STA Law Firm https://www.stalawfirm.com/en.htmlSTA Law Firm - Court Uncourt (Blog) - Tenancy LawenCopyright 2024 STA Law Firm All Rights Reserved<![CDATA[Economic and Fraud Provisions in the Middle East]]> Economic and Fraud Provisions in the Middle East

"There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."

- Milton Friedman

Economic fraud is a term that has been repeated over the years, so much so that the consequences it bears do not have any precedence or impact on the ones that hear it. For many companies and capitalist machinery, this term essentially triggers them to explore options to hide their fraudulent tracks and continue operating in the same manner. To have governments help them cover the tracks in certain jurisdictions ultimately defeats the purpose of the assignment.

Despite the incongruent activities of individuals, companies, and governments from the expected norm of justice in many jurisdictions, other countries are tenacious to implement a regulatory framework that will eradicate such fraudulent activities in the market. This article will discuss the economic and fraud provisions established in the Middle East, their effectiveness, and the scope of reach it possesses about financial crime.

What are the Economic and Fraud provisions in the Middle East?

If one area of the economy has seen a steady increase in the past years, it would be the economic fraud prevalent in society. Regardless of the number of provisions that jurisdictions and international organizations establish to combat financial fraud, none of them seems sufficient. The parties involved in economic fraud and other fraudulent practices are constantly evolving to cover their tracks efficiently.

Infamous scandals like Bernie Madoff and the Ponzi scheme leave one in absolute awe as it remains unclear, what is the culprit: the crime or the criminal? Many innocent parties, including employees and clients, were adversely affected by the ill-doings of these financial schemes. After the outburst of many scandals and its impact on many innocent individuals, jurisdictions are trying to fasten their pace to stay a step ahead of wrongdoers and hopefully eliminate the potential threats in the market.

The introduction of new anti-economic fraud regulations has paved the way for potential investors to feel a sense of security over their investments within the market, along with the ability of the regulations to enforce justice. Over time, people have understood that the formation and establishment of an anti-fraud legal framework are not sufficient to ensure peace and harmony in the market, an iron fist must be imposed on fraudulent parties and companies to deter them from doing such activities in the future and serving it as a lesson for other participants in the market who bear similar intentions.

The types of economic fraud can be quite varied and are spread across different industries and the scope of nature. These could include housing benefit fraud, tenancy fraud, council tax fraud, blue badge fraud, social care fraud, business rates fraud, insurance fraud, bribery, and money laundering. These are just a top layer of economic crimes prevalent in an ocean of fraudulent activities in the market. The crimes that are more coherent to the wrongdoings in the market include not declaring the business location, stating that a property is not in use while it is, dishonestly requesting for an exemption to pay for charges that are owed, or any unauthorized movement of money to make ill-gains.

Often, economic crime is caused not by companies but by customers towards companies. The highest reported crime boost in the Middle East is through customer fraud and procurement fraud, which have proved to be the most disruptive fraud within an economic crime. In a survey conducted on a global platform, the number of customer frauds was comparatively more in the Middle Eastern region.

In an ongoing effort to combat fraud together, many companies in the Middle East began investing in more stringent controls and implementation of the rules to avoid economic crime, while many others conducted a thorough examination into reasons after the occurrence of a crime in the company. Another issue that stands alongside customer fraud about its prominence is procurement fraud. This fraud entails the practice of favoring associates with vendor and supplier contracts.

All these efforts are measures taken to mitigate the risks involved and ensure that proper prevention is taken by instilling the right technology and talent to deviate from any fraudulent prone routes.

However, it is not easy to ensure that accountability will be maintained and transparent feedback is provided. Another limitation of this procedure is that advanced technologies to combat financial crime can be costly, which would further deplete if the company possesses insufficient resources to acquire and install the platform and is not equipped with properly trained employees to manage the technology. The lack of proper expertise to handle the in-place technology could attract various cyber threats, which allows a wrongdoer from any part of the world to infiltrate the company's system.

With this in mind, companies must equip themselves from the arsenal of defenses to protect themself and the financial and reputational facets of the company. The extent of damage that infiltration of the company's system can cause to the operations is quite unfathomable. It would be better for companies to leave their vault of secrets wide open than installing an IT platform that is managed poorly. The necessity of combating such insecurities is proliferating and must be countered at the earliest. One would like to believe that the efforts of the legal jurisdictions in the Middle East to battle economic crime are practical and promptly applied. However, many of the jurisdictions still fail to provide a proper implementation of the provisions established against economic crime.

The readiness of companies in the Middle East to confront the indecisive nature of economic crime and report any issues as they arise is still moving at a stagnant rate. The stark increase in cyberattacks and its potential threats is not a mystery to the companies in these regions. Nevertheless, they decide against preparing themselves in defense of such risks and attacks. The firms in the region and the governmental organizations must understand the types of threats that could arise in the economy and the nature of such economic crimes. Although this would seem like an insignificant step, this particular action could help achieve a more profound revelation of the gaps and vulnerabilities of the economy and its protective framework.

Many would argue that the relationship of the Middle East with economic crime and fraud dates back ages. All the glitz and glamour and the boom of economies are incongruent with the fraudulent activities occurring within the firms and regions. A region's legal systems cannot enforce the regulatory frameworks established to fight against economic crime if the country's government does not implement the rulings.

