Sub-tenants need not have to vacate the property even if the rental contract between the landlord and the tenant has been terminated, says a legal expert.
“Even if the landlord has not approved the sub-lease, and the head-lease is properly terminated, it does not necessarily mean that the sub-tenant must immediately vacate the property,” Shahram Safai, Partner, Afridi & Angell, told Emirates24|7.
A head-lease is a contract between the landlord and the tenant, while a sub-lease is contract between the tenant and the sub-tenant.
This website had reported earlier than hundreds of landlords and tenants have been duped by Shamyana Entertainment and another events and entertainment company in Dubai with the latter sub-leasing these properties. Landlords have been asking tenants to vacate their property, citing they never received any signed agreement with them.
The modus operandi followed by the two companies is the same: The company takes an apartment/villa from the owner and issues three or four post-dated cheques. Verbally they tell the owner that they are renting the property to their own staff, but a clause to sub-lease is added in the addendum. The original contract, however, is not registered on Ejari, which is mandatory in Dubai. The companies then lease the unit to a third person for a rent lower than the market rate, but the renter has to cough up the annual rent in a single cheque.
Safai adds: “It may be appropriate for the sub-tenant to issue a written notice to the landlord refuting the landlord’s right to terminate or to file a case at the Dubai Municipality Rent Committee seeking a declaration that it is entitled to remain in the property until the expiry of the sub-lease.”
Moreover, according to the UAE law, no person should be deprived of his or her home without due process, states the legal expert.
The decision, however, of the Dubai Municipality Rent Committee is final and binding for the landlord and the tenant. The judgment cannot be challenged in the Dubai Courts.
Safai answers our questions on the rights of a sub-tenant and whether landlords should allow sub-leasing.
1. Can landlords ask sub-tenants to vacate their premises since they never leased the apartment to them?
Article 30 of Dubai’s Law 26 of 2007 states that if:
1. A property is subject to a head-lease (between the landlord and the tenant) and a sub-lease (between the tenant and the sub-tenant);
2. The sub-lease was approved by the landlord; and
3. The Dubai Municipality Rent Committee determines that the head-lease is terminated, then the sub-tenant is entitled to remain in the property for the remaining term of the sub-lease, on the terms of the sub-lease.
Article 25(1)(b) of Dubai’s Law 33 of 2008 states that if the tenant grants the sub-lease without the approval of the landlord, the landlord is entitled to follow a specific procedure to evict the tenant and the sub-tenant. In that event the sub-tenant retains its rights to claim compensation from the tenant.
Even if the landlord has not approved the sub-lease, and the head-lease is properly terminated, it does not necessarily mean that the sub-tenant must immediately vacate the property.
It is an important principle of law in the UAE that no person should be deprived of his or her home without due process. If a landlord does seek to evict a sub-tenant, there are various arguments that the sub-tenant can make against eviction.
If a landlord does ask the sub-tenant to vacate the property, the sub-tenant should first establish whether the landlord approved the sub-lease. If such approval was granted, then pursuant to Article 30 of Dubai’s Law 26 of 2007, the sub-tenant should not be evicted.
If such approval was not granted the sub-tenant should still contact the landlord to request confirmation of the reasons why the landlord believes it is entitled to evict the sub-tenant. The sub-tenant’s arguments against eviction are strengthened if the sub-tenant can demonstrate that it is not in breach of the sub-lease and is not responsible for any breach of the head-lease.
It may be appropriate for the sub-tenant to issue a written notice to the landlord refuting the landlord’s right to terminate or to file a case at the Dubai Municipality Rent Committee seeking a declaration that it is entitled to remain in the property until the expiry of the sub-lease.
Is the Dubai Municipality Rent Committee decision final or can be challenged in court?
A decision of the Dubai Municipality Rent Committee is final and binding. It cannot be appealed to the Dubai Courts.
Should landlords allow companies, without property management licence, to sub-lease their properties?
Different types of real estate activities require different types of real estate licences. One such activity is described by Rera as “Leasing and Management of Other People's Property”.
Rera states that this includes “firms engaged in managing commercial, residential, industrial buildings through contracting with the owner in order to re-lease on subcontracting bases”. Various conditions must be met before such a licence is issued. Accordingly, landlords should not permit companies that do not hold the necessary licence to sub-lease their properties.
(The above information is not legal advice and is neither intended to create nor creates a lawyer-client relationship. Neither the writer nor Afridi & Angell are responsible for anyone relying on the above information. You are recommended to take independent legal advice.)