Dubai landlord faces dilemma after tenant’s cheques keep defaulting

A property investor is disheartened by a cheque bouncing tenant that then won a rental dispute between the two of them. Mario Volpi advises.

A Dubai landlord is having problems with his tenant. Mario Volpi is here to help. Sarah Dea / The National

I have invested in many properties in Dubai and most are fine except for one asset. I had leased a unit during the recession period in 2011 when the rents were substantially lower. Since 2011 I have renewed the contract with the tenant below the rental index rate. However my dilemma with the tenant is that most of his cheques default. This year I was firm during the renewal process and sought to increase the rent above the index and demanded that the cheques arrive on the due date. The tenant reverted back a with rental committee hearing and he has proven that he didn’t receive notice of the rent increase within 90 days. I explained to the hearing that my problems were the tenant defaulting on his cheques and non adherence on tenancy terms for payment. I have now decided to sell this property and serve him 12 months notice. Having a bad tenant has ruined my investment and I feel totally neglected by the law. Do you have any recommendations for my case? HA, Dubai

Your story does give clarity to situations that some landlords find themselves in. It is not always just tales of bad landlords looking to unlawfully evict their tenants just for material gain - your situation balances out these stories that sometimes it is tenants too who make life difficult for legitimate landlords.

This said, the law does appear to favour tenants in the majority of cases but do not lose heart. Be considerate and also prepared to negotiate to arrive at some sort of compromise as this always seems to be the key to better landlord/tenant relations.

If a tenant does not pay his rent on time or the cheque bounces, then legally you have to give an additional 30 days’ notice to him to remedy this situation. If this deadline is missed, then the law states you can evict the tenant. The law has to be taken into consideration at all times by all parties so if you wish to end your investment by selling the property this action has to be properly executed by giving him the statutory 12 months notice via notary public or registered mail. Remember that if you decide to keep the property and evict the tenant for reason of your own use then you will not be allowed to commercially relet the property to anyone else for a period of two years from your current tenant’s eviction.

I am looking to invest in a studio or a one-bedroom apartment, preferably in JLT or Dubai Marina. I am also looking at already rented properties, so:

1. How do I go about it if there is a tenancy contract with the existing landlord and rental cheques have already been paid by the tenant?

2. Will there be a new tenancy agreement between the existing tenant and myself or will the old tenancy agreement hold?

Also what are your thoughts on the pros and cons of investment in already rented properties? VR, Dubai

If you are buying a property with a tenant in situ, then part of your buying process would include the rental amount which will be paid back to you pro-rata by the seller. This would also include any deposit that the tenant paid too.

After you transfer the property, make an appointment to visit your tenant to get to know one another. With regards to the existing contract, please note that when buying a property with a tenant residing in the property, you take over the existing contract with all the same terms and conditions as before. Remember that any changes to a contract have to be communicated by either party, giving 90 days’ notice before the expiry of the agreement and then with the consent on both sides.

Mario Volpi is the managing director of Ocean View real estate and has worked in the industry in the emirate and in London for the last 30 years. Send any questions to [e-mail]

The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek appropriate independent legal advice

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