Draft Lease Agreement in the UAE
A commercial lease agreement determines how a business may occupy and use rented premises, including its financial commitments, operational responsibilities, and rights throughout the lease.
For companies leasing offices, retail units, warehouses, or other commercial properties in the UAE, the terms of a lease can directly affect business operations. A tenant may discover that the premises cannot be used for its intended activity, that substantial fit-out expenses were not anticipated, or that the agreement does not adequately address delays in obtaining possession.
These issues should be considered before the lease is signed rather than after the business has committed to the property.
Abdulrahman Alshaali Advocates & Legal Consultants assists businesses, landlords, and investors with preparing and reviewing commercial lease agreements, addressing the property’s intended use, applicable legal requirements, and the parties’ contractual responsibilities.
Commercial Lease Agreements Under UAE Law
Commercial property leases in the UAE are subject to the legislation applicable in the emirate where the property is located.
In Dubai, Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, as amended by Law No. 33 of 2008, governs rental relationships involving properties used for commercial activities, businesses, professions, and other lawful purposes.
Article 4 of Dubai Law No. 26 of 2007, as amended by Law No. 33 of 2008, requires the lease contract to clearly identify the leased property, its intended purpose, the lease duration, the rent and payment method, and the property owner’s name where the landlord is not the owner.
The amended provision also requires lease contracts and any subsequent amendments to be registered with the Real Estate Regulatory Agency (RERA).
Commercial leases may involve additional regulatory requirements concerning the tenant’s business activity, the property’s authorised use, and approvals for alterations.
A lease drafted for premises in Dubai should not automatically be used for a property in another emirate, where different legislation or administrative procedures may apply.
The agreement must therefore reflect both the commercial transaction and the legal requirements governing the specific property.
Confirming That the Property Is Suitable for the Intended Business
Before entering into a commercial lease, a tenant should establish whether the premises can legally accommodate its proposed activity.
The description of a property as a commercial unit does not necessarily mean that every commercial activity is permitted.
A retail outlet, medical facility, restaurant, and warehouse may be subject to different licensing, planning, safety, and operational requirements.
For example, a company planning to operate a restaurant should investigate whether the premises can accommodate the necessary kitchen facilities, ventilation, and regulatory approvals.
The lease should accurately identify the intended business activity and address any necessary landlord cooperation with the relevant licensing procedures.
Where the business cannot operate without a particular approval, the parties should consider how the lease will address that requirement and the consequences if approval cannot be obtained.
This is particularly important where the tenant must commit substantial funds before commencing operations.
Identifying the Leased Premises and Included Facilities
A commercial lease should establish precisely what the tenant is entitled to occupy.
A property description may need to identify the unit, floor, building, location, and relevant property registration details.
For businesses renting premises within a larger building or commercial complex, the agreement should also clarify which facilities are included in the leased space.
These may include parking spaces, storage areas, loading facilities, shared entrances, or access to particular building services.
For example, a company renting a warehouse may require access for delivery vehicles at particular times.
If the lease does not establish the relevant access arrangements, the tenant may encounter operational difficulties even where the warehouse itself is suitable.
Where plans or specifications are necessary to identify the rented area, they should be properly incorporated into the agreement.
The objective is to distinguish the premises exclusively leased to the tenant from shared facilities and areas that remain under the landlord’s control.
Commercial Rent and Additional Occupancy Costs
The financial implications of a commercial lease may extend beyond the agreed rent.
Depending on the property, the tenant may need to consider utility charges, building management costs, government fees, fit-out expenses, and other agreed payments.
Article 22 of Dubai Law No. 26 of 2007 provides that, unless the lease states otherwise, the tenant is responsible for fees and taxes due to government entities for use of the property, as well as applicable subletting fees and taxes.
The contract should therefore distinguish the rent from other expenses and specify how relevant costs are allocated.
For example, an office tenant may agree to pay annual rent while the landlord remains responsible for certain building-related expenses.
The parties should establish whether any additional charges are fixed, calculated according to a defined method, or subject to adjustment.
Where a landlord proposes service charges or other recurring payments, the agreement should explain what those charges cover and how they will be communicated.
The purpose is to enable the tenant to assess the financial commitment associated with occupying the premises, rather than relying exclusively on the quoted rent.
Negotiating the Lease Commencement and Fit-Out Period
A business may require access to leased premises before it can begin trading.
Offices may need partitions and technical installations, while retail units and restaurants may require more extensive preparation.
