Dubai landlord in limbo after tenant with bad debt flees the UAE

I am a landlord with a commercial office (in Business Bay) that is rented until June 30. I have been trying to contact my tenant (a limited liability company with a licence issued from DED) and so far have been unable to reach him. His mobile has been cut, no one picks up the office […]

I am a landlord with a commercial office (in Business Bay) that is rented until June 30. I have been trying to contact my tenant (a limited liability company with a licence issued from DED) and so far have been unable to reach him. His mobile has been cut, no one picks up the office phone, and emails bounce back. I visited the office personally and found the office locked. After asking a few of the offices nearby, I discovered the partner of the company defaulted on a bank loan and fled the country some eight months ago. My rent has been paid until June 30, but if I’m not able to get in touch with the owner to hand over the tenancy renewal notice, or if he decides not to return, what is the process I must follow to get my office back? Luckily I had one of the employees’ numbers who also mentioned that the bank he has taken the loan from had come to the office, locked down the office and taken the key. There is no notice placed on my office door so I’m not sure if the bank has acted in its legal capacity to take they key and asked the employees to leave. How can I get my key to the office from the bank? The employees have not received their salary and are also stuck in that they can’t get their visa cancelled. Please advise me. PR, Dubai

Any default by the tenant on any of his loans is not your responsibility. The tenant’s bank will not be able to seize your property as it does not belong to the tenant therefore it cannot be held as collateral by them. Given the bank’s actions, I would definitely get in touch with them. Explain who you are and show proof of ownership by having your title deed to hand. The bank should release the keys back to you. If you experience difficulties, I would seek further advice from the rental committee. Rental laws are in place to protect both parties. Given that your tenant has now left the country, it is obvious he will not be renewing your rental agreement, therefore it will be acceptable to relet the property to another tenant after the expiry of your present agreement at the end of June.

How can I get a hold of the 2008 decree for Northern Emirates rental caps? My owner has gone from Dh30,000 in 2013 to Dh40,000 in 2014 and now, in 2016, is asking for Dh50,000. In addition, no maintenance costs have been paid for by the owner, everything has been paid by me and the bills amount to Dh20,000. Who should I contact at the municipality and what can I do please to prevent this as I believe this is illegal according to the 2008 decree. Additionally, the tenancy contract expired five days ago. Although I have transferred the quarterly rent it is not being collected. FE, Northern Emirates

Most of the Northern Emirates follow the same rules with a slight variation on some of the details. In summary they are as follows;

For Sharjah: according to Law 2 of 2007

– Article 9 stipulates that the landlord should carry out maintenance of the property unless both parties agree otherwise.

– Article 11A states that the landlord is not entitled to increase the rent under a lease period prior to the expiry of three years from the signing of the lease.

– Article 11B provides that the increase in rent mentioned in Article 11A shall be according to market rent of comparable properties and once decided will be applicable to the property for two consecutive years. If the landlord and tenant cannot agree they may refer their case to the Sharjah municipality rental committee who will decide the outcome by placing a value on the property in question.

For Ajman: the laws are the same apart from when it comes to increasing the rent after the initial three-year period, the rate cannot exceed 20 per cent of the previous rent.

For Ras Al Khaimah: rental increases are allowed but again only after the expiration of the three-year period and then the increases are capped at 5 per cent for residential and 7 per cent for commercial.

In all disputes between landlords and tenants there will be committees set up within the respected municipalities so if an agreement cannot be reached directly between the parties, filing a complaint has to be done through one of these offices.

Mario Volpi is a real estate professional who has worked within the industry for the past 31 years in London and Dubai. The opinions expressed in this article are those of the author and they do not reflect in any way those of the institutions to which he is affiliated. It does not constitute legal advice and is provided for information only. Please send any questions to mariovolpi64@gmail.com.

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