To know more about Economic and Fraud Provisions in the Middle East in Singapore Click here 

 

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Mon, 27 Dec 2021 03:22:00 GMT
<![CDATA[Early Termination of Tenancy Contracts in Dubai]]> Early Termination of Tenancy Contracts in the UAE

Introduction

A tenancy contract is a rental agreement between a tenant and the landlord that must be signed before receiving the keys of the real estate property. A tenancy contract is essentially a legally binding agreement that allows the tenants to use the property for a particular purpose and for a set length of time. It outlines all of the lease's terms, including both parties' obligations and expectations, in the form of provisions in the contract. Preventing disputes and misunderstandings between parties by clearly stating and specifying all terms and conditions of the agreement.

Contract of Tenancy

According to Article 4 of the Dubai Tenancy Law, the contractual relationship between the Landlord and the Tenant will be governed by a written Lease or Tenancy Contract signed by both parties and detailing, in a manner that leaves no room for doubt, a description of the leased real property, the purpose of the tenancy contract, the name of the owner, the number and type of the land, and the area where the leased Real Property will be located. It will also decide the lease contract's term, the rent, and the mode of payment.

The tenancy contract includes the details about Landlord's name and contact information, the tenant's name, and contact information. Property information including - complete address, building name and location, size, plot number, DEWA premise number, rent amount, contract term, and contract date. The amount of the security deposit, Payment options. Any additional terms and conditions not contained in the basic the provisions of the tenancy contract are linked to the agreement as an amendment. that spells out each party's particular responsibilities.

All lease contracts for real estate that are subject to the terms of this law, as well as any modifications to those requirements, will be recorded with Real Estate Regulatory Agency (RERA). Unless a Lease Contract is registered with RERA in compliance with the relevant rules and regulations, judicial authorities, government departments, authorities, and corporations may not examine any dispute or claim or take any other action about it.

A Lease Contract's term must be specified. The Lease Contract will be assumed valid for the period specified for payment of the rent if the term is not specified in the Lease Contract or if it is impossible to substantiate the purported term. According to Article 6 of Dubai Tenancy Law, if a Lease Contract's term expires but the tenant continues to occupy the Real Property without the Landlord's consent, the Lease Contract will be extended for the same duration or one year, whichever is shorter, and on the same terms as the previous Lease Contract.

The Lease Contract does not end when either the Landlord or the Tenant demises. The contractual relationship with the heirs continues until the Tenant's heirs choose to end it, in which case termination must occur within thirty (30) days of notifying the landlord of such intent or the expiration date of the Lease Contract, whichever comes first.

The Tenant's entitlement to continue to occupy the Real Property under the terms of the Lease Contract entered into with the previous owner is unaffected by the transfer of title to a new owner, provided that the Lease Contract has a fixed term. While a basic tenancy contract in Dubai is one page long, an addendum can be added to the contract to provide additional terms and conditions. Always be aware of these terms and clauses, which may include payments for utility expenses and repairs, as well as annual rent increases.

Tenancy Law in Dubai

The Real Estate Regulatory Agency (RERA) regulates the interaction between landlords and tenants in Dubai under the Dubai Rental Law No. 26 of 2007 (and revisions from Law No. 33). (2008). To avoid any potential problems or misunderstandings, the law spells out the roles and responsibilities of landlords and tenants. The Rent Issues Settlement Centre (RDSC), which was formed by Decree No. 26 of 2013, investigates and resolves all rental disputes in Dubai, whereas Decree No. 43 of 2013 governs all rent increases.

RERA administers tenancy contract rules as well as the real estate sector in Dubai overall. Under the Ejari system, a new tenancy contract system has been built, and all tenancy agreements must be recorded with the system. The Dubai Land Department's judicial arm, the Rental Dispute Settlement Centre (RDC), was founded in 2013. RDC's goals include using new ways with adaptable mechanisms to suit the needs of the next era, as well as assisting in the execution of issues and problems about Dubai real estate with better precision, impartiality, and transparency.

RDC is in charge of resolving all rental disputes between tenants and landlords involving real estate in the Emirate or its free zones, including counterclaims and requests for interim or urgent action from either party to the lease. RDC has created a specialized court system to deal with rental disputes, as well as conciliation procedures, to maintain social and economic stability while simultaneously promoting the Emirate's long-term growth. RDC also hears appeals against decisions and verdicts in line with the decree's requirements and the regulations issued thereunder, and its staff is in charge of enforcing RDC's decisions and judgments in rental disputes.

Important Tenancy Contract Clauses

  • An addendum to the regular leasing contract can be appended by the landlord and tenant, outlining the terms of the agreement, including who pays for what services, such as the chiller. However, as stated in Article 4 of the Dubai Tenancy Law, it is essential to register the tenancy contract, as well as any revisions, with Real Estate Regulatory Agency RERA.
  • A single party cannot cancel a tenancy contract unless the two parties agree otherwise. If the tenant continues to occupy the property as indicated in Article 6 of Dubai Tenancy Law, the contract term is automatically extended for a similar length or one year (whichever is shorter) with the same terms and circumstances after the contract expires.
  • According to Article 14 of the Dubai Rental Law, if the landlord wishes to terminate or change the tenancy contract, he must give written notice to the tenant at least 90 days before the contract expires.
  • According to Article 27 of the Dubai Tenancy Law, the tenancy contract will not be automatically terminated in the event of the death of either the landlord or the tenant. It shall pass to the heirs unless the tenant's heirs wish to terminate the lease, in which case the termination will take effect within 30 days of contacting the landlord.
  • Under Article 28 of the Dubai Tenancy Law, if the property is transferred to a new owner, the tenant's right to continue to occupy the property is unaffected, as long as the tenancy contract includes a specified date.

