Measuring the damage

PWShutterstock

After the recent spate of fires in Dubai, questions arose regarding tenant rights when an apartment suffers damage. It is difficult times when tenants have to find alternate accommodation after a fire, while advance rent has been paid and the landlord holds postdated rent cheques.

Loss of enjoyment

The law refers to partial or permanent loss of enjoyment where occupancy is affected due to damage. In each case the rights of tenants are defined. The challenge for tenants is to determine exactly what constitutes permanent or partial loss of enjoyment and what rights apply. The first question a tenant must ask is whether the damage has reduced the “enjoyment” thereof.

Where the apartment is completely gutted by fire and is uninhabitable, it is easy to prove loss of enjoyment as the authorities would likely prevent the tenant from returning to the apartment for safety reasons. In such cases, it is relatively simple to cancel a lease agreement.

Where the loss of enjoyment of the apartment is partial, there is uncertainty in determining such a loss. Partial loss of enjoyment could be interpreted as being unable to use a portion of the apartment or appliances, or partial loss of utility services, parking facilities or recreational facilities in the building. It may even be interpreted as remotely as the loss of a satellite television.

It is important to consider the specific wording in the relevant provision of the Civil Transactions Law No 5 of 1985 (Civil Code), which states that the partial loss of enjoyment must be of such a nature “as to affect the enjoyment intended”. The “enjoyment intended” is the ability of the tenant to use the leased premises for the purpose set out in the lease agreement. Standard residential lease agreements in Dubai usually state that the tenant may only use the apartment for residential purposes, and this wording determines “the enjoyment intended” and accordingly, when the apartment is no longer in a fit condition to be used for residential purposes, the tenant will be able to cancel the lease agreement.

Where there is total loss of enjoyment, the Civil Code states that the tenant shall not be liable to pay rent from the date of the event that
caused the complete loss of enjoyment. In case of partial loss of enjoyment, the Civil Code distinguishes between partial loss of enjoyment that is caused by damage to the property from situations where partial loss is imposed by a competent authority.

How can a lease agreement be cancelled?

In the UAE lease agreements are generally cancelled by agreement between the landlord and tenant or by order of court. The first step in the cancellation process is to establish whether the tenant’s situation falls within the scope of the provisions of the Civil Code. Should the tenant’s circumstances qualify for cancellation, the next step will be to address a letter to the landlord detailing the situation, the grounds of the cancellation and the date of the loss of enjoyment, and requesting the return of all postdated cheques and the refund of prepaid rent from the appropriate date as determined by the Civil Code as well as any deposit.

It is important to retain proof of receipt of the letter by the landlord, and it is preferable to deliver it by courier. If the landlord agrees to the cancellation, a confirmation should be obtained in writing and preferably signed by both landlord and tenant. The confirmation should include the terms of the cancellation, clearly indicating the commencement date of the loss of enjoyment, the date of cancellation and an undertaking from the landlord to return any prepaid rent, including the calculated apportioned amount if possible, deposit and postdated cheques.

What if the landlord refuses to comply?

If the landlord does not agree or does not respond to the cancellation letter, a tenant may ask the court to have the lease agreement cancelled. The current practice and procedures are laid down by the Dubai Rental Disputes Settlement Centre, also known as the Dubai Rental Committee, which has the authority of the Dubai Courts with regards to all tenancy issues.

Tenants may directly approach the Dubai Rental Committee to resolve all tenancy matters as well as to cancel a lease agreement and recover any prepaid rent, deposit and postdated cheques. The first step is to file a complaint seeking the required relief in accordance with the Civil Code. There are a number of documents required and formalities to follow. Prior to filing the complaint, you will need to visit a typing centre to prepare the appropriate documents and complaint in Arabic and have any supporting documents translated into Arabic. Ensure that all details are fully and correctly set out in the complaint, including a request for the landlord to pay the costs incurred by the tenant and any costs of the proceedings. Should the loss be remedied by the landlord, the lease agreement will not be cancelled and only a claim for compensation for the period of the loss of enjoyment, such as a rent reduction, can be claimed.

Upon payment of fees (3.5 per cent of the yearly rent, limited to a maximum of Dh20,000), a date will be set to hear the complaint, which should be within 30 days of filing. The committee will first try obtain an amicable resolution. If this is not possible, the committee will adjudicate on the complaint. There are specific regulations concerning a landlord not attending the hearing, but the committee can still reach a decision despite the landlord’s non-attendance.

The judgment will clearly state the decision and stipulate the terms of the cancellation, including any repayments, the return of cheques and an order regarding any costs awarded. The judgment is subject to an appeal within 15 days, however thereafter the decision is final and is executable.

Can a tenant stop payment of uncashed rent cheques?

The filing of a complaint does not invalidate postdated cheques issued to the landlord. Should a postdated cheque be due prior to the date of the hearing, the tenant may ask the Dubai Rental Committee to instruct the landlord not to present the postdated cheque until the hearing is finalised. This would act as an interim measure, so the tenant is still not authorised to stop payment and should ensure that there is sufficient funds in the event the landlord presents the cheque for payment. This will avoid unnecessary criminal prosecution.

Conclusion

A rather untenable situation may arise where a tenant has to pay for a new apartment, while still having financial obligations under an existing lease pending cancellation. In such a situation it is advisable to get advice from a legal practitioner, especially if the landlord is absent and there is a possibility of criminal prosecution.



Source: John Peacock, Special to Property Weekly

For Rent

 

View more properties

For Sale

 

View more properties