property law

|

October 14, 2020

|

1076 views


| Your comment matters, please click here to rate article!



With the unprecedented COVID-19 pandemic permeating into the economy leaving a considerably downturned state of liquidity worldwide, the question arises whether lease agreements can be enforced when all other business have come to a standstill?

This article by Property Lawyers of Dubai seeks to explore various provisions made available for commercial and residential tenants during the pandemic and what are the possible relief measures.

egislative & Judicial Provisions

The Government of Dubai, as a relief measure, suspended all eviction judgements and cheque dishonor complaints and actions temporarily in the months of March and April. In its first stimulus package, the government decided that part of the service charges (DEWA) would be mitigated by 10% whether the rent is private or commercial with a pre-payment reduction of 50%. In the second stimulus package, the Free zone Council (association of various free trade zones), including the Dubai Airport Free zone, the Dubai International Financial Center, the Jebel Ali Free zone, Dubai South and the DMCC, has decided to suspend rent payments for a period of six months.

In the case of DIFC, the Dubai Judicial Council has laid out measures like suspension of rent till six months, facilitating payments in installments, refund of security deposits and guarantees and cancellation of fines for both companies and individuals From April to June, retail tenants in DIFC's Gate Avenue, Gate Village and Gate District were not required to pay basic rent.

The DIFC also allowed deferred rental payments with respect to all properties owned by DIFC Investments for a period of up to six months. In the DMCC, tenants benefitted from a waiver of rent for two months for commercial tenants impacted by the Dubai Economy Directive requiring them to temporarily close. Sharjah Asset Management waived commercial rents for all tenants of Haraj and Jubil markets for three months from March.

The Abu Dhabi, Administrative Resolution 92 of 2020 grants tenants in the restaurant, tourism and recreational sectors a refund of 20 per cent of the rent value collected during 1 April 2020 to 30 September 2020.

Relief Claims

The tenants can seek relief through “force majeure“ or “material adverse effect“ clauses in the lease agreements. The protection via force majeure is granted by Article 273 of the Civil Code. The force majeure clause is not exhaustive in nature and the interpretation depends entirely on the wordings of the contracts. Hence, judicial precedents regarding the same differ on a case to case basis. The lessor might try to incorporate a narrow force majeure clause while the lessee would vouch for a broader interpretation.

The tenants can claim “exceptional event“ under Article 249 to argue oppressive performance in order to escape payment. In order to successfully argue oppressive performance, tenants would need to demonstrate that the current events were unforeseen, fall outside of their control and the economics of the current situation are oppressive to the extent that the contract should be re-opened.

The obligation to pay rent ceases under Article 782 of the Civil Code when it becomes impossible for a tenant to have full or partial enjoyment of the leased property. This results in cancellation of the contract which in turn results in any payment obligations ceasing, not a temporary suspension of rent.

What Should You Do?

The landlord may pursue a claim against the tenant for unpaid rent through the Dubai Rental Disputes Settlement Centre. A landlord may also seek eviction under Article 25 of the Dubai Landlord and Tenant Law which permits eviction of the tenant where the tenant fails to pay the rent within 30 days of notice being served.

In order to escape payment and claim relief, the tenants must be aware of the contractual provisions of the lease agreements. The lease agreements must be carefully drafted with the help of legal professionals in order to incorporate relief under adverse circumstances such as the force majeure class If the landlords persist you to pay the rent, you may seek legal advice from top lawyers and approach Rental Dispute Committee and register a complaint.

Related Links


Copyright © of this article is retained by the author and/or other copyright owners. We explicitly grant you permission to download a copy, without any alteration, of this article for personal non-commercial research or study, without prior permission or any charge. This article can be utilized on your website or for marketing, however, we grant you permission to host this article on your website and no other rights. This content should not be altered in any way or sold commercially in any format without prior permission of the copyright holder. During reference of this article, full biographic details entailing the name of the author, his designation, the institute and the publishing date of the article shall be provided.


Client Testimonials

I owe the success of my case to Dr. Hassan's diligent approach. He remained focused, put me at ease and always went the extra mile. Dr. Hassan tirelessly put my case in the best possible light and I cannot thank him enough. I would highly recommend Dr. Hassan - I am grateful to him from the bottom of my heart.

Raphael Lauria
Manager, FME General Trading

Dr. Hassan Elhais is among the best legal consultants I have ever worked with. He has an amazing ability to reduce complex issues into a simple concept that non-legal people can understand. He consistently develops innovative litigation strategies that help us to achieve our ultimate legal goals.

Zhuo Liu
Client

...the extraordinary effort that has been exerted by the staff, and we specially thank Dr. Hassan Mohsen Alhais. Wishing your continues success & excellence...

H.H. Sheikh Saeed Bin
Mohammed Hashir Al Maktoum

I believe everyone should recognize what a difference Dr. Hassan Elhais work has made to people's lives; and especially to our family's life, because we will remain forever grateful to each and every one of his team.

Luis Pozueco
Client

Dr. Hassan Elhais never fears cases that involve exposure and he always gives me his honest assessment of our chances of success, which is invaluable to me.

Bassam Yamout
Director, JM Metal Trading LCC

He aided us not only in providing legal advice but also in all legal issues that required a long term strategic approach to achieve most favorable and optimum outcomes he provided us with high level of professional service.

Philippe Delbecq
Client

Dr. Hassan Elhais is a responsible, reputable counsel who operates to high levels of service.

British Client

Dr Hassan Elhais is responsive, thorough and creative with his advice, and is a valued advisor and legal consultant.

Asma Mattar
Manager, Italian Style

Regardless of the complexity of the matter I know Dr. Hassan Elhais will consider not only legal strategy but also business practicalities in providing advice and litigation options.

Dr. Massimo Hakim
Chairman, Italian Style

I recommend Dr. Hassan Elhais to anyone who says 'I'm in legal trouble'. I was extremely satisfied with the high standard of his work. He has always been there when I have needed him and I refer all my clients, family and friends to him/his firm.

Manish Gupta
Marketing Manager, Express Digital System

Dr. Hassan Elhais was very professional and he listened to my needs. He was very prompt, efficient and always kept me informed. Dr. Hassan Elhais's service was excellent and I would definitely recommend him to friends and colleagues.

James Horsley
British Client

Comments

No comments found.

Leave a Comment

Your email address will not be published. Required fields are marked *

Want to know more?
Then talk to us.


Select your Language:

        

Main Menu

Zoom