Lost your job in Dubai? How to exit rental contract without penalty

Question: I signed my rent contract in January this year in Dubai but lost my job this month. I cannot afford the rent anymore. Is there any way that I can end my contract without paying the two-month penalty on humanitarian considerations?

Answer: Pursuant to your query, the provisions of the Dubai land laws and the UAE civil transaction law are applicable.

In the emirate of Dubai, the landlord–tenant relationship is governed by a written lease contract which includes details such as property details, purpose, lease term, rent, payment method, and information of the property owner and the tenant. All such lease contracts and any amendments must be registered with RERA to be legally valid. This is in accordance with the Article 4 of the Law No. (33) of 2008 Amending Law No. (26) of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai:

“1. The contractual relationship between a Landlord and a Tenant will be regulated by a Lease Contract which includes a description of the leased Real Property that leaves no room for uncertainty; the purpose of the lease; the term of the Lease Contract; the Rent and its payment method; and the name of the Real Property owner if the Landlord is not the owner.

2. All Lease Contracts related to Real Property which is governed by the provisions of this Law, and any amendments thereto, will be registered with RERA.”

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A lease contract is valid for the term, it may be terminated if both a landlord and a tenant mutually agree to do so, or in accordance with the provision of the law. This is in accordance with the Article 7 of the Law No. (26) of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai:

 “Where a Lease Contract is valid, it may not be unilaterally terminated during its term by the Landlord or the Tenant. It can only be terminated by mutual consent or in accordance with the provisions of this Law.”

Further, once a contract is valid and binding, neither party can unilaterally cancel or modify it; any change or termination is only permissible through mutual agreement between the parties, by an order of a competent court, or where expressly allowed under a specific provision of law. This is in accordance with the Article 267 of Federal Law No. (5) of 1985 concerning the issuance of the civil transactions law of the United Arab Emirates:

“If the contract is valid and binding, it shall not be permissible for either of the contracting parties to resile from it, nor to vary or rescind it, save by mutual consent or an order of the court, or under a provision of the law.”

In accordance with the aforementioned provisions of the law, a tenant may request the owner of a property for an early termination of the lease contract. However, the termination of the lease contract would require the mutual agreement between the parties. Any such termination is subject to the terms of the lease contract. If the lease contract provides for an early termination penalty, the tenant may be liable to make such payment as the penalty for the early termination of the lease contract unless the landlord agrees to waive or reduce it by mutual consent.

Applicable laws:

• Law No. (33) of 2008 Amending Law No. (26) of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai.

• Law No. (26) of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai

• Federal Law No. (5) of 1985  concerning the issuance of the civil transactions law of the United Arab Emirates 

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.

Disclaimer: The information provided above is intended for general guidance and does not constitute legal advice. It is recommended to seek formal legal counsel.