COVID-19: Lost your job? These are the options with your rental contract in the UAE
Should you terminate your contact or negotiate a reduction? How can you find a new place?
Dubai: Your rent is due soon but you just lost your job after your company was negatively affected by COVID-19 – what do you do next?
Gulf News spoke with rental dispute experts, legal researchers and lawyers in the UAE to find out what alternatives a person can consider when trying to work around his or her rental contract after suffering a job loss.
In normal circumstances - pre COVID-19 - a person leasing or renting a unit in the UAE could not terminate a rental contract by law, as most contracts require the lessee to submit a few months’ notice to the landlord, informing them that they cannot renew the contract. However, the situation changed significantly after the COVID-19 pandemic disrupted businesses across the world.
Option 1: Negotiate with your landlord for a reduction in rent or deferred payments
The biggest advice all the legal experts had for a person who finds himself in a tight situation in terms of fulfilling their rental obligations is to be upfront if they are unable to pay rent.
Adel Abdullah Humaid, an Emirati writer and academic researcher in the legal, police and security field, spoke about how by law the landlord was entitled to receive rent as long as the tenant was using the unit.
“No law has been enacted that can compel the landlord to exempt a tenant from the rent, but an agreement can be concluded between the lessor and lessee that the tenant be exempted from rent for a month or two, or from some fines. But there is nothing in the law that absolves a tenant from paying the rent permanently,” Humaid, who is also a retired police officer, told Gulf News.
“However, I found some cases where competent authorities found solutions to such problems, which are humanitarian problems, and took into account the interests of both the parties,” he added.
No law has been enacted that can compel the landlord to exempt a tenant from the rent, but an agreement can be concluded between the lessor and lessee that the tenant be exempted from rent for a month or two, or from some fines. But there is nothing in the law that absolves a tenant from paying the rent permanently.
Leniency in exceptional circumstances
Humaid also stressed on the need for all parties involved to deal with the issues with a humanitarian mindset.
“As these are exceptional circumstances, it is advisable for the landlord to take into account if the tenant proves his termination of work. The economic situation has caused critical conditions for everyone. Landlords can exempt tenants from paying a month or two of the dues they owe. In the UAE in particular, many landlords exempt and forgive many tenants from the fines even though there is nothing that obliges them to do so. They did it because they responded positively to the current conditions and followed the approach of tolerance, which they follow based on the UAE’s leadership as well as the nature of tolerance of the people of the Emirates,” Humaid said.
"Also, the issue can be brought up to the highest authorities, which applies to contracts of store owners in malls and others who have been affected by the suspension," he added.
However, he reiterated that as per UAE law, landlords were within their rights to ask for rent as long as the tenant continued to stay in the unit.
As these are exceptional circumstances, it is advisable for the landlord to take into account if the tenant proves his termination of work.
Tenant’s responsibility
Humaid added that this went hand-in-hand with tenants also ensuring that they do not make false claims to avoid paying rents.
“The tenant must take into account his conscience and not manipulate or provide false arguments that may cause material or moral damage to the landlord or other landlords, who may fear similar false claims to come in,” he added.
Adel AlJneibi, who owns a legal consultancy in Dubai, also stressed that there was no provision in the law which would allow a tenant to not pay his or her dues, even in force majeure circumstances - unforeseeable circumstances that prevent someone from fulfilling a contract.
“In general, all such disputes and requests that would arise out of tenancy contracts and their termination as a result of COVID-19, shall be referred eventually to the competent judicial authorities, which shall balance between the interests and ability of both parties in execution of the tenancy contract,” he said.
In general, all such disputes and requests that would arise out of tenancy contracts and their termination as a result of COVID-19, shall be referred eventually to the competent judicial authorities, which shall balance between the interests and ability of both parties in execution of the tenancy contract.
Can I get evicted?
While evictions had been put on hold during the first phase of restrictions related to COVID-19, legal experts stressed on the fact that tenants could not legally expect to continue staying in the unit if they could not pay rent, according to Wael Eltounsy, Head of Real Estate Dispute resolution at Baker McKenzie Habib Al Mulla.
“No one can make the landlord let the apartment or unit with a tenant or lessee without payment. I have seen postponement of eviction happen in Abu Dhabi, but the judgement must keep a balance between landlord and tenants,” Eltounsy said.
“You cannot put an obligation against the landlord to let a tenant live in the apartment without payment. At the same time, we need to keep the tenant comfortable in Dubai because this also affects the economy. The tenant is also a consumer of other goods. If you have a good history with the landlord, and negotiate in good faith, you can request for a discount for month or two or request for the rent to be reduced. I think, in the current situation, the landlord may accept the negotiation. If the two parties have good faith and a good payment history, then you can reach a good settlement or agreement with the landlord,” he added.
You cannot put an obligation against the landlord to let a tenant live in the apartment without payment. At the same time, we need to keep the tenant comfortable in Dubai because this also affects the economy. The tenant is also a consumer of other goods. If you have a good history with the landlord, and negotiate in good faith, you can request for a discount for month or two or request for the rent to be reduced. I think, in the current situation, the landlord may accept the negotiation. If the two parties have good faith and a good payment history, then you can reach a good settlement or agreement with the landlord.
