All About the DIFC Leasing Laws in Dubai

Leasing property in DIFC might seem rather easy, but if one looks deeper, one will see many rules, requirements, and conditions. Imagine you leased your ideal office in DIFC just a few months ago, but after that, a part of the lease you didn't fully understand presented a problem. It can be an unexpected service charge or restrictions on property modifications. Suddenly, your cost-effective decision isn't so economical anymore. These problems show why knowing DIFC leasing laws is necessary. Here's what you need to know.

What is the DIFC Legal Framework?

DIFC operates as an independent jurisdiction within Dubai, governed by its laws and courts. Unlike the UAE's civil law system, DIFC follows common law principles. The DIFC Real Property Law (No. 10 of 2018) governs all property transactions, including leases. This law protects the rights of the lessor and lessee. Apart from that, the law also has clauses to resolve disputes among the parties. The law states:

• A lease must be written and clearly outline key details, such as the lease term, the rent amount, payment dates, how the property can be used, and the identities of the lessor and lessee.
• A lessee cannot use the leased property for illegal activities or purposes other than the landlord has permitted.
• If a lessee wishes to use the property for any other purpose, they must obtain written approval from the DIFC.
• Rent must be paid on time as stated in the lease.
• The property must be returned in its original condition at the end of the lease.
• The lessor must ensure the lessee can use the property without disturbance, cannot cut off utility services, and must pay charges like community and utility fees.
• Lessors can only enter the property with two days' notice unless they cannot reach the tenant, in which case they may enter without notice.

Maintenance Obligations

Under DIFC leasing laws, tenants (lessees) and landlords (lessors) are responsible for property maintenance. Tenants should carefully use the property and common areas, such as art galleries and bars, to prevent significant damage. They are not responsible for damage caused by the landlord's negligence. 

Landlords should maintain the property and complete all items on a maintenance checklist. They can give a notice to the tenant for regular maintenance, and if the tenant does not follow that, the landlord can undertake the maintenance work and recover the cost from the tenant. 

If the tenant thinks the notice is unreasonable or the cost is unfair, he may appeal before the DIFC court within 20 days.

Lease Termination Rules

Under DIFC law, leases can be terminated under specific conditions to ensure a fair tenant-landlord relationship. A landlord can terminate the lease if:

• The tenant violates the agreement and does not fix the issue within 30 days of receiving a written notice.
• Does not pay rent 30 days after it is due.
• Vacates the premises for over thirty days.
• Causes significant damage or passes away.

The DIFC court can also cancel the lease on various grounds, for instance, if the tenant fails to fulfil the duties of maintenance or payment, becomes insolvent, or uses the property against the law. On the other hand, tenants can request the lease cancellation if the landlord violates the agreement and fails to address written notices within 30 days or if the property is not maintained or fit for its intended use.

Practical Tips for Leasing in DIFC

When leasing in the Dubai International Financial Centre (DIFC), taking a few practical steps is important to ensure everything goes smoothly.

• Hire a legal expert who knows the ins and outs of DIFC laws.
• Take time to understand every clause before signing.
• Allocate time and budget for registering your lease with the DIFC Registrar.
• DIFC laws can change, so stay updated on any changes that might affect your lease.

Conclusion

Leasing property in the DIFC is difficult, but knowing the leasing laws well can help turn these difficulties into opportunities. Understanding the legal rules and important clauses will help you make decisions that fit your business goals. Whether you are a multinational company or a new business wanting to start in Dubai, learning DIFC's leasing laws will make the leasing process easier and safer.

Frequently Asked Questions

What happens if the landlord wants to increase my rent?

If your landlord wants to increase the rent, they cannot do so before your lease ends. If they plan to raise the rent for the next lease period, they must inform you at least 90 days before your current lease expires.

Can I sub-let my lease without the landlord's consent?

You cannot sub-let your lease without the landlord's consent. To sub-let, you, the landlord, and the person you want to sub-let to must all sign a sublease agreement and submit the required documents to the DIFC Registrar.

Do I have an automatic right of renewal?

No, you do not have an automatic right to renew your lease. If you want the option to renew your lease for another term, it must be clearly stated in the lease agreement.

How do I handle a dispute with my DIFC landlord?

If you have a dispute with your DIFC landlord, you can take it to the DIFC Small Claims Leasing Tribunal, which handles rental disputes up to AED 1,000,000. To file a claim, you will need to pay a fee of 5% of the total amount you are claiming.