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Dubai realty broker 'loses' Dh3 million

Those who function without a licence can be punished by a warning; or a fine not exceeding Dh5,000; or a ban. (File)

By Mohammed El Sadafy

Real estate brokerage firms require licences from the authorised department as stipulated by the Director of the municipality to function, ruled the Dubai Court of Cassation in a new principle.

The court pointed out in its principle that real estate brokers also require a licence to function. And those who function without a licence can be punished by a warning; or a fine; or a ban.

Based on these principles, deals made by unauthorised brokers (those without licence) are invalid and are not entitled to commissions, the court said.

The principles were issued in a case wherein, a real estate broker filed a case before the civil court against a company seeking commission.

The Court of First Instance dismissed the case , where the broker requested the court to compel the company to pay him Dh2,925,198 as commission in return for selling 5,085 square feet of plots for the company.

The broker carried out the deals without obtaining his commission agreed with the appellant company.

He moved the Court of Appeal, which also upheld the lower court’s judgement. So the real estate broker appealed before the Court of Cassation, which ruled to dismiss the appeal.

The Court of Cassation based its ruling on local Order No. 32 of 1987 of the ‘Organisation of work of real estate brokerage  in buying, selling and renting real estate’.

The local order stipulates that the broker should obtain a licence issued from the licensing section at Dubai Municipality, before practicing real estate brokerage.

The local order also stipulates punishment of warning, or a fine not exceeding Dh5,000 or a ban between three months and not exceeding one year to brokers who practice without licence.

The court also confirmed that the rule is a public order, and violating it makes contracts invalid.

Similarly, the invalidity of the contract also includes the date of issuance of the contract signed between the parties.

Therefore, in this case, the broker is not entitled to any commission because the contract is false.

And because the terms in the contract are invalid, both the parties have no  obligations or commitments towards each other since the date of signing it.

The court ruled that as the broker hasn’t obtained a real estate brokerage licence from the competent departments, the appeal is rejected.