Dubai tenants, landlords can cancel signed rental contracts if deception is proven

Dubai: Landlords and tenants in Dubai can ask to cancel a signed rental contract before the tenancy begins if they can prove they were misled when making the agreement, under a new judicial principle established by Dubai's Rental Disputes Center.

The ruling, announced on Thursday, means that signing a rental contract does not always make it final. If deception is proven, either party may seek to have the agreement cancelled before it takes effect, provided the legal conditions are met.

Dubai's Rental Disputes Center said the principle "confirms that legal safeguards may extend beyond the signing of a contract, provided the applicable legal requirements are met."

The decision follows a dispute involving a landlord who wanted to cancel a signed rental agreement after discovering that the company he planned to rent his property to had a history of unpaid rent and court cases.

History of rental disputes

The landlord had agreed to rent his property to a company. Before handing over the property, he discovered that the company had previously faced court cases and judgments for failing to pay rent on other properties it had leased for subletting to third parties.

Several arrest and bring-in orders had also been issued against the company's manager in cases involving unpaid rental obligations, bounced cheques and delayed payments.

Concerned that the company might fail to meet its obligations, the landlord approached Dubai's Rental Disputes Center to have the agreement cancelled before the tenancy began.

His request was initially rejected. The case was later reviewed on appeal by the General Authority of Dubai's Rental Disputes Center. After examining the evidence, the Authority found that the circumstances amounted to deception under the UAE's Civil Transactions Law.

Dubai's Rental Disputes Center said the Authority "ruled that the lease agreement must be annulled and the parties restored to the position they had been in before signing it." In simple terms, the contract was cancelled, and both sides were to return to their positions before the agreement was signed.

Proof of deception must

The ruling does not mean landlords or tenants can simply walk away from a signed agreement because they change their minds. There must be evidence of deception, and the legal requirements must be met.

Dubai's Rental Disputes Center said the ruling confirmed that "annulment may be sought before implementation begins where deception is demonstrated and the applicable legal grounds are satisfied."

This means a landlord or tenant may have grounds to challenge an agreement even after signing it, as long as the tenancy has not yet begun and deception can be established.

Judge Abdulqader Mousa Mohammed, Chairman of Dubai's Rental Disputes Center, reaffirmed the Centre's commitment to protecting the rights of landlords and tenants and ensuring fair treatment in rental agreements.

Free rental history checks

Dubai's Rental Disputes Center has also encouraged residents to check the other party's rental history before signing an agreement.

Its free Rental Good Conduct Certificate service allows landlords and tenants to check whether the other party has previously been involved in rental-related court cases or judgments. For example, a landlord planning to rent a property to a company can check its available rental litigation history before signing.

A tenant can also use the service to review the rental-related court history of the party offering the property. According to Dubai's Rental Disputes Center, "This information allows them to assess whether to proceed with a proposed agreement before becoming bound by its terms."

The service is free and is intended to help both parties identify possible risks before entering a rental agreement.

How ruling affects residents

The ruling makes clear that a signed rental agreement can still be challenged before the tenancy begins if deception is proven.

It is particularly relevant to landlords renting properties to companies, including those planning to sublet them, as well as residents entering new rental agreements. Still, having previous rental disputes does not automatically mean a landlord or tenant has acted dishonestly. Deception must be established under the law.

For anyone planning to sign a new rental contract in Dubai, the Centre recommends checking the other party's rental history first. Doing so could help identify problems before money changes hands or a property is handed over.