United Arab Emirates: Overview: Lease Regulations In The United Arab Emirates

Last Updated: 10 June 2019
Article by STA Law Firm
Most Read Contributor in United Arab Emirates, August 2019

Overview: Lease Regulations 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.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions