Author(s):Salah Salem,Several

TENANCY LAW OF ABU DHABI AND ITS AMENDMENTS (Updated October 2019)

(This article was updated on 7 October 2019)

Tenancy Law is one of the most important aspects of societies' life by means of which individuals' rights and duties are determined. Besides, it also sets a guiding principle for interactions among individuals in general and for resolving disputes thereof in particular. Tenancy law is considered to be the backbone of every individual’s daily life as it is a tool regulating tenants’ and landlords’ (collectively referred to as Parties) transactions through tenancy executed contract. Further, tenancy law has been amended from time to time to bring it in line with current circumstances in addition to the market and social demands thereof.

In this article, our team of lawyers in Abu Dhabi seek to accentuate the tenancy law of Abu Dhabi; its latest amendments and further regulations setting out the obligations of the landlords and tenants per terms of the law.

Tenancy law was not exclusively set out in single legislation or act in the emirate of Abu Dhabi. However, we may say that it is a group of laws regulating the rental relation between the Parties either for residential, commercial or industrial purposes by means of establishing certain mechanisms. It also outlines all procedural steps surrounding these collaborations between the contractual parties as well as setting out the penalty for going against the rules already laid down.

In 2006, Abu Dhabi Law Number 20 was issued to regulate the relation between landlord and tenant on matters such as increasing rental prices and evicting the tenant from the property. Before the amended Law Number 4 of 2010, landlords could not demand tenants to vacate the rented property upon expiration of their tenancy contract. However, circumstances have changed after the below amendments.

The main amendments to the law number 20 of 2006 (the Tenancy Law) include the following:

Abu Dhabi law number 4 of 2010;

This law entitled the landlord to seek eviction of the tenant from the property upon expiration of their tenancy contract and further the landlord may also refuse renewal of the contract. A rent cap of 5% was applicable; however, tenants were subject to a 5% increase in rent upon renewal of the contract without previous intimation to the tenant. This 5% cap is removed due to further amendments.

Head of Judicial Department Resolution Number 10 of 2010 on Lease Dispute Resolution Committees and the applicable procedures before such committees

Under the provisions of law, a Dispute Resolution Committees (the Committee ) will be formed, where the committee will be chaired by a judge. The Committee will have the power to urgently resolve the matter arising out of the lease relationship between the landlord and the tenant and to settle temporary procedures submitted by either party. The Arabic Language will be used before the Committee, and the Committee will hear the claims and defenses of litigants, witnesses, and any other person, who is ignorant of the Arabic language through an interpreter.

Abu Dhabi Executive Council number 4 of 2011 on rules and procedures of registration of tenancy contracts in the emirate of Abu Dhabi :

Abu Dhabi Executive Council number 4 of 2011 introduced rules and procedures for landlords to register their tenancy contracts at the Abu Dhabi Municipality (the ADM). The resolution introduced a system upon which the ADM establishes and keeps a registry of tenancy contracts including all data related to the leased property which is known as the ADM’s tawtheeq system. Besides, all tenancy contracts existing or entered between the parties after the implementation of this resolution shall be registered at the ADM. The tenancy contracts must be in English and Arabic or only Arabic language while registering it with the Tawtheeq registry system of the ADM.

Considering the above provisions, the ADM, shall only consider tenancy contracts registered under the provisions of this resolution, any transaction requiring a tenancy contract shall not be accepted and shall be dismissed if the contract is not registered in the tawtheeq registry system of the ADM. The resolution applies to all residential, commercial units and industrial units.

Administrative Resolution Number 12 of 2012 on Controls of Occupancy of Housing Units in the Emirate of Abu Dhabi;

Housing property is defined under the law as the property, or any part thereof prepared for the lease and use it as domicile that provides a person with residence, living, basic daily life needs including a bathroom, kitchen and at least one bedroom. Also, the Resolution prohibits the occupancy of one housing unit by two families.

Administrative Resolution Number 13 of 2012, on Executive Resolution Law 1 of 2011 on Regulation of occupancy of Housing Units and use of property allocated for citizens in Emirate of Abu Dhabi:

The Resolution does not allow the following buildings to be rented out:

Buildings built in farms and manors; Public housings and other additional housing units; Public housing that has been demolished and rebuilt upon a license issued by the government; Housing units built on residential lands that have been licensed upon the owner’s request for special social causes

