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New property scam engulfs Dubai tenants

Scores of companies targeted while alleged scammers left with huge sums of money

  • By Faisal Masudi, Staff Reporter
  • Published: 21:59 January 21, 2013
  • Gulf News

  • Image Credit: Francois Nel/Gulf News
  • Dubai-based estate agencies have scammed thousands of The City Palace by renting out the same Labour accomodation in Al Qouz to more than one company.

Dubai: A new alleged rent scam has hit scores of companies paying for staff accommodation in Dubai, with the alleged perpetrators vanishing with huge sums of money, Gulf News has learnt.

A number of would-be tenants said a Dubai-registered technical services firm and an International City-based property agency posed as both broker and sub-lessor of at least two shared accommodations in the Al Quoz area.

The firm also allegedly duped the accommodations’ landlord by posing as the tenant and providing rent cheques worth hundreds of thousands of dirhams that recently bounced.

Meanwhile, the firm cashed rent cheques, security deposits, commissions and booking amounts for the accommodations — renting out the same rooms to different would-be tenants in some cases.

A partner of the firm, who signed as landlord in the tenancy contracts, is unreachable and his whereabouts are unknown, the clients and landlord said. The firm’s Dubai offices are closed and so is the International City property agency that the partner allegedly identified as his broker for the rooms.

The reported tactics are almost identical to multimillion-dirham property fraud allegations that have rocked dozens of tenants and landlords over recent months.

A representative of the landlord, who did not want to be named, said 33 companies have been affected in two of the buildings the accused had leased.

“They [the firm] told us they needed the labour accommodations for their ‘sister concerns’,” the representative said.

“We checked their documents, and they appeared to be a large company in the electromechanical sector, with business interests in Dubai and Abu Dhabi.

They said the accommodations were for their own use. Had the deal been for outsourcing or subletting, it would have been a completely different story.

“We have incurred a loss of hundreds of thousands of dirhams in bounced cheques. A legal notice has been served to them.”

Tenants, meanwhile, said they have filed complaints at Bur Dubai police station. Some paid half-year rents upfront and have requested their banks to stop the cashing of remaining post-dated cheques.

The alleged conmen have reportedly fled without providing valid tenancy contracts. Some companies’ employees told Gulf News they were duped into signing duplicate contracts and were promised the original registered ones before the accused fraudsters allegedly went into hiding, in the last few days of 2012.

The would-be tenants have now been left in legal limbo with apparently invalid contracts and an accommodation without cleaners, security guards or facilities management.

“When we went to the accommodation to receive the keys, we found out someone else was moving in and the accommodation was in a big mess,” said the managing director of City Palace Furniture, one of the companies affected.

The landlord’s representative said: “We’re trying to work out the best solution for everyone. We’re doing whatever we can to negotiate with the victims. They had ‘rented’ out the rooms for about Dh1,000 instead of the going rate of about Dh1,500-Dh2,000 per month.

“When people see a cheap deal, they often jump on it without checking the paperwork. They should see if something’s fishy. Now, there’s no valid tenancy contract for them. The cases range from a single room to 20 rooms at a time. So far, about 27 ‘tenants’ have complained to us, and many have filed a police complaint also.”

Comments (5)

  1. Added 14:14 January 22, 2013

    WE CAREFULLY CHECK ALL DOCUMENTS BEFRORE LEASING ANY APATMENT, ALSO THE RESPONSABILITY OF RERA AND RENTAL COMMITY TO MAKE HOT LINE TO REDUCE FOR THIS TYPE OF SCAMM,S AND VERIFIEY THE DOCUMENTS .

    AZIZ KHATTAK, DUBAI, United Arab Emirates

  2. Added 13:24 January 22, 2013

    The issue is not that the rents were paid for the full year or for one month. The main problem is that they were paid to wrong people regardless of the amount. It is the responsibility of the lessee to check all the relevant documents such as trade licence, cheques to be issued in what name, etc before making a payment. What a stupidity it is to issue cash or cheques to some one without verifying the facts and documents. A lease contract must be in the name of the landlord and the tenant and chequest must be always issued in the name of the landlord which must be clearly specified in the Lease contract. If it is a sub-lease, then the main lease agreement between the land lord and the agent must be verified aswell. Ensure to collect the receipt of payment for cash or cheques issued to the land lord or the agent. It is always better to lease it directly from the Landlord.

    V, Dubai, United Arab Emirates

  3. Added 13:04 January 22, 2013

    @GF. Paying in one lump is a commercial decision. Just because someone (estate agent or landlord) told you "that is how it is in Dubai" doesn't mean you have to accept it. Escrow accounts - they don't exist here as they do in other countries. However, RERA could ban payments by cheque, replacing it with monthly bank transfers via standing order. RERA would then need to draw up a list of valid reasons for reducing the rent (leaks, a/c not working etc) and a fixed % to reduce by according to the fault. At the same time the landlords must have recourse for dealing with non-payment for invalid reasons.

    Luke, Dubai, United Arab Emirates

  4. Added 12:49 January 22, 2013

    The same incident happened to me also & i have lost my money in a scam like this.though i have complained in the police station & process is going on,i hope i'll get my money back from cheaters .b'coz this amount means so much to mean.i request you all to be careful.still i'm waiting to get my money back as soon.

    Sanjy Sagar, Dubai, United Arab Emirates

  5. Added 11:39 January 22, 2013

    Seems the way to resolve this is to not require full year rent payment in advance for leasing of residences in the UAE. To my knowledge, no other country in the world requires paying the entire year's rent in advance like is required here when leasing an apartment/villa. Paying someone a huge sum of money in advance only compounds the potential for inappropriate actions to happen. One way to solve this problem would be to change to a month to month payment schedule. Require the rental money to be deposited in an escrow account that the leasing agent or owner could draw against monthly, once services are rendered, would squash this problem quickly. The leasing agent/owner would benefit from the interest on the escrow account and the person leasing the residency would get the benefit of knowing that their remaining investment could be returned to them if the leasing company or owner does not provide services as contracted.

    GF, Dubai, United Arab Emirates

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