Dubai Rental Disputes Center Permits Lease Annulment Before Start Date for Deception

Dubai's Rental Disputes Center (RDC) has established a judicial principle permitting landlords and tenants to seek the annulment of lease agreements before they take effect if deception during the contracting process is proven, Gulf Business reported. The decision confirms that legal protections under the law apply after a tenancy agreement has been executed but before its implementation begins, provided statutory requirements are satisfied.

The judicial principle arose from a legal dispute in which a landlord entered into a lease agreement with a company. Prior to handing over the property, the landlord discovered that the company had a history of prior rental disputes and court judgments concerning unpaid rental obligations. The corporate tenant had leased properties to sublet to third parties but failed to settle amounts due under those contracts.

The landlord also found that multiple arrest and bring-in orders had been issued against the company's manager in connection with unpaid rental dues, bounced cheques, and delayed payments. Citing concerns regarding the counterparty's ability to fulfill contractual obligations, the landlord filed to annul the lease prior to property handover.

While the landlord's lawsuit was initially dismissed at first instance, the case was reviewed on appeal by the RDC's General Authority. The Authority overturned the initial decision, determining that the established facts constituted deception under Articles 170, 171, and 173 of the UAE Civil Transactions Law, and ruled to annul the contract while restoring both parties to their pre-signing legal status.