The Dubai Land Department (DLD) recently announced the introduction of a "Unified Lease Form" contract which will be unveiled next month (March 2017). Use of the form to govern leasing arrangements will be mandatory for landlords and tenants.
What is it and which tenancies does it apply to?
This is a standardised tenancy contract for residential, industrial and commercial units. It is based on the applicable Dubai tenancy laws.
Why has the DLD taken this step?
The new lease form has been designed to facilitate the DLD's policy of encouraging transparency and professionalism within the real estate market. The new form is intended to regulate the relationship between all parties involved in a leasing transaction and set out their respective rights. The DLD hopes that the clarity which comes with the unified form will result in a boost in consumer confidence and subsequently in investment in Dubai.
What are the key clauses?
The form is drafted in both English and Arabic and includes standard terms and conditions that require the tenant to:
- inspect the premises and to agree with the landlord to lease it in its current condition;
- use the property for its intended purpose, which includes not sub-leasing or transferring the property in whole or in part to any third party;
- not make any amendments or modifications without the landlord's written consent;
- pay all the utility charges resulting from occupying the property, including electricity, water, cooling and gas charges unless otherwise agreed;
- adhere to the rules and regulations for the building's common parts; and
- settle any disputes at the DLD Rent Committee.
It also specifically refers to Article 25 of Law 26 2007 (as amended) which specifies the grounds on which the landlord can evict the tenant, and also refers to Article 16 of the same law, which states that landlords are responsible for all maintenance unless agreed otherwise.
The inclusion of this provision is not surprising as, in our experience, the two most common disputes between parties relate to maintenance and/or repayment of a deposit.
How will tenancies change?
Currently, there are a variety of tenancy contract forms being used by landlords in Dubai, some of which include terms and conditions that conflict with recent Dubai laws. The objective of this reform is to help prevent confusion relating to the terms being agreed by the parties and create greater transparency/predictability when it comes to leasing transactions in general, thus reducing tenancy disputes.
On most commercial transactions it will be expected that landlords and tenants will still agree special conditions which will apply to the tenancy which may (or may not) be annexed to the contract. As an example, if the landlord wished to pass any maintenance obligation to the tenant (contrary to Article 16 mentioned above), this should be noted in an addendum to the standard form.
The new unified lease document should be executed by the landlord, tenant and two witnesses.
Will you still have to register the tenancy with EJARI?
At present, Dubai leases are agreed separately from the EJARI system and parties are only obliged to register their contract with EJARI afterwards. However, this new standard lease is to be issued jointly by EJARI and the Dubai Government and all new tenancies must be processed within this legal framework.