Executive Council Resolution No. 4 of 2011 requires mandatory registration of tenancy contracts in Abu Dhabi with a term of up to four years, through a new registration system, known as "Tawtheeq". The registration system is designed to regulate the relationships and safeguard rights of landlords and tenants and will establish a database for all short term tenancy contracts.
The deadline for registration is 31 July 2011 for existing properties and tenancies. With only three months to go, this e-bulletin describes the new process for registration and how it is being implemented.
Phase 1 – registration of existing lettable properties and tenancies
We have been informed that Tawtheeq is being implemented in two phases with the first phase already in operation. In Phase 1, landlords (or their appointed property management agents) must register details of all existing lettable properties and short term tenancy contracts (with a term of up to four years) in the new Register of Tenancy Contracts ("Register") by 31 July 2011.
The Register is maintained by the Abu Dhabi Municipality (ADM) in electronic format. It is not available for public inspection. At present, interested parties cannot carry out a search of the Register to ascertain which properties have been registered. Enquiries of this nature need to be raised directly with the Tawtheeq team to be dealt with on a case by case basis. The Register is separate to, but sits alongside, the Land Register.
Lettable properties must be already registered in the Land Register in order for them to be registered in the Tawtheeq Register. Previously, it was only mandatory to register leases with a term of four years or more. For the purpose of Tawtheeq a "lettable property" is a building located in the Emirate of Abu Dhabi which either is, or is intended to be, let on a short term tenancy contract.
When landlords apply to register lettable properties, the Tawtheeq team will verify the data submitted against the recorded details held for the relevant property in the Land Register. If there is a discrepancy, Tawtheeq will require the landlord to rectify it. For example, if the permitted use of a building as recorded in the Land Register is commercial, the landlord cannot register that building as a residential building with Tawtheeq.
The fee for registering data relating to a lettable property is AED 1,000 and the fee for registering a tenancy contract in respect of a property unit is AED 100. There are also fees for registering amendments and renewals of tenancy contracts. Where a landlord owns a number of lettable properties in one location, each property must be registered separately together with payment of a separate fee. For example, a landlord who owns several office buildings on Al Reem Island must register each individual office building paying a registration fee of AED 1000 per building.
The only tenancy contracts that are exempt from registration are those named under the Landlord and Tenant Law (Abu Dhabi Law No. 20 of 2006, as amended) being:
- agricultural land and buildings;
- land and property owned by the government and leased for residential purposes;
- land and property allocated to ADNOC and being leased for the petroleum industry;
- real estate leased to the hotel and tourism industry; and
- housing occupied for working conditions.
Phase 2 – registration of new tenancies; introduction of standard form tenancy contracts
Following on from Phase 1, a standard template for new tenancy contracts will be released as part of the Tawtheeq system in Phase 2. From that point, new tenancies and renewals of existing tenancies must adopt this template. We understand the template will be available in electronic format only and will contain a number of fields tailored to the relevant tenancy (for example, sections for corporate landlords, individual landlords, property management agents, residential, industrial and commercial properties).
The template will include a section for "special conditions" where the parties may insert additional agreed contractual provisions. Although parties are free to agree special conditions, the tenancy contract will not be registered if any of the special conditions are contrary to UAE law.
Consequences of failure to register
Landlords have until 31 July 2011 to provide the relevant information to register existing lettable properties and tenancy contacts. Tenancy contracts entered into before 13 January 2011 are exempt from payment of registration fees.
Although there are no financial penalties imposed on landlords who fail to register prior to this deadline, there are practical difficulties which may arise from a failure to register a tenancy contract. Firstly, government departments and utilities providers will only act upon tenancy contracts that have been registered. Therefore, landlords and tenants may face delays in obtaining essential services if they are unable to provide evidence of a registered tenancy contract.
Secondly, landlords of commercial buildings may face logistical difficulties in providing utilities within the timeframes provided in tenancy contracts as part of a service charge regime. If a landlord fails to register a lettable property, then tenancy contracts granted out of that property will not be capable of registration and will be suspended until the property is registered.
If a landlord fails to register a tenancy contract, the tenant is entitled to ask the Lease Disputes Committee to validate the signatures to the tenancy contract. The Lease Disputes Committee will then instruct Tawtheeq to register the tenancy contract and recover the registration fees from the landlord. At present, it is unclear how long this process will take.
ADM has established a dedicated section on its website dealing with Tawtheeq registration. Landlords and property managers must open an account with Tawtheeq before they can begin the process. ADM states that the account opening process and the actual registration of new tenancies will take no longer than 30 working days for each process. The registration of existing tenancy contacts is expected to take no longer than three working days. A Property and Contract Registration User Guide and a Supporting Documents Guide will soon be available on ADM's website.
Once a tenancy contract has been entered on the Register, it will remain there until it is removed. Therefore, landlords granting short tenancies for 12 months should diarise to remove the tenancy from the Register at the end of the term if the tenancy contract is not being renewed. The Tawtheeq system will note that the tenancy contract has expired, but it will remain as a registered tenancy against that registered lettable property until it is removed.
Where a tenancy is granted for more than 12 months, the landlord must renew the registration each year and pay an annual renewal fee of AED 100, which will apply to both tenancies that roll over on an annual basis and tenancies granted for a fixed term of more than one year (up to four years).