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02 March 2024

Million-dirham trap: MFR property scam drawing to painful close

By Majorie van Leijen

It's almost a year after tenants and landlords - both engaged in contractual agreements with real estate company MFR Properties - first came face to face.

It was not a pleasant occasion, as both were victims of one of Dubai's biggest real estate scams in years.

MFR Properties, which was eventually shut down by the Dubai Land Department, followed a subletting scheme. They would let property from the owner against four cheques, and then sublet it for lower amounts against one cheque.

By the time landlords wanted to encash their second or third cheque, the company had insufficient funds and the MFR cheques bounced.

Meanwhile, tenants had paid their annual rent in one cheque to MFR and demanded they be let to live in the property for a year. Landlords said the rental cheques had bounced, and anyway, the property was not rented out to the tenants, so they had to leave.

Landlords and tenants - both duped by the scam - were left to fight it out while MFR' management were imprisoned or fled.

Today, most of these victims have either concluded or are in the final stages of lengthy Rent Committee hearings. Needless to say, these cases did not bring the two parties closer together, and resentment is the overall feeling among the parties involved.

A and I, a married couple of Indian nationality is staying in a hotel in Ajman. Two days ago they left their apartment. According to the Rent Committee they could be evicted, and that is exactly what the landlord did.

But the couple is furious. "We asked the landlord to give us some time to vacate, because finding a new apartment and moving there may take up to 4 days. However, he neither gave us a written notice nor the time we requested and we were literally kicked out of the apartment in our nightwear and without having brushed our teeth," tells the wife.

The judgment of the Rent Committee in their case was in favour of the landlord, who had the permission to evict the tenants. "When I signed the contract, I added a clause that the property could not be sublet. In the end, this is what happened, so I think this is why the ruling was in my favour," tells the Lebanese landlord of the one-bedroom apartment in Jumeirah Lakes Towers.

"The hearing was three weeks ago, after which I received a written notice. I sent this notice to the tenants, but they refused to accept the judgment and they failed to move out. I asked the Rent Committee to help and they sent people to force them to leave."

The case described is not the only one where tenant and landlord parted their ways with resentment. MC, who owns a studio apartment in Discovery Gardens just got his apartment back. However, the tenant was permitted to stay until the end of his contract by the Rent Committee.

"The judgment was in my favour and I was permitted to stay in the apartment until February, I have just moved out," tells BA, the tenant. Although his contract with MFR extended into this year, the contract between owner and MFR lasted only until August, another common feature of the subletting scheme of MFR.

"I honestly do not understand why the judgment was in the tenants' favour and not in mine," comments MC.  "I asked for a clarification, but it was not given. I was told that MFR had to pay for the 6 months extension period of the rent, but MFR fled and never attended the hearing.

"I just spent over Dh10,000 on the case, public notices, printing of documents and so on, in addition to the Dh30,000 that I lost in rental income. But it is not only the money that I am frustrated about. I spend hours and hours waiting, going back and forth to show up with different documents, publishing notices etc. Now I am supposed to submit the judgment to the court in order to regain my money from MFR, but I do not know if I have the energy left."

SIR knows what MC means. In fact, the two met in the Rent Committee office, and they became friends. Their cases are similar. However, the Rent Committee ruled in favour of SIR, who owned an apartment in the Greens.

"I think the ruling was in my favour because at the time I started the case the contract had already expired. I think I was extremely lucky," said SIR. His tenant moved out, and he is now waiting for a verdict of the court.

"I was told that I might get my money back if the money is there. There is a deposit of Dh5 million that MFR paid to get their licence. Maybe we will get paid from these funds."


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