Legal Recourse: Developer neither paying rent nor cancelling contract

If you have a rental agreement with the developer and have not received your rightful rental income, you have legal options based on UAE law. For example, if a property is purchased in Dubai directly from the developer five (2) years ago. At the time of buying, the buyer also signed the rental contract for the property so the developer will be managing the property on rent. The developer will enjoy 30% of the rent while the landlord will enjoy 70% of the rent. However, the developer is not paying the rent to the landlord for what he is receiving from tenants. The developer is neither paying the rent nor cancelling the contract. Let us discuss the legal rights.

• Article 246 of the UAE Civil Transaction Law: It states that any contract or contracts must be Executed/honored only in good faith and no party can make himself rich by using another’s/other party’s expense.
• Article 272 of the Civil Transaction Law: It states that if one party fails to fulfill contractual obligation/s, then other party/parties have right to seek either enforcement or termination of the contract but after serving a proper formal notice.

• First, a formal notice has to be served to developer in which property owner must demand rent payments or the termination of the contracts.
• If developer refuses to pay or cooperate, then property owner can open a case against developer. Through Court Case, he can again ask for the cancellation of the contract or payment of the unpaid rents or both. He should appoint one auditor, to calculate the right rent incomes.