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

You may be able to terminate the tenancy contract with your landlord unilaterally

  
Customer signing a real estate contract in real estate agency. Image used for illustrative purpose.

Customer signing a real estate contract in real estate agency. Image used for illustrative purpose.

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Question: I am seeking help to understand the consequences of the pandemic situation in relation to a flat I am renting in Dubai. I lost my job in March because of the Covid-19 pandemic, so I am now planning to move back to my home country, Pakistan, since I can no longer afford to live in the UAE. The tenancy contract states that I must give a notice of three months minimum and a two-month penalty applies if the contract is cancelled before its completion. I have issued cheques for the rent till June 9, and I have requested to leave the apartment before the fourth cheque is due. However, the landlord doesn't seem to agree because he is not responding to my request.

I want to leave the apartment and move to Pakistan. However, in this tough situation, the two-month penalty is too high for me. I would like to know what I should do to avoid the penalty, as well as the payment for the last cheque. I have the termination letter as a supporting document.

Answer: It is understood that you are residing in a rented apartment in Dubai and due to prevailing pandemic you lost your employment in March. Therefore, you have decided to relocate to your home country Pakistan as it is difficult for you to live in the UAE without employment. Further, your tenancy contract states that you need to serve three months of minimum notice period along with two-month rent as penalty in the event you terminate the contract prior to its completion. You have paid the rent up to June 9 and you have requested your landlord to vacate the this apartment before the next rent cheque is due on June 9. However, your landlord is not responding to you. Further, paying the penalty is too high for you and, therefore, you would like to know the remedies available to you to avoid payment of your next rent cheque and the penalty. Finally, to substantiate your reason for early termination of tenancy contract, you have with you the termination letter issued by your employer.

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As your rented apartment is situated 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.

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. This is in accordance with 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."

The terms and conditions mentioned in the tenancy contract is applicable to both the landlord and the tenant. This is in accordance with 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."

Further, 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.

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. This is in accordance with 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."

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. This is in accordance with 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."

Know the 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.


Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India.

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