Dubai landlord’s 10% penalty for bounced cheque seems unfair

Landlord demanding a hefty fee for a tenant's bounced cheque mistake is why most renters consider property owners 'greedy', says real estate expert Mario Volpi.

The Dubai landlord is insistent on imposing a 10% penalty on the bounced cheque. Sarah Dea / The National

One of the rental cheques for Dh25,000 I gave to my landlord bounced due to a mistake on my side. I had the amount in a different account number (in the same bank) than the one I gave to him. I called the landlord on the same day explaining the issue and then gave him the same amount in cash the same week. However, he is demanding a 10 per cent penalty of Dh2,500 on the bounced cheque amount and he has this mentioned in the rental contract which I signed earlier. AD, Dubai

The actions of the landlord are precisely why most tenants regard their landlords as “greedy”. You made a mistake, you communicated this as soon as you knew and rectified it all within the same week. Your landlord could have just left it at that but unfortunately for you he has decided to apply a clause in your agreement that allows his behaviour to be legitimised. I have never seen a clause that states 10 per cent of the amount to be paid as a penalty for any returned or bounced cheques; the norm is a monetary figure of anything between Dh500 and Dh1,000. Your relationship with your landlord is clearly not as good as perhaps you thought. If he insists on this amount being paid, I would suggest that you negotiate with him to “waive” this change as it was not intentional, but if he insists on a penalty offer him the normal amounts quoted above.

I was planning to buy a three or four-bed villa or town house but decided to hold back. I believe that the property prices will come down in the second quarter of this year, either because of the oil prices and less people having the capital or because when Dubai Expo 2020 was announced the prices went up a considerable amount. I don't know, so can you shed some light on this please? AN, Dubai

Timing the market is extremely difficult, but I do suggest that if you are buying the property to live in, the time to do it is always now. The reason for this is due to the longevity of the purchase. You are buying to live in, not to sell on quickly, so the timing, while always important, is less critical as markets go up and down eventually. If you are buying for investment purposes, the price is more crucial. The facts are that nobody really knows what is going to happen in the property market, but we do appear to be in a period where prices are softening due to slow transactions, possibly because of all the reasons you mentioned before. Therefore if you do not have to buy now, wait until the summer, when a clearer picture will have formed as to exactly where the market will be heading. One thing is for sure, the market is maturing, which is actually good news for all.

My tenant has recently written to inform me that she does not want to renew her lease at the end of February as she is leaving the country. The tenant and I have a good relationship, and she is leaving on very good terms. I have therefore arranged to sell my apartment and have found a buyer, however, they are requesting a Vacation Notice. Am I obliged to provide this given that the tenant is moving out voluntarily? CH, Dubai

It is refreshing to see that you and your tenant clearly have a great working relationship. During your period as a landlord, you have had time to build up this trust, so when your tenant says she is leaving you are going to believe her. Your buyer, however, does not have the same relationship, so therefore has to rely on more concrete evidence of departure such as the requested vacating letter. This letter will give your buyer comfort and as you have a good relationship with your tenant, I’m sure she will be happy to oblige. In answer to your question you are not legally obliged to provide this but not doing so could jeopardise your sale.

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 past 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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