Unified lease agreement and resolution of disputes

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Real estate disputes arising between landlords and tenants account for a large percentage of the cases lodged before the regional emirates, police stations and courts. The processing and resolution of these disputes can drag on and consume much of the time of judges and officials in other governmental departments, let alone the parties at dispute. Judges very often hesitate before making a judgment and try to help the disputing parties reach an amicable solution and make some concessions. Usually, the judge asks the landlord to make some concessions and reduce the amount of rent he claims from the tenant.

In fact, the majority of judges resolve the disputes amicably and in some cases they let litigation drag on in order to convince the landlord to decrease the amount of rent which the tenant should pay as per the lease agreement signed between both parties. Some landlords agree to drop the case and not take any rental money if the tenant is willing to leave the unit. Landlord-tenant disputes arise when the landlord increases the rent and the tenant cannot afford to pay either because he has not been paid his monthly salary or for any other reason.

To end these disputes, the Ministry of Housing has decided to launch an electronic unified lease agreement in collaboration with the ministries of the Interior and Justice. The agreement acts as a binding document for the landlord and the tenant and takes into consideration the interests of both parties. It is completely different from the previous rental agreement which real estate offices provide. The new agreement will only be available at real estate offices that have completed the pertinent licensing requirements. These offices will charge the tenant for having the lease agreement certified and will charge landlords SR250 for each leased residential unit and SR400 for each leased commercial unit.

Okaz daily interviewed some real estate experts and lawyers and asked them about their view of the agreement. Mishal Al-Shareef, a legal consultant, said treating the unified document as binding has a number of positive features and can reduce the number of rent dispute cases reviewed by courts, especially those cases where the tenant fails to pay the rent or delays the payment on purpose. The unified lease agreement will help reduce the processing time for such cases and encourage the landlord and the tenant to comply with all the articles therein for fear of being penalized if they fail to do so.

Khalid Rasheed, former chairman of the Real Estate Committee at the Eastern Province Chamber of Commerce and Industry, said that the unified lease agreement will bring a lot of benefits to the rental sector and the national economy and it will remove some burdens from judges, which will allow them more time to dedicate to more important cases. Rasheed also believes that the new agreement will attract investments, local and international, as it protects the rights of all the parties involved and allows the Ministry of Housing to collect accurate statistics about the number of Saudi and non-Saudi tenants.

Ahmed Al-Rumaih, a real estate investor, said that the decision to introduce the agreement has been long awaited and that it will leave no room for tenants to be in arrears with their rent. Moreover, landlords cannot rent a unit that does not meet the agreed-upon specifications. In his opinion, the agreement will enhance the Kingdom’s plans for digitization and regulate the rental sector and stimulate foreign investment.

Khalid Al-Dawsari, a financial and economic consultant, said the new agreement regulates the relationship between the landlord and the tenant and the real estate office. The Ministry of Housing is the only official authority that will issue licenses to real estate offices.

The unified lease agreement will no doubt help to resolve landlord-tenant disputes. However, I do not think the enforcement of the agreement will be easy unless the Ministry of Housing is planning to pay the rent for those who fall behind in their payments.

— Dr. Ali Al-Ghamdi is a former Saudi diplomat who specializes in Southeast Asian affairs. He can be reached at algham@hotmail.com


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