New landlords to refund deposit

A renter in Dubai is finding it hard to recover her security deposit after the apartment was foreclosed and the new owner turning down her request for refund.

“Last year, I rented an apartment for Dh100,000 in a single cheque and paid a security deposit of Dh10,000. However, the apartment was foreclosed by a financial company and that is when all the trouble started,” DM, who requested not to use her name, told Emirates 24/7.

“Initially, after taking over the apartment, the new owner kept on asking me to pay them the rent. But I refused to pay any additional money as I had already paid the rent in one cheque. Despite their persistence, I refused to pay.

“Although after a few months they stopped asking me to pay the rent, but when I served them a notice of non-renewal and asked to return of deposit, I was told to approach my old landlord since I had paid my deposit to him.”

DM says that when she approached her old landlord he also refused to repay her deposit, saying, “he had already lost a lot of money and was no more owner of the property.”

According to DM, she is planning to file a case with the Dubai Municipality Rent Committee, but is uncertain of whom she needs to file the case against.

-New owner take over all liabilities

Ludmila Yamalova, Managing Partner, HPL Yamalova & Plewka JLT told Emirates 24|7 that the obligation to refund the deposit should be attached to the new owner.

“Generally, upon transfer of the property, all liabilities attached to it are also transferred. The property obligations (deposit) are transferred to the new owner, in the same way as the property's benefits (rent) are transferred to the new owner.

“Therefore, when the new owner received the property, he would have received the liabilities that are attached to it.  A refund of the deposit would be one such liability. Maintenance issues associated with the property is another example of such liability.”

Any issues between the new owner and the old one, such as a refund of the deposit, must be resolved between them, adds Yamalova.

“The tenant's rights and obligations are attached to the owner of the property at the relevant time.  If at the time of claiming the deposit the property belongs to the new landlord, that landlord should be obligated to fulfill it.

“The best option for the tenant, therefore, is to file a case against the new owner.  If the new owner believes that the claim should be filed against the old owner, he can bring him into the lawsuit as well.”

Yamalova suggests another alternative is for the tenant to file a case against both owners at the same time.

“The fee will be the same, and it will be one case.  It will then be up to the parties to argue who should be responsible for the deposit.  This tactic could work as a leverage to get the parties to agree outside of the Rent Committee. But it could also prolong the process, as more parties may require more time,” she asserts.

Image from shutterstock

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