UAE Law and Practice Contributed by: Duncan Pickering, Nicola de Sylva, Sean Cope and Marta Almeida, DLA Piper Middle East LLP
6.16 Effect of the Tenant’s Insolvency Insolvency law applies only to commercial com - panies. If a tenant (not a commercial company) is insolvent, the regular landlord and tenant laws would apply, which would comprise the reme - dies for failure to pay rent. There are no provi - sions specific to insolvency in the landlord and tenant laws. Under insolvency law, the debtor must first apply to the court for: • a preventative composition, in which case it is the debtor’s duty to inform the court, within 30 days of doing so, of all and any creditors’ rights against the debtor; or • bankruptcy, in which case any ordinary credi - tor of ordinary debt under AED100,000 can apply to the court to open proceedings, as long as the creditor has warned the debtor to settle in writing and this has not been done within 30 days of the written notice to settle. 6.17 Right to Occupy After Termination or Expiry of a Lease If a lease term expires and the tenant remains in the property with the landlord’s knowledge and without any objection by the landlord, the lease shall (in Abu Dhabi) be renewed for a similar term and on the same conditions, or (in Dubai) renewed for a similar term or a period of one year (whichever is less) on the same terms. If the lease agreement does not specify the terms of renewal, the Abu Dhabi and Dubai land - lord and tenant laws set out a standard position to be implied into the contract, and if a party does not wish to renew or wishes to renegotiate the terms of the lease, notice must be given in accordance with the landlord and tenant laws.
6.18 Right to Assign a Leasehold Interest
In Abu Dhabi and Dubai, a tenant may only assign the lease or sublease all or part of the leased premises with the written consent of the landlord. Unless otherwise agreed, the landlord may withhold or grant its consent at its sole dis - cretion. 6.19 Right to Terminate a Lease In Abu Dhabi, tenants have a statutory right to request the Rent Dispute Settlement Committee to terminate a lease where the landlord hands over the property in such a poor condition that it cannot be used for its intended purpose. The Civil Code also allows parties to an agree - ment to agree to an early termination. Break rights in longer-term leases are common, to allow tenants greater flexibility. Landlord break rights are less common and may not be effective in Abu Dhabi, unless the landlord can also establish a ground for termination. 6.20 Registration Requirements Abu Dhabi Leases of less than four years are required to be registered by the landlord (or property manage - ment company) in the Tawtheeq system. Leases of between four and 25 years attract a registra - tion fee equal to 1% of the rent “on a one-year lease basis” . The authors understand that the DMT’s current practice is to apply the 1% fee against the year-one rent value, multiplied by the total length of the term. Leases for over 25 years attract a registration fee equal to 4% of the value of consideration. Dubai Leases of less than ten years are required to be registered on the Ejari system, using the DLD
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