Abu Dhabi court orders real estate broker to refund Dh100,000 for operating without license

Abu Dhabi: The Abu Dhabi Commercial Court (First Instance) has ordered a real estate broker to refund Dh100,000 he had received as part of a commission for mediating the sale of an industrial plot of land, ruling that he was not licensed to practice brokerage, Emarat Al Youm reported. 

The court said the broker’s lack of a valid real estate mediation license from the competent authority meant he was not entitled to any fees, profits, or rewards for the work he carried out, in accordance with Abu Dhabi’s real estate regulations.

According to case records, the broker had filed a lawsuit against an investor, seeking Dh200,000 in outstanding commission, plus legal interest and court fees.

He claimed that the two parties had signed a brokerage contract under which he agreed to mediate the transfer of usufruct rights for a plot of industrial land and the buildings on it, for a total commission of Dh300,000, payable in full by cheque upon completion of the deal.

The broker said he fulfilled his contractual obligations, successfully mediated the transaction, and facilitated the sale of the land for Dh3.2 million. However, the investor allegedly paid him only Dh100,000, refusing to settle the remaining amount.

The defendant, in his counterclaim, denied breaching the agreement and requested the court to reject the broker’s claim. He also demanded the return of the Dh100,000 already paid, plus Dh20,000 in compensation for losses, asserting that the broker had failed to transfer the usufruct rights as agreed.

During the proceedings, the broker presented several documents, including a settlement agreement between the investor and the original usufruct holder for Dh3.2 million, as well as a subsequent sale agreement between the investor and another company for Dh6.8 million concerning the same plot.

In its judgment, the court clarified that the plaintiff’s claim was based on a brokerage contract related to the sale of industrial land. 

However, under Article 5 of the Abu Dhabi Real Estate Sector Regulation Law, no person may act as a developer, broker, or auctioneer, or represent themselves as such, without obtaining a license from the relevant authority. 

Anyone operating without such a license is not entitled to any commission or remuneration for their activities.

The court found that the broker did not hold a valid license at the time the contract was signed, rendering his claim for unpaid commission invalid. It added that even though the investor had previously paid Dh100,000, this payment could not legitimize an arrangement made in violation of the law.

Consequently, the court dismissed the broker’s original lawsuit and ordered him to pay the legal fees and expenses. On the counterclaim, the court ruled in favor of the investor, ordering the broker to return the Dh100,000 with interest accruing from the date of the counterclaim until full repayment, in addition to covering court costs and attorney fees.