Can loss of job be a reason for termination of lease agreement in UAE?

The restrictions and measures taken up by the government of UAE in order to curb the drastic impact of COVID-19 has certainly affected many unknown industries and specifically the real-estate sector whether first hand property or the one sub-let to tenants. The market has been affected by the temporary closure of shops, bars, eateries and other open spots, just as the more extensive effect on business property following the ‘telecommute’ activities and curfews which have been as a result.

Commercial Lawyers of Dubai are usually encountering cases from tenants seeking termination of lease agreement due to loss of employment in the pandemic. Ergo, this articles discuss the potential legal considerations with respect to the termination or amendment of the lease agreements and some similar issues.

Due to shocking change in the economy and loss of employment or business faced by many foreign expatriates in UAE has raised rumors among them regarding the termination of lease agreements in the event of loss of employment. However, this piece of information may not be all true allowing tenants to terminate the lease agreement without facing any legal consequences. If you believe this information and refuse to pay your rental amount, you may find yourself in trouble if the cheque held by the landlord is deposited in the bank. It is important for all the tenants to note that Article 249 of the Civil Code may allow the tenant to renegotiate the terms of the lease agreement with landlord on the basis of financial stress or loss of employment which makes it impossible to pay the said amount of rent, yet it is considered on the basis of specific facts and circumstances of each case.

As afore-mentioned, it is anything but an inhabitants “right” to request end the lease, decrease the rent or waive some part of the rent. It is important to be informed that a lease contract is an agreement and in this way it can’t be changed or ended except if by shared understanding, by court request or by request of the Rental Disputes Center (RDC) or by activity of law.

Force majeure clause in the general UAE Civil Code sense achieves end of an agreement by activity of law, in any case, this requires a few elements to be available including that the commitments themselves must have gotten difficult to act with the goal for end to result, and not that a specific individual has thought that it was hard to perform. Tenant must be very cautious about their translation of the word impossible to perform and whether that reaches out to a circumstance where an occupant can’t pay since they need more cash in the wake of losing their positions. In cases of residential occupancy, the tenant is allowed to stay in a premises due to lockdown restrictions and shall adhere to its contractual obligations more than ever unless he is able to establish the fact the paying rent is beyond his capability and the loss of employment has left him with no scope but to terminate the agreement, yet this argument is subject to the very discretion of UAE courts.