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Dubai Banks Refuse to Stop Cheques for Rent Payments

Dubai, UAE : 22 July 2010

Tenants in Dubai have accused Dubai banks of refusing to allow stop payment requests on cheques made out for rentals.

They say that the banks act in favour of the landlord, even if there is some sort of “genuine problem” that tenants need the cheque to be stopped. This may include retrenchment or other legitimate reasons. While laws in different Gulf nations do differ, generally in terms of existing UAE legislation there is a possibility that people whose cheques bounce can go to jail if somebody decides to file a “police case” against them. In any case they will be charged a penalty fee by their bank if there are insufficient funds to honour the cheque.

According to one tenant who, lost his job in Dubai, the bank said they would only stop the cheque issued for rent if the landlord consented to this in writing. Clearly the landlord was not prepared to forego the rental payment and so the tenant was forced to allow the cheque to bounce.

Another Dubai tenant said that three months notice in writing was not sufficient for their landlord. In the end the landlord demanded a penalty payment amounting to two month’s rent and said that if this wasn’t paid, he would deposit the rent cheques in hand.

According to property agents in the region, many people who lose their jobs fail to honour rental agreements and simply allow their rental cheques to bounce. Agents acknowledge that a shortage of funds is the reason, but say that tenants think they will be able to negotiate new terms when their circumstances change for the worse. Agents confirm that landlords are generally reluctant to give rental cheques that have been issued to them back to tenants who want to vacate the property before the lease terminates.

Sharjah changed its laws regarding tenancy in January this year and now if tenants are forced to “exit” lease contracts for any reason that is beyond their control, they can do so provided they pay 30% of the money that is due until the lease expires.

There is no similar law in Dubai, but during November last year the government set up a “judicial committee” that now deals specifically with “bounced cheque” issues that relate specifically to property and tenancy.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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