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The Loan Novation Agreement is essential in UAE banking and finance transactions where there is a need to transfer an existing loan facility from one lender to another. This document is commonly used in scenarios such as bank portfolio restructuring, debt trading, or strategic realignment of lending relationships. The agreement must comply with UAE Civil Code requirements, Central Bank regulations, and where applicable, Islamic finance principles. It typically includes detailed provisions about the transfer timing, consideration, security arrangements, and ongoing obligations. The document is particularly important in the UAE market where both conventional and Islamic financing structures coexist, and where cross-border lending is common. The agreement ensures all parties' rights are protected and provides a clear framework for the novation process.

1. Parties: Identifies the Existing Lender, New Lender, and Borrower as parties to the agreement

2. Background: Recitals explaining the existing loan agreement, the parties' intention to novate, and any relevant context

3. Definitions and Interpretation: Defines key terms and establishes interpretation rules, including references to the original loan agreement definitions

4. Novation: Core clause effecting the novation, transfer of rights and obligations, and release of the existing lender

5. Effective Time: Specifies when the novation takes effect and any conditions precedent

6. Consideration: Details the consideration paid by the new lender to the existing lender

7. Representations and Warranties: Statements of fact and assurances from each party

8. Security Continuation: Confirms the continuation and validity of existing security arrangements

9. Further Assurance: Obligations to execute further documents or take additional steps if needed

10. Costs and Expenses: Allocation of transaction costs and expenses

11. Notices: Communication procedures and contact details

12. Governing Law and Jurisdiction: Specifies UAE law as governing law and jurisdiction for disputes