MFR Properties: Million-dirham trap

MFR owner speaks exclusively to Emirates24|7 with “promise to pay all”; DLD suspends MFR licence, begins probe

The Dubai Land Department (DLD) has begun an investigation into MFR Properties and has suspended the company’s licence, revealed the Real Estate Regulatory Agency (Rera).

Millions of dirhams belonging to landlords and hundreds of frustrated, angry and desperate tenants are at stake.

Rera issued a statement to Emirates 24|7 which stated: "The Dubai Land Department has immediately investigated the issue and started looking into the submitted complaints. 

“As a precautionary measure, DLD has suspended the license (of MFR) and is looking into complaints in order to preserve the rights of all parties."

The case, however, is complicated and the turn of events so far, opaque.

Uniquely, parties who are normally on the opposite sides of the negotiating table – owners, commission brokers and tenants – have all been hit and are now uniting to seek justice.

The accusation is that they have been cheated by MFR and want their money back.

A recent meeting of the aggrieved parties was held in a mall to rally those affected and come up with a more focused plan of action.

A web forum has been created to discuss what action can be taken.

The problem appears to be widespread and new victims are popping up by the day.
 
The Property Owners

Sahil Khosla, one of the property owners affected, explains how he got hit. Last year, he authorised MFR Properties to sublease his property.

As agreed per contract, the sublease was to be paid for in four cheques.

However, the third cheque bounced. He was informed by the bank that the MFR account was closed.

Mohammed, another landlord, encountered a similar problem. “My property is a villa in Springs 14. I bought this villa in July 2011, and the agent I bought it from referred me to MFR to put it on rent.

“They offered me Dh160,000 with payment in four cheques.”

Similar to Sahil, the first two cheques were cleared, but the third bounced.

“I contacted my commission agent and she told me that she will get the cheques exchanged from MFR. I kept on following up for two weeks, but they kept on saying ‘tomorrow, tomorrow’. Eventually, my agent gave up and told me to go to the police.”

Affected landlords said not only was this bank account of MFR closed, but they also found out that MFR’s office had closed.

They said attempts were made by many to contact somebody responsible for the financial transactions of MFR, to no avail as even the mobile phones of MFR agents were turned off.

Some landlords took the initiative to visit the tenants living in their properties.

But they found out that these tenants were unaware of the lack of payments, as they had paid the rent in ‘one’ cheque.

Moreover, tenants paid a lower rent than the sum of the four cheques their landlord had contracted to. In some cases, the rental period exceeded that of the period the landlord had initially agreed on.

The Tenants

"My landlord visited me and informed me that I did not have the right to live in his property, because he did not receive the rental payment for the third quarter.

“In addition, my contract period exceeded his. I could not possibly move out, because I already had to borrow money in order to pay my current rent in one cheque.

“I sent my wife back home and my landlord is now trying to find out what can be done," explains a tenant who rented a property through MFR.

He does not wish to be named in this article.

“I think we were not supposed to know the person living in our property,” says landlord Sahil.

“When MFR subleased out my property I asked for a copy of the tenant’s passport. Knowing who my tenant is now, this seemed to be a bogus passport copy. The person identified on the passport is a complete stranger,” he adds. 

According to the contract MFR signed with these property owners, MFR is the tenant leasing the property, which it then subleased with the consent of the owner.

However, a different contract is signed with the tenant and this contract was allegedly never shown to the owner.

Legally, the landlord has the right to evict the tenant when payment is not made.

However, in these cases the person inhabiting the property can claim not to be responsible for the failure of payment.

The Commission Brokers

“I work as a real estate broker; we used to advertise MFR properties,” says Azam Sultan. “We work on a commission basis, and MFR owes me Dh80,000 in commission.

“I got in serious financial trouble due to the lack of payment, because I rely on my commission as an income.

“The sad thing is that I was part of it,” Azam tells. “I was advertising this property and I noticed how the lease prices were always a little lower than the market rate.

“Once I asked about it, and I was told that this was to stimulate the cash flow, so MFR could invest in buying up complete buildings. At that time it made sense to me.”

The Accused

The man behind MFR is Mohammad Fahad Razaq and he spoke to Emirates 24|7 last Sunday (February 26). At the time of filing this report he was not contactable.

Razaq had been arrested earlier by his own admission.

Last Sunday, Mohammad explained his side of the story.

“For a while we have been unable to clear cheques that were due to landlords and other parties. This is due to a shortage of funds. My business partner took the money and left the country,” he told Emirates 24|7.

“Due to issues with our local sponsor, administrative hurdles and internal issues, we have faced serious problems with all our clients have had no choice but to bounce numerous cheques.

“We would like to notify all clients that have dealt with MFR in the past and who are currently in contract with us to stay calm and we will make sure that everyone’s payments are done.”

“We have a local sponsor again and bit by bit we will be able to pay back all clients,” he claimed.

Mohammad says he is aware of the hurdles he is facing.

“There are several cases against me. But I am not running away. If I wanted to flee, I would have done that a long time ago. I am here and I am willing to solve my problems.

“I was arrested a month ago because I owed two companies a total amount of Dh1.8 million. They brought me to court, but I paid them and I was released,” Mohammad says.

"I want to win back the trust of the market. I want to stay in business and clear it from its bad reputation. In the future I will not engage in brokerage deals anymore. I will focus on buying and selling property.”

Asked about the discrepancy in tenancy periods, Mohammad says he is willing to sit down with both landlords and tenants to resolve this issue. “I will also pay for the period of overlap if that is required,” he says.

He claims not to know anything about the bogus passport copies property owners say they have received from MFR. “I have never given anybody any passport copy.”

Pay Back?

On Wednesday, February 29, Mohammed received a message from a representative of MFR, telling him he would receive his money on that day.

“I received the money,” said Mohammed, a couple of hours later. “I am starting to believe that he is genuinely intending to pay us all back.”

Also Azam keep his hopes high. “I do believe I will get my money from MFR. He cannot go anywhere and I think he wants to clear this up. I will just be patient.”

Seeking Justice

Not everybody has been able to sit still and wait. Currently, there are several police cases filed reporting the lack of payments, naming Mohammad Fahad Razaq as the responsible owner of MFR.

“I filed a police report in order to bring the case to court,” says Sahil. I am currently working with my lawyers to see which steps we can take.”

Julia from Poland has gone through the effort of bringing her case to court.

“I am opening a case against both partners. They are both responsible, and I am about to be ready to open my case,” she says.

However, her hopes aren’t very high.

“I do not have a lawyer, because I could not afford one. That would only cost me more money.

“And I think what MFR has done might turn out to be completely within the boundaries of the law. After all I authorised them to sublease my property. All my efforts might prove useless; I might not get my money back.”

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