Who is responsible for signing the tenancy agreement?

A tenancy contract must be signed in the presence of a witness by both parties, the landlord and the tenant. If a Power of Attorney (POA) is required, the Dubai Land Development DLD recognizes the signature of the landlord's legal representative. A Power of Attorney, or POA, on the other hand, is only valid for two years and must be re-stamped by the Dubai Courts after that period. Property management companies with a DLD license are also allowed to execute leases for the units they manage. The approved list of businesses can be seen on the DLD's official website.

Early termination of Tenancy Contracts

The provisions of Law No. 26 of 2007 Regulating Landlord-Tenant Relationships in the Emirate of Dubai (the Dubai Tenancy Law) and Law No. 33 of 2008 Amending Law No. 26 of 2007 Regulating Landlord-Tenant Relationships in the Emirate of Dubai (the Amended Dubai Tenancy Law) apply. The tenancy contract cannot be unilaterally cancelled by either the landlord or the tenant, but it can be mutually terminated by both the landlord and the tenant during the period of the contract. This complies with Dubai Tenancy Law Article 7, which states: "A legal lease contract cannot be unilaterally cancelled by the landlord or the tenant throughout its duration. It can only be ended by mutual agreement or in compliance with this law's rules."

Both the landlord and the tenant are bound by the terms and conditions of the tenancy contract. This complies with Article 4(1) of the Amended Dubai Tenancy Law, which states: "The contractual relationship between a landlord and a tenant will be regulated by a tenancy contract detailing, in a manner that leaves no room for doubt, a description of the leased real property, the purpose of the tenancy, the term of the tenancy contract, the rent and payment method, and the name of the owner of the property if the landlord is not the owner."

Furthermore, Article 19 of the Dubai Tenancy Law states that the renter is responsible for paying the rent on time. In the case that the tenant fails to pay the rent, the landlord has the right to evict the tenant under Article 25 (1) (a) of the Amended Dubai Tenancy Law. According to the aforementioned legal regulations, as a tenant, you must fulfil the requirements stated in your tenancy contract, and you may be required to pay two months' rent as a penalty for terminating the contract early.

Unless an early termination clause is specifically included in the agreement, the landlord is not required by law to refund any rent if a tenant chooses to quit the property early. In the emirates of Dubai, there is no standard rule or controlling principle regarding early tenancy termination. Instead, the tenant should ask for a language in the contract that specifies a notice period and penalty amount in the event of early termination. Real Estate Regulatory Agency RERA's Law 26. of 2007 regulating landlord-tenant relationships does not have an article allowing for early contract cancellation but rather governs the relationship between the two parties throughout the contract.

There is no provision in Dubai's tenancy law for terminating lease agreements early. Tenants must be aware that the Dubai tenancy legislation does not allow for the early termination of a lease agreement. The rental law only applies to landlord-tenant relationships for as long as the contract is in effect.

One of the essential provisions of Law 26 of 2007 is that the lease agreement is binding on both the landlord and the tenant and that neither party can terminate it without the other's approval. Law 33 of 2008, which revised several provisions of Law 26 of 2007, only states that if either the landlord or the tenant wishes to alter any of the contract's provisions, they must give the other party notice at least 90 days before the tenancy contract expires.

As a result, the effect of terminating the lease early will be determined by the tenancy contract's early termination clause. In the emirates of Dubai, if tenants have such a condition in their rental contract, they must follow it when terminating a leasing arrangement early.

If the tenancy contract in Dubai does not include an early termination clause, the landlord may seek compensation from the tenant for breaching the lease and leaving early. This means that if the tenant wants to terminate the tenancy agreement early, they may have to forfeit their rent for the remaining time of the contract or pay some other kind of compensation to their landlord.

What are the notice period and penalty for terminating a contract early?

The tenant must provide the landlord 60 days' notice if they are quitting the property early. The penalty is usually 2 months' rent, which is paid to the landlord. However, because Real Estate Regulatory Agency RERA does not include an article allowing for early contract termination, any penalty or refund of prepaid rent is entirely at the discretion of the landlord.

Eviction Cases

According to Dubai's tenancy legislation, a landlord can demand early termination of a lease agreement. Under Article 25 of the Dubai Tenancy Law

  • the Landlord may seek eviction of the Tenant from the Real Property before the term of the Tenancy expiring only under the following circumstances:
    • If the Tenant fails to pay the Rent or any part of it within thirty (30) days on the date the Landlord gives the Tenant a Notice to Pay unless the parties agree otherwise;
    • if the Tenant sublets the Real Property or any part of it without first getting written permission from the Landlord. The eviction will apply to both the Tenant and the Sub-Tenant in this circumstance. The Sub-right Tenants to seek compensation from the Tenant, however, will be protected.
    • when the Tenant uses or allows others to use the Real Property for any illegal purpose or for a purpose that violates public order or morality;
    • unless both parties agree otherwise, the Tenant of commercial Real Property leaves the Real Property vacant for thirty (30) consecutive days or ninety (90) non-consecutive days within the same year for no justifiable reason;
    • when the tenant makes a change to the Real Property that makes it unsafe and makes it difficult to restore it to its original condition or damages the Real Property willfully or through gross negligence, by failing to exercise due diligence, or by permitting others to cause such damage;
    • if the Tenant uses the Real Property for a purpose other than that for which it was leased, or if the Tenant uses the Real Property in a manner that violates the Emirate's planning, construction, or use-of-land restrictions;
    • if the Real Property is condemned, the Landlord must show this by a technical report issued by or verified by Dubai Municipality;
    • the Tenant fails to comply with any obligation imposed on him by this Law or any of the provisions of the Tenancy Contract within thirty (30) days of the Landlord serving him with a Notice to Perform such obligation or term; or
    • Where competent government entities need the demolition or reconstruction of real property to meet the Emirate's urban development requirements. 

