The robust market conditions have led to tenants choosing to renew their current tenancy contracts to maintain previously agreed retail price and landlords looking to benefit from the market conditions and raising the rents.
Facts
This legal dispute centered around a one-year tenancy contract for a residential villa which spanned from 20/02/2022 to 19/02/2023. The relationship between the parties involved (the landlord and the tenant (our client) was strictly based on this tenancy contract. Under the terms of the contract, the annual rental amount was agreed to be AED 120,000.
Upon the expiry of the initial term, the landlord unexpectedly declined to renew the tenancy contract and provided no valid grounds for his decision not to renew the contract, which obviously was for an attempt to evict the property for better rental value.
Following various attempts to speak to the landlord to sort the matter amicably, which proved fruitless, our litigation team were retained by the tenant to take assertive legal steps against the landlord. On 17th March 2023, we have filed a case before Rental Dispute Resolution Court (RDRC) against the landlord requesting the renewal of the lease contract on the same terms and conditions of the expired one.
Parties’ Arguments
Landlord Arguments:
Following the expiration of the lease agreement, the landlord (defendant) requested the tenant (plaintiff) to vacate the villa. The defendant also indicated that, should the plaintiff fail to vacate the premises, legal action would be pursued to formally evict the tenant from the villa.
Tenant’s (our client) Arguments/Court Proceedings:
- Initiation of Offer to Renew: To manifest the tenant’s sincere intention to renew the lease and commitment to continuity, we initiated an offer to renew the tenancy contract on the same terms and conditions of the expired contract.
- Deposit of Rental Amount: We took a proactive step by depositing AED120,000 with the RDRC. This action was in line with the agreed rental value, demonstrating our client’s readiness and financial commitment to uphold the lease terms.
- Legal Representation for Lease Renewal: We actively represented the Client in registering a case focused on the renewal of the lease. The emphasis was on retaining the same conditions, value, and duration as stipulated in the old contract, ensuring consistency and fairness in the lease terms.
- Submission of a Comprehensive Defense Memorandum: To strengthen our client’s position, we submitted a detailed defense memorandum. This included a comprehensive portfolio of documents that provided robust support for the case, meticulously detailing every aspect relevant to the lease renewal dispute.
Court’s Ruling
The Court delivered a decisive ruling in this case, with the following key determinations:
- Unjustified Refusal to Renew: The Court found that the Landlord refused to renew the lease without any legal justification and did not express any intention to modify the terms of the existing contract.
- Mandatory Renewal Order: As a result, the Court ordered the renewal of the tenancy contract for one-year period starting from 20/02/2023 at the same rental value of the expired contract.
- Responsibility for Legal Costs: The Court also ordered that the landlord to bear all the Court’s fees and expenses incurred during the legal proceedings.
Conclusion
Our arguments in this case were rooted in the principle that the lessor cannot arbitrarily oppose the renewal or request termination of the lease, whether during its term or after its expiration.
This stance is permissible only under specific conditions exclusively outlined by the relevant legislation. Moreover, should any amendments to the lease terms be desired by either party, a formal notification must be issued to the other party no later than ninety days before the lease’s expiration date.
Furthermore, it is mandated that upon the renewal of a lease, it should be extended for a period equal to the original period or for one year, whichever is shorter, under the same terms as the previous agreement. This legal framework is designed to ensure fairness and clarity in the lease renewal process, safeguarding the interests of both parties involved in the rental agreement.
About M&A
We advise on the full spectrum of the real estate transactions involving sale and purchase of property, off plan projects, mortgaging, transfer of ownership, and landlord and tenant relationships. Our real estate litigators have handled a wide variety of disputes involving sale and purchase agreements, delayed handover, cancelled projects, and discrepancies in saleable area and rental disputes. For more info about our Real Estate Practice, please visit: https://motei.com/real-estate/.
