Weathering the Storm: Legal Implications of Flood-Damaged Properties

On April 16, the UAE experienced a deluge of rainfall that exceeded a year’s worth of precipitation in a single day. According to media reports, this was the most amount of rain to have fallen for 75 years. As the country grapples with the aftermath of this unprecedented storm, we look at (i) what this means for landlords and tenants; (ii) the allocation of maintenance obligations; and (iii) developers’ obligations for flood damaged properties.

Landlords and Tenants

In Dubai, the landlord-tenant relationship is regulated by Dubai Law No. 26/2007 as amended (the Dubai Tenancy Law). The default position in the Dubai Tenancy Law is that landlords are responsible for maintaining the property and repairing damage that affects the tenant’s enjoyment of the property (unless the parties agree otherwise). Landlords are also responsible for damage that is not caused by tenants. This encompasses a wide variety of damage to property and, in the absence of agreement in the lease to the contrary, would likely include damage caused by heavy rain and other natural phenomena including, for example, structural repairs, plumbing and sanitation and electrical systems.

Landlords however can request a deposit to cover expected maintenance costs. Several academic publications have noted that climate change will continue to alter weather patterns in the GCC, meaning the likelihood of such extreme weather events occurring increases. It is conceivable that this may prompt landlords to ask for a larger deposit over the coming years to cover damage that may be caused by such events, and which may fall outside of the terms of a landlord’s insurance policy.

The relevant law in Abu Dhabi is Law No. 20/2006 as amended (the AD Tenancy Law). The AD Tenancy Law distinguishes between ‘’necessary repairs’’ and ‘’rental repairs’’. The former is defined as ‘’urgent repairs necessary to maintain the leased estate of ruin, as well as the necessary repairs of the estate for the benefit of the lessees…’’ i.e. repairs necessary to protect the structure of the property and repairs necessary for the tenant to utilize the property. The responsibility for necessary repairs falls on the landlord. By contrast, rental repairs are generally the tenant’s responsibility and are often minor repairs associated with day-to-day usage of the property. We would therefore expect that responsibility for repairing damages caused by storms and other natural disasters to be classed as ‘necessary repairs’ and to fall on the landlord.

However, it is important to check lease terms carefully as parties can adjust the allocation of responsibility for maintenance and repairs in their lease agreement.

The AD Tenancy Law also provides that tenants may obtain permission from the Rental Disputes Committee to carry out necessary repairs if the landlord is late in doing so or cannot be contacted. In such case, the tenant will be entitled to a reduction in rent equivalent to the amount it spent on the repair. This is without prejudice to the tenant’s right to request a recission of the lease agreement or general reduction in rent commensurate to the reduction in its benefit of the property. On the other hand, tenants cannot prevent landlords from conducting urgent repairs. Where such repairs affect the tenants’ partial or total enjoyment of the property, the tenant may normally request that the (i) lease agreement be rescinded; (ii) rent be waived or reduced for the period during which the benefit of the property was lost; or (iii) lease period be extended for a term equal to the time during which the benefit of the property was lost.

In the aftermath of the adverse weather there is likely to be a significant uptick in land and tenant claims, particularly given the potential for wide interpretation around whether:

1. the damage in question affected the tenant’s enjoyment of the property;
2. a tenant is entitled to rent reductions and waivers or extensions to the lease agreement due to a loss of the property’s benefit; and
3. the damage is major or minor and who is responsible for repairing the damage.

Obligations and liabilities of developers, consultants and contractors

Whilst much focus is placed on the landlord’s responsibility to provide maintenance and repairs, what obligations do developers have in relation to flood damaged properties in their own communities?

For certain types of defective work, there is a strict liability regime that holds contractors and consultants liable.

Separately from this:

1. contractors would be liable where the damage to the property results from their negligence.
2. through operation of law subsequent owners might be able to rely on the rights the original developer would have had against contractors and materials suppliers to bring a claim against the latter.
3. a property buyer can potentially sue the developer.

This leaves the door open to claims against developers, contractors, and consultants for flood-damaged property on the basis that the property was not appropriately designed or constructed to withstand such occurrences.

The Civil Code also contains important protections against injury to a person caused by the total or partial collapse of a building. This is the owner’s responsibility, and we have first-hand experience of such claims being successfully brought against UAE developers. This perhaps explains the approach taken by a number of developers across the UAE who have agreed to repair flood-damaged homes at no cost to residents, thus stemming the flow of potential claims.  

Charting a Course Forward

As the UAE navigates the aftermath of the unprecedented rainfall and prepares for future climate-induced challenges, stakeholders in the real estate sector should familiarise themselves with their rights and responsibilities, both under the terms of the leases and at law.

Please contact Alexandra Lester, Jennifer Eakins or Khaled AlMulla if you have been affected by the recent storms and require legal advice or if you would like to learn more about how we can help.