The lease should distinguish between the date the tenant receives possession, the period permitted for fit-out, and the date on which rent becomes payable.
These dates may differ depending on the commercial arrangements.
For example, a landlord may agree to provide a limited rent-free period during which the tenant can complete approved alterations.
The agreement should identify the conditions governing that concession and whether other expenses remain payable during the period.
The parties should also address what happens if the landlord cannot deliver possession on the agreed date.
Where an opening date depends on regulatory approval or completion of works, the associated responsibilities should be established in the contractual documentation.
A clearly structured commencement arrangement helps the tenant plan the transition from property preparation to commercial operation.
Allocating Fit-Out and Alteration Responsibilities
Commercial tenants frequently need to modify leased premises to accommodate their activities.
However, a tenant should not assume that signing a lease automatically authorises alterations.
Article 19 of Dubai Law No. 26 of 2007 restricts tenants from making alterations or carrying out restoration or maintenance works without the landlord’s permission and the required approvals from competent authorities.
Article 18 also addresses the landlord’s obligation to provide approvals needed for decoration or other works, subject to the conditions established by the law.
The agreement should establish which works are permitted and how approvals will be obtained.
Relevant arrangements may include:
- The scope of approved fit-out works.
- Responsibility for obtaining regulatory permits.
- The party responsible for the cost of installation.
- Restrictions on changes affecting structural elements.
- Procedures for reviewing proposed modifications.
- Responsibility for damage caused by contractors.
For example, a retail tenant planning to install additional electrical equipment may need to establish whether the building’s existing infrastructure can support the proposed installation.
The lease should not replace technical or regulatory approval where such approval is legally required.
A detailed fit-out schedule may be useful where the intended alterations form a significant part of the commercial arrangement.
Maintenance of Commercial Premises and Building Systems
Maintenance responsibilities should reflect the nature of the leased property and the systems necessary for its intended use.
Under Article 16 of Dubai Law No. 26 of 2007, the landlord is generally responsible for maintenance and repairs affecting the tenant’s intended use, unless the parties agree otherwise.
Commercial premises may require particular attention to air-conditioning, electrical systems, plumbing, lifts, and other shared building infrastructure.
The lease should establish the agreed division of responsibilities between the landlord and tenant.
For example, an office tenant may be responsible for maintaining equipment installed exclusively for its own use, while the landlord may retain responsibility for specified central building systems.
The appropriate allocation depends on the agreement and applicable legislation.
The parties should also establish how defects are reported and whether the tenant must provide reasonable access for necessary repairs.
Where a failure affects business operations, the agreement should address the relevant responsibilities and procedures without assuming that every disruption automatically entitles the tenant to a particular remedy.
These matters should be considered in light of the property and the systems needed for its commercial use.
Access, Signage, and Building Management Rules
Commercial tenants may depend on facilities and services controlled by the landlord or building management.
A retail business may require customer access during extended operating hours, while a logistics business may need regular access to loading areas.
The lease should address commercially significant access requirements where they form part of the agreed arrangement.
It may also need to regulate signage, external branding, use of common areas, and compliance with applicable building rules.
Where signage or other installations require regulatory approval, the agreement should identify the relevant responsibilities.
Building management policies should be reviewed before signing, particularly where they impose conditions affecting the tenant’s intended operations.
If the agreement incorporates separate building rules, the tenant should understand the obligations arising from those documents.
This helps avoid entering into a lease that technically permits a business activity but restricts facilities essential to carrying it out.
Commercial Lease Renewal and Business Continuity
For a business operating from established premises, lease renewal can affect staffing, customer relationships, investment, and operational planning.
A commercial tenant may invest substantially in fitting out a property and building a customer base associated with that location.
It is therefore important to understand the applicable renewal framework before committing to the premises.
In Dubai, Article 13 of the tenancy legislation, as amended, permits the landlord and tenant to reconsider rent or other contractual terms for renewal.
Article 14 requires a party seeking to amend the terms to notify the other party at least 90 days before expiry, unless otherwise agreed.
The lease should identify the parties’ agreed communication arrangements and any relevant renewal provisions.
The tenant should also consider whether the proposed lease duration is commercially appropriate for the investment required to establish operations.
Contractual renewal provisions must be evaluated together with the applicable statutory protections rather than treated as the only source of the parties’ rights.
Reviewing Commercial Lease Termination and Eviction Clauses
A commercial lease should not be drafted on the assumption that either party may terminate the relationship whenever it wishes.
