Abu Dhabi, UAEWednesday 17 July 2019

Homefront: 'Can a landlord charge two month's rent for breaking a contract after a week?'

The Dubai resident never moved into the home due to a personal issue

The Dubai tenant has offered to pay a one-week penalty, which has been rejected by the landlord. Pawan Singh / The National 
The Dubai tenant has offered to pay a one-week penalty, which has been rejected by the landlord. Pawan Singh / The National 

I signed a new tenancy agreement earlier this month, with the tenancy period due to start two weeks later. However, I then had an unforeseen situation involving my son's schooling and immediately informed the agent and landlord that I needed to withdraw from the deal. I also requested the return of my post-dated cheques. Because I have not received the keys to the new place, nor processed the utilities or registered the Ejari, I thought it would be easy to resolve. However, the landlord is telling me to pay two month's rent otherwise he will not return my cheques or cancel the agreement. I know I signed a legal document but can he demand this? I have not even entered that apartment. I have also not been given the original contract by the agent. Due to my personal situation I cannot go ahead with the contract and that is why I informed them in advance. I told the landlord, I would pay him penalty charges for the first week - from the date I signed until the date I alerted them that I could not go ahead, but they are refusing to agree to that. They want the two months' rent. Can you provide clarity on this? AE, Dubai

It is regrettable that you are not able to continue with your rental contract but I have to add that in this situation the landlord has done nothing wrong. You have signed a legal contract and in doing so the agreement is in place. The landlord in good faith has stopped showing his property to other prospects, so you not wishing to carry on now leaves him out of pocket. For this reason he is entitled to some form of compensation.

The contract obviously states a two-month penalty but I would argue that this should only be triggered if you want to terminate early after you have moved in. I understand your point that the contract has not begun yet but I maintain that the landlord is entitled to some form of remuneration. I believe his stance of two months compensation is a little optimistic. My advice would be to continue to mediate to try and come to some sort of an agreement. If all fails you will have no alternative but to file a case at the Rental Dispute Settlement Committee given the landlord has your cheques and could try to cash them

You have to take action against the landlord for unreasonable behaviour. The judge will decide the outcome but I believe that as you have already tried to offer compensation for the period November 1 to 7, this will hold you in good light.

Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for 34 years in London and Dubai

The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com

Updated: November 22, 2018 08:02 AM