Loan Termination Letter for United Arab Emirates

Loan Termination Letter Template for United Arab Emirates

A formal document governed by UAE law that officially terminates a loan agreement between a lender and borrower. This document confirms the full repayment or settlement of the loan, releases both parties from their respective obligations under the original loan agreement, and complies with UAE Central Bank regulations and Federal Laws. It includes specific provisions for the discharge of any securities, guarantees, or collateral, while ensuring compliance with UAE banking and financial services requirements.

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What is a Loan Termination Letter?

The Loan Termination Letter is a crucial document used in the United Arab Emirates when a loan facility has been fully repaid or settled, and both parties wish to formally terminate their lending relationship. This document serves as official confirmation that all obligations under the original loan agreement have been satisfied, including principal, interest, and any other charges. It must comply with UAE Federal Laws, particularly UAE Federal Law No. 5 of 1985 (Civil Code) and UAE Federal Law No. 14 of 2018 (Central Bank Law). The letter typically includes details of the original loan agreement, confirmation of final settlement, release of any securities or guarantees, and mutual discharge of obligations. It's particularly important in the UAE context where formal documentation is required for regulatory compliance and future business relationships.

What sections should be included in a Loan Termination Letter?

1. Letter Header: Date, reference number, and formal addressing of the recipient including full legal name and address

2. Loan Agreement Reference: Clear identification of the original loan agreement including date, parties, and any reference numbers

3. Termination Statement: Express statement of termination of the loan agreement and effective date

4. Settlement Confirmation: Confirmation of all outstanding amounts being settled and payment details

5. Release Statement: Mutual release from obligations under the loan agreement

6. Closing Formalities: Signature blocks, company stamps (if applicable), and contact information

What sections are optional to include in a Loan Termination Letter?

1. Security Release: Section confirming the release of any security or collateral, used when the loan was secured

2. Partial Termination Notice: Used when only specific facilities under a larger loan agreement are being terminated

3. Surviving Provisions: Section listing any provisions that will survive termination, if applicable

4. Regulatory Compliance: Additional statements required for regulated lending facilities or when parties are regulated entities

What schedules should be included in a Loan Termination Letter?

1. Settlement Statement: Detailed breakdown of final settlement amounts, including principal, interest, and any fees

2. Security Release Documents: Forms or documents evidencing release of security interests (if applicable)

3. Payment Confirmation: Evidence of final payment or settlement of the loan

4. Original Loan Agreement: Copy of the original loan agreement being terminated (for reference)

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Publisher

Genie AI

Document Type

Termination Letter

Cost

Free to use

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