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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
Aruna Mukherji - Associate - Real Estate
|No.||Description||Ras Al Khaimah||Umm Al Quwain||Ajman||Fujairah|
|1.||Applicable Tenancy Laws||The Emirate of Ras Al Khaimah currently does not have a law to regulate landlord and tenant relationships. Therefore, the provisions of the UAE Civil Transactions Law No. 5 of 1985 apply to lease agreements in Ras Al Khaimah.||Umm Al Quwain Law no. (3) of 2008 regulating the Relationship between Landlords and Tenants in the Emirate of Umm Al Quwain as amended by Law No. 2 of 2011||Ajman Emiri Decree No. 3 of 2009 as amended by Emiri Decree No. 8 of 2014 promulgating the Amended Real Estate Leasing Law in the Emirate of Ajman||Fujairah Law No. 1 of 2011 concerning leases of premises in the Emirate of Fujairah|
|2.||Dispute Resolution Authority||Real Estate and Rental Dispute Settlement Committee deals with tenancy disputes between master developers affiliated with the Government of Ras Al Khaimah and third party tenant pursuant to RAK Emiri Decree No. 2 of 2012. For all other tenancy disputes, the matter is referred to the Courts of Ras Al Khaimah.||Rent Dispute Settlement Committee formed pursuant to Law No. 3 of 2008 Amending Law No. 1 of 2006 Regulating Relationship Between Landlords and Tenants in the Emirate of Umm Al Quwain||Rent Dispute Settlement Committee formed pursuant to Emiri Decree No. 3 of 2009 on the Promulgation of Amended Real Estate Rent Law in Ajman||Committee for Resolution of Lease Disputes formed pursuant to Law No. 1 of 2011 concerning leases of premises in the Emirate of Fujairah|
|3.||Leases that can be registered||Based on our discussions with the competent authorities, we have been informed that there is no prescribed tenure for short term leases in Ras Al Khaimah.||Based on our discussions with the competent authorities that whilst there is no prescribed tenure for lease agreements in Umm Al Quwain, the lease agreement for residential use are usually between 1 to 5 years. All commercial lease agreements do not exceed 1 year in tenure.||Based on our discussions with the competent authorities, we have been informed that all short term lease agreements (i.e. for residential or commercial purposes) in Ajman do not exceed 12 months in tenure.||Based on our discussions with the competent authorities, we have been informed that all short term (i.e. residential, commercial or industrial) leases not exceeding 10 years in tenure can be registered.|
|4.||Registration Fees||Based on our discussions with the competent authorities, we have been informed that 1% of the total rent value is payable for residential lease agreement with a minimum fee of AED 300; and 5% of the total rent value is payable for commercial lease agreements.||Based on our discussions with the competent authorities, we have been informed that a registration fee of 2% of the rent contract value is payable in cases of residential lease agreement; 10% of the rent contract value per annum is payable in cases of commercial lease agreement.||Based on our discussions with the competent authorities, we have been informed that 1% of the annual rent value is payable in cases of residential lease agreements; 10% of the annual rent value is payable for commercial lease agreements.||Based on our discussions with the competent authorities, we have been informed that if the rent amount is in the range of AED 1 to AED 15,000, then the registration fee payable is AED 300. For rent amount exceeding AED 15,000, the registration fee is 2% of the total rental value.|
|5.||Fees to obtain the standard contract documentation||AED 50||AED 50||Available free of cost at Ajman Municipality||AED 50|
|6.||Where to register?||RAK Municipality||Umm Al Quwain Municipality register the residential lease agreements. Department of Economic Affairs in Umm Al Quwain register the commercial lease agreements.||Ajman Municipality||Fujairah Municipality|
|7.||Effects of non registration||Based on our discussions with the competent authorities, we have been informed that non registration does not affect the validity of the lease. However, without registration a tenant is likely to face practical problems for example when renewing trade licenses, visa sponsorships and utility connections.||Article 3 of Law No. 2 of 2011 states that the government departments and institutions shall not accept any lease contract in any transaction which requires submitting a copy of the lease contract unless such lease contract is issued and approved by the Umm Al Quwain Municipality and it is valid. The current policy of the Umm Al Quwain Municipality provides for imposition of a penalty for non registration in an amount of 1% of rent value in addition to the 2% registration fees.||Article 4.1 of Emiri Decree No. 8 of 2014 provides that non registration of lease contracts will attract a fine equal to three times the contract attestation fee upon the landlord. The tenant is likely to face practical problems for example when renewing trade licenses, visa sponsorships and utility connections.||Article 4 (3) of Law No. 1 of 2011 provides that non registration of Fujairah leases would result in that none of the government or local department or institution in Fujairah would accept the tenancy contract without the registration with the Fujairah Municipality. The Fujairah Municipality would accept the lease registration by recording the date of the tenancy contract in its contract authentication register maintained by the Municipality.|
Given that majority of the lease registration fee requirements is based on policies of the competent authorities in the respective Emirate, we recommend to verify with the competent authority prior to undertaking any lease registration.
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