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Feb 25 2013

Property brokers adding 'No rent refund if building catches fire' clause to contracts

By Parag Deulgaonkar

Major brokers, however, say this is not yet a market trend
A new clause that states - "The tenant will not be entitled for any rent refund in case the building become uninhabitable due to fire or any other natural calamity" - is being added by a limited number of property brokerage firms to contracts in order to safeguard their clients (landlords).

AJ, who just leased a two-bedroom apartment in Al Seef tower in Jumeirah Lakes Towers, says: "There is a clause in our contract which says that we are not entitled for any rent refund in case of the building become uninhabitable due to fire, or any natural calamity."

He added: "There were a number of clauses stated in the addendum that was given to me with the rent contract. One of them was the one above. Since we had zeroed on the apartment, we decided to sign the lease irrespective of the clause."

Emirates 24|7 had reported earlier that landlords in Tamweel Tower, which was gutted by fire in November 2012, had on "humanitarian grounds" agreed to return cheques of the tenants since the building was not in an livable condition, even though there were not bound by law to do so.

Landlords have previously incorporated clauses such as - "The landlord will not be responsible for any damage arising from any accident caused by the negligence of the tenant occurring while using the property's facilities (electrical, fire, swimming pool or any other cause) during the time of the occupancy" - but no mention has ever been made on rent refunds.

Rent contracts in the emirate usually do not include clauses of refund of rent to a tenant, even on a pro rata basis, if a building becomes uninhabitable due to fire.

Parvees Gafur, Chief Executive Officer, PropSquare Real Estate, however, stated it was not a market trend.

"We haven't got any of our landlords or tenants asking to include such clauses. There might be some people who are adding such clauses, but it is not a market trend," he added.

The Dubai Municipality Rent Committee and the Real Estate Regulatory Agency have stated that a contract cannot be nullified if the parties have mutually agreed to the clauses stated in the addendums attached to rent contracts.

© Emirates 24|7 2013


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