Option 2: Terminate your contract
A recent judgement by Dubai’s Rental Dispute Centre provided some relief to those renting an accommodation in Dubai, as the centre declared job loss due to COVID-19 an ‘emergency circumstance’, which could not have been prevented or expected at the time of finalising the contract.
This allows the tenant to vacate the premises without having to pay any penalties, with the Rental Dispute Centre even advising the landlord to return the advance cheques.
Have a good rental record
Eltounsy reiterated that having a good relationship with your landlord and reaching out to him or her immediately after you have been informed of your job loss is helpful in making the tenant’s case strong.
“If you want to terminate your contract, you can take your termination letter to your landlord, tell your landlord you want to terminate your rental contract. Discuss how you may have a month or two still to go on the rent you have already paid and how you cannot continue with the contract. If the landlord does not respond positively, you can file a case with the rental dispute centre in your emirate,” he said.
If you want to terminate your contract, you can take your termination letter to your landlord, tell your landlord you want to terminate your rental contract. Discuss how you may have a month or two still to go on the rent you have already paid and how you cannot continue with the contract. If the landlord does not respond positively, you can file a case with the rental dispute centre in your emirate.
Submit your termination letter as proof
AlJneibi referred to three articles in the UAE Civil Transactions Law which look at force majeure, unpredictable circumstances and unforeseen situations.
Article 794 of UAE Civil Transactions Law
1. One of the contracting parties may, for an unforeseen excuse concerning him, ask the termination of the lease contract and, in this case, he shall warrant to the other party, within customary limits, against the damages that he may sustain as a result of such termination.
2. In case the lessor is the one who asks the termination of the contract, the lessee is not bound to restitute the leased property until he receives the compensation or obtains a sufficient collateral.
Article 273 of UAE Civil Transactions Law
1. In bilateral contracts, if a force majeure arises that makes the performance of the obligation impossible, the corresponding obligation shall, be extinguished and the contract ipso facto rescinded.
2. If the impossibility is partial, the consideration for the impossible part shall be extinguished. This shall also apply on the provisional impossibility in continuous contracts. In both instances the creditor may rescind the contract provided the debtor has knowledge thereof.
Article 249 of UAE Civil Transactions Law
If public exceptional unpredictable circumstances shall arise, and their happening has resulted in making the execution of the contracted obligation, if not impossible, has become burdensome to the debtor in such a manner as to threatening him with heavy loss, the judge may, according to circumstances and by comparing the interests of both parties, reduce the burdensome obligation to reasonable limits, if justice so requires. Any agreement to the contrary is void.
He advised tenants to provide all the necessary supporting documents when they file a dispute with the rental centre.
“The tenant who wishes to terminate his rental contract based on this article [Article 249] must submit a copy of the termination letter to the RDC. The RDC may accept the complaint and may terminate the tenancy contract without payment of penalty to the landlord,” he said.
The tenant who wishes to terminate his rental contract based on this article [Article 249] must submit a copy of the termination letter to the Rental Dispute Centre (RDC). The RDC may accept the complaint and may terminate the tenancy contract without payment of penalty to the landlord.
How can I file a case with the rent dispute centre?
According to Baker McKenzie Habib Al Mulla, in Dubai, the RDC is located adjacent to the Dubai Land Department in Deira, Dubai and has a team that registers complaints and rental disputes.
This team includes counsels that are available to answer your rental disputes queries as well. First, you would need to file a complaint at the RDC against your landlord. The RDC has a form to fill in along with ID documentation and lease documents such as:
• Ejari certificate
• Tenancy contract
• DEWA bills
The fee to lodge the complaint is 3.5 per cent of the annual rent of the property and must be at least Dh500 and not exceed Dh20,000. This fee is exclusive of administrative and translation costs.
Upon lodging the complaint, the RDC will attempt to settle the matter within 15 days. If the dispute is not resolved, then it is transferred to a lawsuit.
The judgment is issued and can be appealed.
Details of rental dispute centres
Dubai
Rental Dispute Centre
Dubai Land Department
Baniyas Road, Dubai
Call: 800 4488
Abu Dhabi
Abu Dhabi Rent Dispute Settlement Committee
Defence Street
Call: 800 2353
Sharjah
Sharjah Rental Dispute Committee
Rent Regulation Department, Near Sharjah Cricket Stadium
Call: 06 593 1525
Ajman
Ajman Rent Dispute Committee
Al Rashidiya 3, Ajman
Call: 06 744 8884
What next?
Once the contract is terminated, your following step would depend on whether you wish to leave the UAE or continue living in the country. If you wish to leave the UAE, you may need to make temporary living arrangements, either within your social contacts or at a hotel that falls within your budget.
If you wish to stay in the UAE, ElTounsy recommends looking for an accommodation unit that falls within the new budget you are working with. His only advice: don’t leave things until the last minute.
“Don’t let yourself get into a critical situation, where you have no room to work with. A month or two before your rent ends, start speaking to your landlord and explain the situation. If you give the landlord advance notice, he or she may consider this in your favour,” Eltounsy said.
If you are looking for an alternative accommodation, however, Eltounsy advised residents to ensure they submit their new rental contracts within the validity of their visas. This may be during the validity of your earlier visa, or on a new visa, if you have found an alternative work opportunity.