Why Dubai brokers can’t sign rent contracts anymore
Dubai Land Department prohibits brokers with power of attorney to sign on behalf of landlord
If you are a real estate broker handling an overseas landlord’s property portfolio in Dubai using a power of attorney (POA), you may be no longer entitled to sign lease documents on their behalf.
According to a Dubai Land Department executive, brokers legally appointed to manage property of landlords based abroad are no longer allowed to sign unified lease contracts to get an Ejari. The DLD says the property owner must directly sign the original lease contract. Brokers with POAs must now send the unified lease contract via courier to owners who cannot come to Dubai to sign new POAs.
“The aim is that it would be conflict of interest in many cases if the agent signs the contract on behalf of the landlord – till the landlord feels comfortable with the arrangement and the agency’s internal rules allow for their agents to receive a POA. This rule has now been changed and does not allow an agent even if he holds a POA to sign a rental contract,” says Sanjay Chimnani, managing director, Raine & Horne Dubai.
Property management companies may sign contracts on behalf of their clients. However, even in this case, they would need a specific authorisation.
“We now involve lawyers to act as the clients’ power of attorney. Previously, brokers were happy to offer this service to their overseas clients free of charge but this new service is no longer free as lawyers charge for acting on behalf of clients. The move is aimed at making the system more transparent and has helped to secure clients’ finances through a more secure method of operating,” observes Mario Volpi, chief sales officer, Kensington Exclusive Properties.
The DLD launched the unified lease contract for rental properties in Dubai in March this year to create a transparent and professional real estate market with measurable standards.
Experts say the new system aims to protect all parties in the lease process and the revisions are seen as an example of best practice.
“We are sending leases to property owners overseas for original signature and return. While somewhat cumbersome, the new rules ensure that lease terms entered into on behalf of the landlord are being confirmed by the landlord/landlady themselves by the action of their original signature,” points out Jason Hayes, founder and CEO of Luxury Property.
Hayes suggests that an electronic docusign system may be used. “There will follow some form of secure online system where unified lease contracts could be electronically signed by property owners abroad,” he concludes.
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