     The Landlord will give Notice to the Tenant through a Notary Public or registered mail for paragraph (1) of this Article.

    2. Only under the following circumstances may the Landlord request removal of the Tenant from the Real Property after the Tenancy Contract has expired:

    • If the owner of the Real Property desires to demolish the Real Property to reconstruct it, or to construct any new structures that will prevent the Tenant from utilizing the Real Property, provided that the necessary licenses are acquired from the competent organizations;
    • if the Real Property is in a state that necessitates repair or extensive repair that cannot be performed in the presence of the Tenant, provided that the Real Property's condition is verified by a technical report issued by or certified to the Dubai Municipality;
    • If the owner of the Real Property desires to take possession of it for his personal use or that of any of his first-degree relatives, provided that the owner establishes that he does not own another Real Property suitable for such use; or
    • the leased Real Property is being sold by the owner of the Real Property.

    For paragraph (2) of this Article, the Landlord must provide the Tenant notice of the eviction grounds twelve (12) months before the eviction date, provided that the notice is issued through a Notary Public or registered mail.

    Tips for resolve reparations of early Terminating of Tenancy Agreement

    To begin, look for an escape provision in the rental contract that allows the tenant to terminate the tenancy early. When entering a lease agreement, tenants must ensure that an exit clause is included. If they find themselves in the position of having to terminate a lease arrangement early, this will save them a lot of time and effort.

    If the tenancy contract does not have such a clause, approach the landlord. Explain the circumstances and reason for terminate the leasing arrangement. If the landlord accepts to negotiate an exit settlement, then it is obligatory to remunerate the landlord with payment of the penalty. Alternatively, the tenant might offer to locate a new renter for the landlord to avoid any financial damage. If the tenant is unable to find a renter promptly, they will most likely be required to compensate the landlord.

    In the past, tenants and landlords in Dubai were required to offer a 90-day notice period in the event of a rental contract not being renewed. However, after the implementation of Law 33 of 2008, which altered some provisions of Law 26 of 2007, a 90-day notice period is no longer necessary if either party does not intend to extend the tenancy agreement. Instead, Dubai's rental legislation has been changed to prioritize the conditions of lease agreements. As a result, tenants must make certain that they are aware of the notice time stipulated in the rental agreement.

    In Dubai, rent is usually paid through post-dated checks that are deposited with the landlord. If the landlord refuses to accept the checks, they can be delivered to the Dubai Rental Dispute Settlement Centre. The renter is expected to receive the leased property in excellent working order, and the landlord is usually responsible for any substantial maintenance or repairs.

    Experiencing a forcible eviction

    If a tenant in the emirates of Dubai faces eviction by their landlord, the tenant must first approach the landlord and try to resolve the situation. If the tenant and the landlord are unable to settle, the tenant has the right to submit a complaint with the Dubai Rent Dispute Settlement Centre (RDSC). When initiating a rental disagreement case in Dubai, tenants should provide all of their legitimate papers, including their tenancy contract or Ejari Dubai, the most recent DEWA bill, a copy of the title deed, and a copy of the tenant's passport and visa. Before addressing the RDSC, customers should have a copy of their Emirates ID and any other supporting documentation.

    The Financial hardship during the pandemic of COVID-19

    If a tenant is having financial difficulties and is unable to pay the rent, the first step is to approach the landlord, explain the situation, and try to reach an agreement that is acceptable to all sides. Providing supporting documentation, such as a copy of your employer's termination letter/pay reduction, will assist establish your claim of early lease termination. If the landlord refuses to bargain, the tenant can seek counsel from the Rent Dispute Settlement Centre (RDSC).

    Furthermore, in light of the current Covid-19 epidemic, local governments have asked both landlords and renters to reach an agreement on revisions to the existing lease contract. Based on the epidemic, both the landlord and the tenant may mutually agree to a rent reduction, early termination of the lease contract, rent-free time options, or any other concessions. The Dubai Tenancy Law and the Amended Dubai Tenancy Law are quiet on the subject of tenancy contract cancellation owing to force majeure. In layman's terms, "force majeure" refers to unforeseen events that prevent someone from performing their obligations under a contract.

    The pandemic may be regarded as an unforeseen event, and as a result, you may be allowed to unilaterally cancel your leasing agreement with your landlord. This conforms with Article 273 (1) of the Civil Transactions Law, which stipulates that in contracts involving both parties, if force majeure intervenes and renders the contract impossible to execute, the associated duty ceases, and the contract is automatically dissolved.

    Tenants can also personally approach and negotiate with the landlord, explaining that owing to the present financial position, to which tenants are unable to pay the penalty. To corroborate the claim of early termination, provide a copy of the Employer's wage Reduction letter or the updated employment contract to the landlord. If the landlord refuses to comply with the request of the tenant, a complaint can be submitted to the Rental Dispute Centre (RDC) in the emirate of Dubai, alleging that the concerned landlord refused to consent to early termination of your rental contract without penalty.

