Dubai's new standard tenancy contract

Out-Law Analysis | 01 Jun 2018 | 11:51 am | 3 min. read

ANALYSIS: A new standard tenancy contract has been introduced in Dubai to address inconsistencies in the variety of contract formats being used for local rentals.

Launched by the Dubai Land Department (DLD) in 2017, the use of the standard tenancy contract is mandatory for all short-term tenancies in Dubai, with the exception of those in the Dubai International Financial Centre (DIFC).

The standard tenancy contract is a marked improvement on the previous forms adopted in the local market. However, a tenant should carefully review the contract before entering into any tenancy agreement, and obtain legal advice if required.

The new contract applies to industrial, commercial and residential leasing arrangements and short term residential tenancies, which I will examine in more detail.

The main provisions

The introduction of the standard tenancy contract was primarily aimed at addressing the wide variety of contract formats being used, some of which contained provisions which were in conflict with Dubai's Tenancy Law (Dubai Law No. 26 of 2007, as amended by Dubai Law No. 33 of 2008).

Accordingly, one of the most significant changes introduced in the standard tenancy contract is a statement that the contract is subject to the Tenancy Law and that, although the parties may agree to include additional conditions, these must not conflict with the Tenancy Law and any other applicable property laws and regulations.

While the introduction of the standard tenancy contract is a step towards further guaranteeing the rights of both parties, there are still certain checks which a tenant should carry out before entering into a tenancy agreement from both the practical and legal perspectives. These include, but are not limited to:

Verify the contract

Ensure that the document being signed is in fact the standard tenancy contract, available on the Ejari website.

You should also request a copy of the Ejari certificate once the tenancy contract has been registered by the landlord, as any dispute between the parties will not be entertained by the rental dispute settlement centre in Dubai without evidence of valid Ejari registration.

Verify the identity of the landlord or agent

If the property has been advertised by an agent, request to see a copy of the agent's identification issued by the Real Estate Regulatory Agency and confirm that the agent is licensed to undertake brokerage activity.

Verify that the person or entity presenting itself as the landlord is authorised to grant a lease of the property to a third party. Do this by requesting a copy of the current title deed and a copy of the landlord's valid passport and company documents, and confirming that the landlord's official or registered name appears on the title deed.

If the landlord has appointed a representative through a power of attorney, or if an agent is holding itself out as the landlord's authorised representative, request a copy of the representative's valid passport and a copy of the power of attorney and confirm that the representative's name appears on the power of attorney.

In addition, check the power of attorney is valid and has been attested by the local authorities. Carefully review the power of attorney and/or seek legal advice to ensure that the representative is authorised to represent the landlord and grant the rights anticipated under the respective tenancy contract.

Verify the property details

Ensure that the details of the property as stated on the title deed are accurately reflected in the tenancy contract, e.g. size, location, car parking, plot number etc.

Check whether the tenant is responsible for paying any air conditioning consumption fees in addition to the annual rent.

Repair and maintenance

Ensure that the allocation of repair and maintenance for the property is stated clearly in the tenancy contract. According to Article 16 of the Tenancy Law, this is the responsibility of the landlord unless the parties agree otherwise. However, typically, the landlord will be responsible for major or structural repairs and the tenant will be responsible for minor repairs. It is not unusual for the parties to agree to a threshold figure, e.g. that the landlord will be responsible for repairs costing more than AED 500/1,000 (€117/€334).

Insurance

Obtain personal belonging insurance, and ensure that the landlord is obliged to arrange appropriate insurance coverage in relation to the property and third party liability.

Renewal and termination

Ensure that the entitlement and respective notice periods stipulated for renewal and/or termination of the tenancy contract mirror the notice periods set out in the Tenancy Law.

Ensure that fair wear and tear is allowed as part of the tenant's obligation to return the property in its original condition. Check to see if the tenant is responsible for re-painting the interior of the property.

Payment

Identify whether any penalty amount is imposed by the landlord if a cheque submitted by the tenant is returned by the bank. This amount typically ranges between AED 500-1,000.

Ensure that any cheques are written only in favour of the landlord.

Nayab Aziz is a real estate law expert at Pinsent Masons, the law firm behind Out-Law.com.