Tuesday, 26 May 2020

How to end rent contract early in UAE without penalty due to Covid-19

Posted by Zaishan at 17:16 Dubai News UAE Rental Law

The Corona Virus has resulted in the loss of employment for lot of people and people want to vacate their flats or villas and relocate to th...

The Corona Virus has resulted in the loss of employment for lot of people and people want to vacate their flats or villas and relocate to their home country. Below is the situation and law explained in such circumstances.

Situation

You are residing in a rented villa or apartment in Dubai

Due to prevailing pandemic you lost your employment and received termination letter from the employer

Decides to vacate the flat apartment or villa and relocate to your home country since it is difficult for you to live in the UAE without employment

Tenancy contract states that you need to serve minimum three months notice period along with two-month rent as penalty in the event you terminate the contract prior to its end date.

You have already paid the rent for a period in the coming month and you have requested your landlord to vacate this apartment before the next rent cheque due date

The penalty amount is too high for you

Landlord is not responding to your calls or emails.

Requirement

Avoid the payment of your next rent cheque and the penalty.

Solution

The terms and conditions mentioned in the tenancy contract is applicable to both the landlord and the tenant. as per the Article 4(1) of the Amended Dubai Tenancy Law.

A landlord or a tenant may not unilaterally terminate the tenancy contract and it may be terminated mutually by the landlord and the tenant during the term of the contract as per the Article 7 of the Dubai Tenancy Law.

Based on the aforementioned provisions of law, as a tenant, you should fulfil the obligations mentioned in your tenancy contract and you may have to pay the two months' rent as penalty for early termination of the contract. However, due to the current Covid-19 pandemic, local authorities have urged both landlords and tenants to come to a consensus related to changes in the terms of the existing tenancy contract.

Both the landlord and the tenant may mutually agree to a reduction in rent; early termination of the tenancy contract; rent-free period options; or any other concessions on the grounds of the pandemic.

The Dubai Tenancy Law and the Amended Dubai Tenancy Law are silent in relation to the termination of the contract due to force majeure. In simple words, force majeure means 'unforeseeable circumstances that prevent someone from fulfilling a contract'.

The pandemic may be considered as an unforeseeable circumstance and, therefore, based on this, you may be able to terminate the tenancy contract with your landlord unilaterally in relation to the Article 273 (1) of the Civil Transactions Law.

You may personally approach and negotiate with your landlord and explain to him that it is not possible for you to pay the penalty due to the current situation and provide him with the copy of your termination letter issued by your employer to substantiate your claim of early termination of the tenancy contract.

If the landlord does not agree with your request, you may approach the Rental Dispute Centre (RDC) in Dubai and file a complaint against your landlord for not agreeing on the early termination of your tenancy contract without payment of any penalty.

Further, you must submit a copy of your termination letter to the RDC. The RDC may accept your complaint and may terminate your tenancy contract without payment of penalty to the landlord as per the Article 249 of the Civil Transactions Law.

The pandemic may be considered as an unforeseeable circumstance and, therefore, based on this, you may be able to terminate the tenancy contract with your landlord unilaterally.

Related Laws Noted

If your villa or apartment is in Dubai, the provisions of Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai (Dubai Tenancy law) and Law No. (33) of 2008 Amending Law No. (26) of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai (Amended Dubai Tenancy Law) are applicable. Further, due to the current pandemic, the provisions of the Federal Law No. 5 of 1985 on the Civil Transactions Law of the United Arab Emirates (Civil Transactions Law) may apply, too.

Article 7 of the Dubai Tenancy Law, which states: "Where a lease contract is valid, it may not be unilaterally terminated during its term by the landlord or the tenant. It can only be terminated by mutual consent or in accordance with the provisions of this law."

Article 4(1) of the Amended Dubai Tenancy Law, which states: "The contractual relationship between a landlord and tenant will be regulated by a tenancy contract detailing, in a manner allowing no room for uncertainty, a description of the leased real property, the purpose of the tenancy, the term of the tenancy contract, the rent and payment method, and the name of the owner of the real property, if the landlord is not the owner."

Article 19 of the Dubai Tenancy Law mentions that the tenant must pay the rent on due dates. In the event of non-payment of rent by the tenant, the landlord may seek the tenant's eviction in accordance with Article 25(1)(a) of the Amended Dubai Tenancy law.

Article 273 (1) of the Civil Transactions Law which states: "In contracts binding on both parties, if force majeure supervenes which makes the performance of the contract impossible, the corresponding obligation shall cease, and the contract shall be automatically cancelled."

Article 249 of the Civil Transactions Law, which states: "If exceptional circumstances of a public nature which could not have been foreseen occur as a result of which the performance of the contractual obligation, even if not impossible, becomes oppressive for the obligor so as to threaten him with grave loss, it shall be permissible for the judge - in accordance with the circumstances and after weighing up the interests of each party - to reduce the oppressive obligation to a reasonable level if justice so requires, and any agreement to the contrary shall be void."

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