    It is also required to furnish a copy of your Termination letter to the RDC or Rental Dispute Centre. The complaint may be accepted by the RDC, and the tenancy contract may be terminated without penalty to the landlord. This is under Article 249 of the Civil Transactions Law, which states that "where exceptional circumstances of a public nature occur as a result of which the performance of the contractual obligation, even if not impossible, becomes oppressive for the obligor to the point of threatening him with grave loss, it should be permissible for the judge - under the provisions of the Civil Transactions Law."

    The Rental Disputes Centre rules that tenants can end rent contract early if hit by financial hardship during COVID-19

    While dealing with hundreds of cases from residents and landlords, the Rental Dispute Centre declared that Dubai renters could terminate their rental agreement without incurring financial penalties provided they can show they were impacted by 'extraordinary circumstances.' Residents may be able to move during a 12-month lease without losing two or three months' rent due to the loss of a job or a fall in income.

    In light of the hardships some individuals had experienced as a result of the coronavirus outbreak, the head of the Rental Disputes Centre. Tenants can use 'Force Majeure as a legal defence to break a contract without penalty if they have a problem with their landlord. The expression refers to unforeseen external factors that prevent a person from fulfilling their duties.

    During the outbreak, the centre, which is the judicial arm of the Dubai Land Department, said that it had solved many cases in favour of renters. The judge urged property owners to be compassionate, as they are normally permitted to collect two months' rent if a renter vacates early. Most residential contracts in the UAE are paid a year in advance, with pre-written checks that are deposited over 12 months. During such extraordinary times, it is incumbent on all parties to cooperate and assist one another, taking into consideration their unique situations and being willing to give up some of their rights until the global crisis calms.

    The renter, who managed a company that provided in-home care for elderly people, told that they could not pay because of the outbreak's inconvenience. A judge concluded that this was justified, allowing them to end his lease without penalty and ordering the landlord to refund two uncashed rent checks. Real estate experts praised the judges' leniency but warned that if landlords are unable to make their payments, they might face legal action.

     

     

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    Mon, 14 Jun 2021 12:00:00 GMT
    <![CDATA[Tenancy Law of Abu Dhabi and its Amendments]]> TENANCY LAW OF ABU DHABI AND ITS AMENDMENTS (Updated October 2019)

    (This article was updated on 7 October 2019)

    Tenancy Law is one of the most important aspects of societies' life by means of which individuals' rights and duties are determined. Besides, it also sets a guiding principle for interactions among individuals in general and for resolving disputes thereof in particular. Tenancy law is considered to be the backbone of every individual's daily life as it is a tool regulating tenants' and landlords' (collectively referred to as Parties) transactions through tenancy executed contract. Further, tenancy law has been amended from time to time to bring it in line with current circumstances in addition to the market and social demands thereof. 

    In this article, our team of lawyers in Abu Dhabi seek to accentuate the tenancy law of Abu Dhabi; its latest amendments and further regulations setting out the obligations of the landlords and tenants per terms of the law.

    Tenancy law was not exclusively set out in single legislation or act in the emirate of Abu Dhabi. However, we may say that it is a group of laws regulating the rental relation between the Parties either for residential, commercial or industrial purposes by means of establishing certain mechanisms. It also outlines all procedural steps surrounding these collaborations between the contractual parties as well as setting out the penalty for going against the rules already laid down.

    In 2006, Abu Dhabi Law Number 20 was issued to regulate the relation between landlord and tenant on matters such as increasing rental prices and evicting the tenant from the property. Before the amended Law Number 4 of 2010, landlords could not demand tenants to vacate the rented property upon expiration of their tenancy contract. However, circumstances have changed after the below amendments.

    The main amendments to the law number 20 of 2006 (the Tenancy Law) include the following:

  • Abu Dhabi law number 4 of 2010;
  • This law entitled the landlord to seek eviction of the tenant from the property upon expiration of their tenancy contract and further the landlord may also refuse renewal of the contract. A rent cap of 5% was applicable; however, tenants were subject to a 5% increase in rent upon renewal of the contract without previous intimation to the tenant. This 5% cap is removed due to further amendments.

    • Head of Judicial Department Resolution Number 10 of 2010 on Lease Dispute Resolution Committees and the applicable procedures before such committees 
    Under the provisions of law, a Dispute Resolution Committees (the Committee) will be formed, where the committee will be chaired by a judge. The Committee will have the power to urgently resolve the matter arising out of the lease relationship between the landlord and the tenant and to settle temporary procedures submitted by either party. The Arabic Language will be used before the Committee, and the Committee will hear the claims and defenses of litigants, witnesses, and any other person, who is ignorant of the Arabic language through an interpreter.
    • Abu Dhabi Executive Council number 4 of 2011 on rules and procedures of registration of tenancy contracts in the emirate of Abu Dhabi:

    Abu Dhabi Executive Council number 4 of 2011 introduced rules and procedures for landlords to register their tenancy contracts at the Abu Dhabi Municipality (the ADM).  The resolution introduced a system upon which the ADM establishes and keeps a registry of tenancy contracts including all data related to the leased property which is known as the ADM's tawtheeq system. Besides, all tenancy contracts existing or entered between the parties after the implementation of this resolution shall be registered at the ADM. The tenancy contracts must be in English and Arabic or only Arabic language while registering it with the Tawtheeq registry system of the ADM.

    Considering the above provisions, the ADM, shall only consider tenancy contracts registered under the provisions of this resolution, any transaction requiring a tenancy contract shall not be accepted and shall be dismissed if the contract is not registered in the tawtheeq registry system of the ADM. The resolution applies to all residential, commercial units and industrial units.

