legal Controversy

A legal controversy therefore arises:

If a judicial ruling orders the property to be sold by public auction, and a non-citizen seeks to bid for it, should participation be limited only to citizens because the original source of ownership cannot lawfully pass to others outside the investment framework?

Or could neglecting this restriction result in the auction being awarded to a non-citizen, thereby undermining the legislative purpose of the grant and effectively transferring ownership outside the categories permitted to own property?

This issue does not concern auction procedures alone, but touches the core philosophy of real estate grants themselves, raising a deeper question regarding whether ownership originating from a government grant allocated to a specific category may legally transfer to another category outside that framework, thereby creating a conflict between procedural enforcement rules and the substantive restrictions governing property ownership in the Emirate.

Practical Consequences of the Court’s Position

The adoption of the Court of Cassation’s position — that state-granted land, even if undeveloped, may be attached and sold compulsorily without special restrictions — could lead to significant consequences, including:

• transforming the grant into a purely financial asset fully subject to creditors’ general security;
• increasing the risk associated with this type of property, thereby affecting lending decisions and collateral valuation;
• undermining the stability of socially oriented granted real estate ownership;
• creating a legal loophole that could be exploited through borrowing followed by the property ending up in public auction.

Subjecting residential land granted by the state to the general security of creditors effectively transforms a socially oriented grant into an asset capable of forced liquidation, thereby stripping it of its legislative purpose of promoting housing stability and preventing speculation.

Likewise, distinguishing between prohibited voluntary disposition and compulsory disposition through public auction raises a fundamental issue regarding the possibility of circumventing the regulatory restrictions imposed on state-granted property, particularly where enforcement ultimately results in transferring ownership to persons outside the categories permitted to own property outside the investment framework.

Conclusion

Accordingly, it becomes clear that the matter is not merely about debt enforcement, but rather concerns achieving a delicate balance between:

• the effectiveness of the general security of creditors; and
• the protection of public housing policy.

That balance may be disrupted unless enforcement provisions are interpreted in light of the legislative purpose behind government grants and the substantive restrictions imposed on real estate ownership.