Abu Dhabi Executive Council Decision issued law number 32 issued in 2012: This Executive Council Decision removed the rent cap of 5% and granted landlords the liberty to raise the price as per the market rates for their interest. However, the Tenancy Law also provides for rules concerning notice periods required in case the landlord seeks to evict the tenant or seeks to raise rental amount or any modifications in the contract. The landlords must notify the tenant by giving two months notice by issuing an evacuation/eviction Notice or a prior note stating the proposed modification in the contract and indicating the specific alteration the landlord desires to apply. For commercial properties, the notice period is deemed to be of minimum 3 months. It is pertinent to note that in case the landlord does not serve an eviction or rent increment notice during the above course of time before renewal, the contract shall be deemed to be automatically renewed with the same price and same terms. President of the Executive Council’s Resolution Number 32 of 2012 on Premises Lease Contracts: The Resolution mentions that the annual increment of the rental specified in the lease contract as mentioned under Article 16 of Law Number 20 of 2006, shall not exceed five percent (5%), provided that the rental should be evaluated as of 10 November 2013 as agreed between both the parties. Administrative Resolution Number 97 of 2012, on Mechanism of Registration of Lease Contract in the Emirate of Abu Dhabi: The Administrative Resolution Number 97 of 2012 has laid down the provisions concerning the mechanism related to the registration of lease contract in Abu Dhabi. The Resolution authorizes the Abu Dhabi Municipality to prepare a special record to register lease contracts which must contain the data related to the property used for residential, commercial, or industrial purposes as well as the records of the occupants for the residential property plus the landlord and tenant’s data. The Municipality will also prepare a unified manual on procedures required for registration and can amend it when it deems necessary. The Municipality is also authorized to collect registration fees of lease contracts subject to the following: • In the case of replacement of the tenant in the same land premises, the current contract shall terminate, and both the parties shall make a new contract upon the payment of fees; • Registration fees for the property and units should be made in one payment as follows: AED 1,000 per building on one lot of land and AED 5,000 per lease unit; AED 1,000 for all villas built on one lot of land and AED 5,000 per lease unit. • The prevailing lease contracts made before the issuance of this Resolution shall be exempted from the registration fees where their fees are to be only collected upon renewal. Abu Dhabi Council Resolution Number 13 of 2016 on housing fee: The Abu Dhabi Council issued a Resolution Number 13 of 2016 in February 2016 whereby the Municipality will charge a 3% housing fee on an annual rent. The fee will be charged on all the housing units in Abu Dhabi. Also, the responsibility to pay the housing fee will be on the tenants and will not be considered as services charge which is payable to owners of the building. j Abu Dhabi Council Resolution Number 14 of 2016 on Lease Agreements of Premises concerning the reintroduction of the annual rental cap of 5%: The Tenancy law introduced a 5% rental cap on the lease agreement, however, the cap was abolished on 9 November 2013, but the cap has again been reinstated under the Abu Dhabi Council Resolution Number 14 of 2016 with an effect from 13 December 2016. Under the Council resolution, both the parties can fix the rent for the lease term, upon agreement, however, if the rent is not decided then the landlord has the authority to increase the rent annually. Tenancy Law amendment of 20 November 2017: The resolution states that the decision of the Abu Dhabi Rental Disputes settlement committee will be final and binding upon the parties if the claim amount in the dispute is below AED 50,000 (UAE Dirham fifty thousand). However, if the claim amount exceeds AED 50,000 (UAE Dirham fifty thousand), the parties can file for an appeal in the Court of Appeal within 15 days starting from the next day of judgment or from the next day of judgment notification, if the judgment is an absent judgment. Additionally, the parties also have the right to file an appeal before the Court of Cassation within 30 days from the next day of the appeal judgment or from the next day of judgment notification if the judgment is an absent judgment, subjected that the claim amount exceeds AED 300,000 (UAE Dirham three hundred thousand).

Key Notes:

1. Tenancy Period:

The lease contract shall be valid to the end of the period specified in the contract and the period may be renewed for additional period/s as agreed between the parties.

If the contract term expires and the tenant keeps making use of the leased premises without objection from the landlord, then the contract shall be deemed to renewed for the same period and same conditions.

If either party wishes not to renew the contract; or to adjust the conditions, such party shall notify the other party in writing, two months prior to its termination for residential properties and two months prior to termination of the contract for commercial industrial or professional properties.

The landlord may not ask the tenant to vacate the leased property on the basis of the expiration of the period before 9th November 2012 (specified date), and this date may be renewed upon a decision of the president of the Executive Council as he may deem appropriate.

The committee has the right to decide on vacating the leased premises before the date specified if the occupation of the leased property by the tenant causes gross damage to the landlord provided that the tenant has made use of such premises for not less than two (2) years. In such case, the landlord shall not grant more than six (6) months to vacate the leased property date of resolution of the Committee.

Upon the decision of President of the Executive Council, rules and procedures on registration of lease contracts related to property existed in the Emirate shall be developed.

2. The following procedures must be adhered to:

Ensure that the landlord has registered his property at ADM by reviewing the registration certificate.

Seek the tenancy contract for your review. Examine all terms and conditions especially those pertaining to tenancy period, rental amount, maintenance and other fees.

Eventually, it should be noted that in case a dispute occurs between the landlord i.e. owner or real estate/property management company and the tenant, it would not be possible to submit dispute application to the Rent Dispute Settlement Committee unless the tenancy contract is registered with ADM tawtheeq system. Accordingly, it is advisable to make sure that the tenancy contract is signed and registered. To state in précise, the Tenancy Law is a security for the rights of both the parties whether the party is the landlord (owner/ property management company) or the tenant.

Abu Dhabi Executive Council Decision issued law number 32 issued in 2012:

This Executive Council Decision removed the rent cap of 5% and grants landlords the liberty to raise the price as per the market rates for their interest. However, the Tenancy Law also provides for rules concerning notice periods required in case the landlord seeks to evict the tenant or seeks to raise rental amount or any modifications in the contract. The landlords must notify the tenant by giving two months notice by issuing an evacuation/eviction Notice or a prior note stating the proposed modification in the contract and indicating the specific alteration the landlord desires to apply. For commercial properties, the notice period is deemed to be of minimum 3 months. It is pertinent to note that in case the landlord does not serve an eviction or rent increment notice during the above course of time before renewal, the contract shall be deemed to be automatically renewed with the same price and same terms.

Abu Dhabi Law Number 13 of 2017 regulating Court Fees in the Emirate of Abu Dhabi:

For litigating disputes between Landlord and Tenant (2018 and 2019), the above law applies which provides that the court fees payable by a party is set at 5% of the annual rent or; AED 40,000 whichever is lower. Also, the earlier law provied that landlords cannot increase the annual rent by more than 5%, (Law Number 14 of 2016, referred above) but now, Landlord must issue a two months written notice (for residential) and three months written notice (for commercial properties). In terms of procedures to be followed before Abu Dhabi Lease Dispute Settlment Centre, Law Number 25 of 2018 issued by Abu Dhabi Judicial Department applies.