    • Administrative Resolution Number 12 of 2012 on Controls of Occupancy of Housing Units in the Emirate of Abu Dhabi;
    Housing property is defined under the law as the property, or any part thereof prepared for the lease and use it as domicile that provides a person with residence, living, basic daily life needs including a bathroom, kitchen and at least one bedroom. Also, the Resolution prohibits the occupancy of one housing unit by two families. 
    • Administrative Resolution Number 13 of 2012, on Executive Resolution Law 1 of 2011 on Regulation of occupancy of Housing Units and use of property allocated for citizens in Emirate of Abu Dhabi: 
    The Resolution does not allow the following buildings to be rented out:
  • Buildings built in farms and manors; 
  • Public housings and other additional housing units; 
  • Public housing that has been demolished and rebuilt upon a license issued by the government; 
  • Housing units built on residential lands that have been licensed upon the owner's request for special social causes
    • Abu Dhabi Executive Council Decision issued law number 32 issued in 2012:

    This Executive Council Decision removed the rent cap of 5% and granted landlords the liberty to raise the price as per the market rates for their interest. However, the Tenancy Law also provides for rules concerning notice periods required in case the landlord seeks to evict the tenant or seeks to raise rental amount or any modifications in the contract. The landlords must notify the tenant by giving two months notice by issuing an evacuation/eviction Notice or a prior note stating the proposed modification in the contract and indicating the specific alteration the landlord desires to apply. For commercial properties, the notice period is deemed to be of minimum 3 months. It is pertinent to note that in case the landlord does not serve an eviction or rent increment notice during the above course of time before renewal, the contract shall be deemed to be automatically renewed with the same price and same terms.

    • President of the Executive Council's Resolution Number 32 of 2012 on Premises Lease Contracts: 

    The Resolution mentions that the annual increment of the rental specified in the lease contract as mentioned under Article 16 of Law Number 20 of 2006, shall not exceed five percent (5%), provided that the rental should be evaluated as of 10 November 2013 as agreed between both the parties. 

    • Administrative Resolution Number 97 of 2012, on Mechanism of Registration of Lease Contract in the Emirate of Abu Dhabi: 

    The Administrative Resolution Number 97 of 2012 has laid down the provisions concerning the mechanism related to the registration of lease contract in Abu Dhabi. The Resolution authorizes the Abu Dhabi Municipality to prepare a special record to register lease contracts which must contain the data related to the property used for residential, commercial, or industrial purposes as well as the records of the occupants for the residential property plus the landlord and tenant's data. The Municipality will also prepare a unified manual on procedures required for registration and can amend it when it deems necessary. The Municipality is also authorized to collect registration fees of lease contracts subject to the following: 

    • In the case of replacement of the tenant in the same land premises, the current contract shall terminate, and both the parties shall make a new contract upon the payment of fees; 

    • Registration fees for the property and units should be made in one payment as follows: 

  • AED 1,000 per building on one lot of land and AED 5,000 per lease unit; 
  • AED 1,000 for all villas built on one lot of land and AED 5,000 per lease unit. 
  • • The prevailing lease contracts made before the issuance of this Resolution shall be exempted from the registration fees where their fees are to be only collected upon renewal.

    • Abu Dhabi Council Resolution Number 13 of 2016 on housing fee:

    The Abu Dhabi Council issued a Resolution Number 13 of 2016 in February 2016 whereby the Municipality will charge a 3% housing fee on an annual rent. The fee will be charged on all the housing units in Abu Dhabi. Also, the responsibility to pay the housing fee will be on the tenants and will not be considered as services charge which is payable to owners of the building. 

    • jAbu Dhabi Council Resolution Number 14 of 2016 on Lease Agreements of Premises concerning the reintroduction of the annual rental cap of 5%: 

    The Tenancy law introduced a 5% rental cap on the lease agreement, however, the cap was abolished on 9 November 2013, but the cap has again been reinstated under the Abu Dhabi Council Resolution Number 14 of 2016 with an effect from 13 December 2016. Under the Council resolution, both the parties can fix the rent for the lease term, upon agreement, however, if the rent is not decided then the landlord has the authority to increase the rent annually.  

    • Tenancy Law amendment of 20 November 2017: 

    The resolution states that the decision of the Abu Dhabi Rental Disputes settlement committee will be final and binding upon the parties if the claim amount in the dispute is below AED 50,000 (UAE Dirham fifty thousand). However, if the claim amount exceeds AED 50,000 (UAE Dirham fifty thousand), the parties can file for an appeal in the Court of Appeal within 15 days starting from the next day of judgment or from the next day of judgment notification, if the judgment is an absent judgment. 

    Additionally, the parties also have the right to file an appeal before the Court of Cassation within 30 days from the next day of the appeal judgment or from the next day of judgment notification if the judgment is an absent judgment, subjected that the claim amount exceeds AED 300,000 (UAE Dirham three hundred thousand). 

      Key Notes:

    1.      Tenancy Period:

    • The lease contract shall be valid to the end of the period specified in the contract and the period may be renewed for additional period/s as agreed between the parties.
    • If the contract term expires and the tenant keeps making use of the leased premises without objection from the landlord, then the contract shall be deemed to renewed for the same period and same conditions. 
    • If either party wishes not to renew the contract; or to adjust the conditions, such party shall notify the other party in writing, two months prior to its termination for residential properties and two months prior to termination of the contract for commercial industrial or professional properties. 
    • The landlord may not ask the tenant to vacate the leased property on the basis of the expiration of the period before 9th November 2012 (specified date), and this date may be renewed upon a decision of the president of the Executive Council as he may deem appropriate.
    • The committee has the right to decide on vacating the leased premises before the date specified if the occupation of the leased property by the tenant causes gross damage to the landlord provided that the tenant has made use of such premises for not less than two (2) years. In such case, the landlord shall not grant more than six (6) months to vacate the leased property date of resolution of the Committee. 
    • Upon the decision of President of the Executive Council, rules and procedures on registration of lease contracts related to property existed in the Emirate shall be developed.

