Court rules in favour of retiree in loan dispute

An Abu Dhabi appeals court has sided with a retired Emirati who challenged his bank over loan deductions that continued after he left his job, ruling that lenders cannot take more than 30 per cent of a retiree's pension to recover outstanding payments.

- Haneen Dajani

According to legal experts, the judgment is now considered a judicial precedent that strengthens borrowers' rights across similar cases.

The verdict overturns an earlier decision in favour of the bank and reinforces a federal rule designed to protect borrowers who can no longer afford their monthly instalments once their income drops in retirement.

The court found that the man had been making his payments regularly until his salary stopped and ordered the bank to reschedule the remaining amount in line with the limit set by law.

The case involved a lease-to-own home-financing agreement for a villa in Abu Dhabi's Al Rahba area. The borrower, who had obtained the Islamic financing in mid-2022, kept up with his instalments until his employment ended later that year. When his income was replaced by a pension, the bank continued deducting the same monthly amount directly from his account — exceeding the proportion allowed under national banking rules.