Being a tenant in UAE does come with quite some responsibilities. In order to make sure your interest are not at risk, you should conduct due diligence over the brokerage firm you are dealing with, the agent and the landlord.
Nevertheless, the tenancy contract you are about to sign should be your second biggest responsibility. Contracts are considered to be the law between the parties joining a certain agreement. Therefore, you have to read the tenancy contract before signing it and understand its clauses.
Lastly, rent payment has to be done carefully , since most of the tenants are paying it by using cheques.
In the second part of “The UAE Tenants Guide” we are going to address the complications that may arise when signing, executing or terminating a tenancy agreement in UAE, as well as the steps to be followed when depositing the rent cheques.
What information and terms you need to understand and make sure exist in standard contracts?
- Landlord contact information including: Full name, Emirates ID or Passport number, contact number, email address, etc.
- Verifying the tenants and landlords full name written in the agreement, the duration of the tenancy contract (i.e. “start and end date”), the total rent value plus security deposit and the number of cheques the rent is payable.
- Make sure that the tenancy contract includes a term defining “Service Charges”, as this is the sole responsibility of the landlord/owner of the property. Additionally, there should be an article which references the tenant’s full access and use of the rented facilities such as common areas like parking, swimming pools, gym, etc.
- Review and understand the implications of the tenancy contracts notice period, (i.e. the number of days the tenant must notify the landlord if they wish to renew or terminate their tenancy contract). This also relates to the provisions for early termination should your circumstances change, and make sure they are reasonable if such situations arise. In many cases the contracts are drafted in a way that will cost the tenant five months of rent to terminate the contract early. It obliges the tenant to give three months’ notice in addition to two months penalty. We always recommend to try and negotiate these clauses.
- Define a set notice period for any notifications received from the landlord to change or amend the tenancy contract. Whether in the terms and conditions or any increase to the rental value to ensure you have enough time to think and respond without falling behind, giving you sufficient notice to vacate the unit without having to pay a penalty.
- In many cases the contract will enforce a renewal fee to be payable to the real estate brokerage firm. In such case you have to define their obligation towards the transaction to facilitate the exchange of contracts and its administration part.
Who should sign to represent the landlord and the tenant?
- The perfect and most secure scenario is when the tenant meets the landlord to sign and exchange the contracts and the cheques. However, this is not very common. Usually the real estate agent takes care of the exchanging of the contracts. In this case the signatures can be verified from the signature of each of the signing parties on their passport copy or their Emirates ID.
- The signatures of both parties should be witnessed as well and the Emirates ID of the witnesses should be made available for both parties in case the signature of all parties are not executed in presence.
- In case the landlord is represented by a property manager or what is commonly known as a Power of Attorney “POA” Holder, whether an individual or a company, the representative must show an original valid power of attorney notarized from the local notary public or duly attested one and to submit their passport copy, UAE visa and Emirates ID as well.
If the property manager is not willing to show such POA and if such POA is simply signed and not notarized, this means that the person signing has no legal powers to represent the landlord and the said contract cannot be legally executed.
What should you do once you get the rental agreement signed?
- Once the Tenancy Contract is signed by both parties and you have received the keys, access cards and parking cards, first of all, you will have to register your Tenancy Contract with Ejari. This is done by submitting in person the following required documents:
- Original Tenancy Contract;
- Copy of the Title Deed; and
- Passport, visa and EID copies of the Tenant and Landlord.
- Once Ejari is issued you will be able to apply and pay deposit for DEWA connection (can be done online on dewa.gov.ae ), and
- You would need to submit to the building management copies of the following documents:
- Tenancy Contract;
- Copy of the Title Deed;
- Passport, visa and EID copies of the Tenant and Landlord;
- Copy of Ejari;
- Fill “Request Form” requesting move in date;
- Pay refundable deposit to the building management (if applicable)
Who should receive the rental checks and security deposit?
Only submit the rental cheques and security deposit to the landlord or a person who is authorized by the landlord by a notarized Power of Attorney (POA). When dealing with a person in possession of a POA, read the POA to ensure the person has the power to collect the rent cheques, make a copy of the POA and make a copy of their passport, visa and EID.
Additionally, make sure you receive receipts for any payments (deposit, rent etc.) mentioned if it is cash, bank transfer or cheque with its number, amount and date (one or multiple).
How much is the commission by law and the security deposit by law?
The real estate agent fees are 5% of the total yearly rent cost. If the real estate agent is asking you for a higher percentage, then contact the real estate agent’s management and/or the landlord directly.
As previously mentioned above, when paying the rent deposit, make sure you are not being over charged as RERA has a fixed deposit price of 5% for unfurnished and 10% for furnished unit of the yearly rental amount.
How can a tenant terminate their rental agreements?
This information can be found in the Addendum to the Tenancy Contract. If you do not wish to renew your Tenancy Contract, in most cases if you give your landlord 2-3 months’ written notice to vacate the property you will not face penalties. Anything less than two months’ notice you will likely face penalties stipulated in the Tenancy Contract.
However, if you wish to cancel your Tenancy Contract before its expiry, you will likely need to compensate the landlord with 2-3 months’ rent. But again, it is depends on the landlord, can be and have to be discussed before signing the Tenancy Contract.
How to get your deposit back?
Once you have cleared your DEWA and other bills (you have to request final bill for each of the services), better if you send it by email to your landlord and agent with request for deposit refund. After your request has been lodged, the landlord will have 10 working days – or otherwise agreed – to repay and settle the deposit.
What happens if the landlord is not paying his community service charges?
Before you pay the deposit, any other payments or sign any documents, you have to make sure that the landlord does not have any outstanding with the building management (service charges, maintenance etc.). It is better to check this yourself with the building security and/or management representatives. If the landlord has outstanding building management fees, this can cause big problems on your move in date, with the security not allowing you to move in until these charges are settled.
Do you get a parking slot when you renting a unit?
Parking is always included when renting an apartment/villa, and should be mentioned in the Tenancy Contract. Please note that it is illegal for the landlords or real estate agents to ask for an additional payment for a parking space.
It’s very important to check the parking slot(s) number(s) on the Title Deed and make sure you are fine with it. Many people are not paying attention to this point and have complaints (i.e. their parking slot is on the sun, or because it’s under a leaking pipe in the basement).
Chartered Compliance Analyst
ELNAGGAR LEGAL ADVISORS LIMITED