    2.      The following procedures must be adhered to:

    •          Ensure that the landlord has registered his property at ADM by reviewing the registration certificate.
    •          Seek the tenancy contract for your review. Examine all terms and conditions especially those pertaining to tenancy period, rental amount, maintenance and other fees.  

    Eventually, it should be noted that in case a dispute occurs between the landlord i.e. owner or real estate/property management company and the tenant, it would not be possible to submit dispute application to the Rent Dispute Settlement Committee unless the tenancy contract is registered with ADM tawtheeq system. Accordingly, it is advisable to make sure that the tenancy contract is signed and registered. To state in précise, the Tenancy Law is a security for the rights of both the parties whether the party is the landlord (owner/ property management company) or the tenant. 

    • Abu Dhabi Executive Council Decision issued law number 32 issued in 2012:

    This Executive Council Decision removed the rent cap of 5% and grants landlords the liberty to raise the price as per the market rates for their interest. However, the Tenancy Law also provides for rules concerning notice periods required in case the landlord seeks to evict the tenant or seeks to raise rental amount or any modifications in the contract. The landlords must notify the tenant by giving two months notice by issuing an evacuation/eviction Notice or a prior note stating the proposed modification in the contract and indicating the specific alteration the landlord desires to apply. For commercial properties, the notice period is deemed to be of minimum 3 months. It is pertinent to note that in case the landlord does not serve an eviction or rent increment notice during the above course of time before renewal, the contract shall be deemed to be automatically renewed with the same price and same terms.

    • Abu Dhabi Law Number 13 of 2017 regulating Court Fees in the Emirate of Abu Dhabi:

     

    For litigating disputes between Landlord and Tenant (2018 and 2019), the above law applies which provides that the court fees payable by a party is set at 5% of the annual rent or; AED 40,000 whichever is lower. Also, the earlier law provied that landlords cannot increase the annual rent by more than 5%, (Law Number 14 of 2016, referred above) but now, Landlord must issue a two months written notice (for residential) and three months written notice (for commercial properties). In terms of procedures to be followed before Abu Dhabi Lease Dispute Settlment Centre, Law Number 25 of 2018 issued by Abu Dhabi Judicial Department applies. 

    Read our extensive guide on Abu Dhabi Property Law here.

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    Mon, 07 Oct 2019 12:52:00 GMT
    <![CDATA[Tenancy Laws in the United Arab Emirates]]> Tenancy Law in the United Arab Emirates

    Introduction

    Tenancy law is a fundamental regulatory framework that systemizes the relationship between tenants and owners. It defines the obligations, risks, and procedural requirements to deal with disputes. In the UAE the provisions regarding tenancy law are found under Federal Law No.5 of 1985 on Civil Transactions, while some of the emirates have extended regulations under local decrees.

    The articles set out different obligations on the parties while leaving room for variant agreements. For instance, the articles provide that unless otherwise agreed by the parties, the landlord shall be responsible for the maintenance of the leased item, and any defects or damages that come as a result of inadequate maintenance. While the tenant is responsible for the upkeep of the unit as an ordinary person would, in addition to abstaining from any alterations or substantial changes to the object of the lease without the consent of the landlord. Where one of the parties was found derelict or negligent the articles obligate the party at fault to indemnify the losses under the discretion of the court. However, all disputes arising as a matter of tenancy law could be heard exclusively by the Real Estate and Rental Dispute Settlement Committee.

    Real Estate and Rental Dispute Settlement Committee

    The committee was formed by order of Decree No. 2 of 1993 to create a committee specialised in resolving disputes arising between lessors and lessees. Following the formation of the committee, the courts would no longer hear disputes arising between the parties of a lease. There were numerous cases where the court dismissed a claim regarding a disputed lease agreement, even where a governmental entity nullified the validity of the contract. In a case where the Chamber of Commerce terminated the lease of a Hotel for commercial purposes, the court ruled that, "as per article 1 of Law No. 2 of 1993 (on the formation of a judiciary committee to resolve disputes arising between lessors and lessees of any nature), the Explanatory Decree No.1 of 1999, and the proceedings of this court, it is not permissible for any tribunal but the mentioned committee to hear disputes arising between lessors and lessees with regard to uncovered funds. The tribunal was offered jurisdictional competence relating to public order, and therefore, the jurisdiction to hear such disputes was stripped from the ordinary courts. The termination of the contract by the Chamber of Commerce does not affect this decision, so long as the disputed contract gave the plaintiff and the defendant the character of the lessor and a lessee".  However, since late 2013 and by order of Decree No. 26 of 2013, the establishment of the Real Estate and Rent Disputes Settlement committee was repealed and replaced by the Rent Dispute Settlement centre structure. Fundamentally, the replacement was to resolve issues and inefficiencies within the former committee. Significantly, the new centre has a higher degree of judicial involvement, in addition to a faster and simpler mechanism. The powers of the centre were also limited to exclude financial and long term leases.  Also, the centre has a reconciliation division for adjudicating before raising the matter to the First Instance Division. However, the centre is still responsible for all tenancy agreement and has exclusive jurisdiction to hear rental disputes.

    The Civil Transaction Law defines a lease as an ownership grant of a specified object for a specified period for a specified time. The articles do not differentiate between commercial and residential leases as far as the maintenance, and the upkeep of the unit is concerned. Therefore, the tribunal would apply those general rules to all lease agreements, while recognising the different measures of care required for each. Article 777 of the Civil Transactions Law provides that where an item is leased a lease has the right of enjoyment as contracted, where the lessee exceeds this right he may be found liable. However, if the agreement does not state the extent of enjoyment available for the lessee, it should be reasonable according to the purpose of which the property is designed.

    General Obligations

    Lessor

    The lessor may not interfere or disrupt the lessee with his enjoyment of the leased property during the period of the lease. The lessor is also liable for the action of his servants that may prevent the lessee from enjoying the property as contracted. Unless the lessee had knowledge of a particular defect before the lease agreement, the lessor shall warrant the lessee of all defects in the property that may significantly affect his enjoyment.

    If the lessee is deprived enjoyment of the property for any of the above mentioned the reasons, then he is entitled to either recession or reduction of the rent. Additionally, the lessee is entitled to damages for the prejudice sustained against him

    Lessee

    On the other hand, the lessee may not exceed his power of enjoyment as stated by the agreement, or in accordance with the reasonable standards of the property. The lessee may not introduce any changes or alterations without the permission of the lessor. The lessee is bound to carry out frequent restoration and cleaning works that customarily are the responsibility of the lessee. Finally, the lessee may not prevent the lessor from carrying out his duties, such as maintenance work etc.

    Fit-out work

    As mentioned earlier and following Article 778 of the civil transaction law, the lessor may not make any substantial alteration to the object of the lease without the consent of the lessor. The lessee may only make alterations necessitated for the repair of the premises, and no damage should be suffered as a result of such adjustments. The lessee is liable for any alterations and damages that may be caused by them. Essentially, the lease puts the lessee on trust for the object of the lease. This relationship is reflected in the ruling of the court where it expressed that "following Articles 778, 784 and 792 of the Civil Transactions Law, it may be inferred that the position of the lessee on a lease is that of a trustee in a fiduciary relationship, where he stands responsible for any shortage, deterioration or losses suffered as a result of his negligence or intentional breach. Furthermore, it is not permissible for the lessee to introduce any substantial alterations to the object of the lease without the authorization of the lessor. Consequently, if the tenant infringes this obligation, they are liable to restore the object of the lease to its former condition. Moreover, the lessor is entitled to claim damages for any losses suffered as a result of the infringement."

    However, the lessee could avoid indemnification if they could provide sufficient evidence that the damages or losses suffered were not as a result of their perpetration or negligence. Here the burden of proof is on the lessee.

    Insurance Claims (subrogation)

     A question that may be raised at this point is where the lessor has insured the object of the lease, who bears the risk of the losses suffered and the burden of the legal claim? In a case where the insurance company raised a claim against a lessee for the reimbursements paid to the insured party, The Court of Cassation ruled that according to Article 742 of the civil transaction law, the character of a lessor is attributable to one who leases a particular benefit for a specified period of time for a determinate value. If the lessor has insured the object of the lease, it is upon the insurer to comply with the insurance policy and compensate the lessor for the losses suffered.   It is also permissible for the insurance company to replace the lessor with regards to any claim regarding his property. Additionally, the insurer may claim for the reimbursements paid to the lessor as a result of the infringement. 

    Note that the Court of First Instance dismissed this case on the grounds that only the Real estate and Rental dispute committee have jurisdiction to hear lease agreement disputes. However, on appeal the Court expressed that the insurer derives this right from a statutory action and not from a transferred power of attorney, thus, the insurer does not base the claim on the damages caused on the object of the lease directly, but only on risk the insurer had to bear as a result of the lessee's infringement. Consequently, this claim may not be raised in the tribunals of the Real Estate and Rental Dispute Settlement Committee, but may only be raised within the ordinary courts of the land, as mandated by statute. Therefore, only after the insurance company reimburses the injured party, the insurance company may seek a claim against the lessee. The lessee might find themselves liable for additional damages after the insurance claim since the insurance would reinstate the lessor only for losses suffered as a result of the damages and not as a result of missed out profits.

    Conclusion

    The tenancy law provides for a common ground where the tenant may enjoy his unit without interference while protecting the benefit of the landlord in his property. Therefore, the enjoyment of the leased unit is limited by the desired beneficial interest of the owner. Alterations to the nature of the apartment may not be in favour of the landlord, if however, the owner gave the tenant consent to make certain fit-out works then it is only permissible to the extent of the agreement.  It is also advisable for tenants to insure the fit-out work they want to undertake to avoid the risk accompanied by any damages that might occur. It is highly likely that the fit-out work would revoke the landlord's insurance policy, and the agreement would put the tenant at liability for any losses suffered. The tenant may also be joined in the insurance policy with the landlord, this way the insurance is meant to cover the tenant as well as the landlord. Most importantly, the insurance company will not be able to practice their right to subrogation against an insured party. Finally, the tenant would also need to obtain a license from the competent authorities before initiating any heavy restoration work, such as that which would require digging or altering the structure of the building. These are authorities that are concerned with urban development and planning control. 

     

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    Mon, 27 May 2019 12:41:00 GMT