Dubai’s tenancy legislation establishes specific rules governing eviction.
Article 25, as amended by Law No. 33 of 2008, identifies circumstances in which a landlord may seek eviction before expiry or upon expiry of the lease.
These include specified contractual breaches and other legally recognised grounds, subject to the applicable notice requirements and procedures.
A contractual provision purporting to permit immediate eviction should therefore be assessed against the law.
The agreement should distinguish between contractual expiry, consensual termination, and eviction pursued on a legally recognised ground.
Where the parties negotiate an early termination arrangement, they should address outstanding payments, possession, and any other relevant consequences.
Disputes concerning eviction must be pursued through the legally applicable procedures rather than through unilateral action inconsistent with the tenancy legislation.
A Practical Example: Leasing a Retail Unit Before Opening a Business
Consider a company negotiating a lease for a retail unit in Dubai.
The proposed agreement specifies the annual rent and a three-year contractual term.
However, the tenant needs to install additional electrical equipment, obtain permission for external signage, and complete interior works before opening.
The landlord expects rent to commence immediately after signing, while the tenant assumes that payment will begin once the business opens.
The parties have also not determined who will bear the expense of upgrading the electrical infrastructure.
These issues should be resolved before the lease is executed.
The agreement could establish a defined possession date, identify the approved fit-out period, allocate responsibility for the required works, and record the agreed rent commencement arrangements.
It should also address the approvals necessary for the proposed alterations.
The result is a contractual structure that reflects the property’s intended commercial use and the operational steps required before trading begins.
Registering a Commercial Lease in Dubai
Dubai’s tenancy legislation requires registration of covered lease agreements and their amendments.
Dubai Land Department provides an official service for registering and renewing tenancy contracts through the Ejari system and approved service channels.
The registration process requires the relevant contractual information and supporting documentation.
Depending on the registration channel, required documents may include the unified tenancy contract, identification documentation, and a valid power of attorney where a representative is involved.
The parties should ensure that the agreement submitted for registration reflects the executed contractual terms.
Where a lease is amended, the applicable registration requirements should also be considered.
Registration procedures in other emirates may differ, so parties leasing property outside Dubai should follow the requirements of the relevant local authority.
Documents to Review Before Drafting a Commercial Lease
A commercial lease should be prepared after examining the documents relevant to the premises and the proposed tenant.
Depending on the transaction, these may include:
- Property ownership and registration documents.
- The landlord’s identification and relevant authorisations.
- The tenant company’s trade licence and corporate documents.
- Documents establishing the proposed signatory’s authority.
- Property plans and technical specifications.
- Agreed commercial terms and rent schedules.
- Existing building management rules.
- Proposed fit-out plans and relevant approvals.
- Any existing lease affecting the premises.
Where the tenant is in the process of establishing a business, the drafting should address the identity of the contracting party and any unresolved licensing requirements.
Reviewing the relevant documentation helps establish whether the proposed lease reflects the property, parties, and intended commercial arrangement.
Commercial Lease Agreement Assistance from Abdulrahman Alshaali Advocates & Legal Consultants
Commercial leasing arrangements can involve significant financial commitments and operational requirements.
Abdulrahman Alshaali Advocates & Legal Consultants assists landlords, companies, and investors with preparing and reviewing lease agreements under the applicable UAE legal framework.
Our assistance may include examining proposed commercial terms, reviewing property-related obligations, assessing fit-out provisions, and considering renewal and termination arrangements.
Where clients require broader assistance with preparing agreements, our contract drafting services address contractual documentation across different transactions.
The objective is to establish a commercial lease that accurately reflects the intended property arrangement and addresses matters relevant to its implementation.
Explore Our Contract Drafting Services
Our contract drafting services cover property, commercial, corporate, employment, and personal agreements. Explore the following areas for assistance with your contractual requirements.
General Contract Preparation
contract drafting: Prepare and review agreements under the applicable UAE legal framework.
contract writing: Develop contractual wording that accurately expresses the parties’ rights and obligations.
draft contract: Prepare an agreement from initial instructions through to the final document.
contract drafting lawyer: Obtain legal assistance with contractual preparation, review, and negotiation.
draft contract between two parties: Establish the respective responsibilities and obligations of two contracting parties.
Employment and Workplace Agreements
draft employment contract: Prepare employment contracts reflecting the applicable UAE labour requirements.
Draft Employment Agreement: Document employment-related conditions and supplementary contractual arrangements.
Non-Compete Agreement Draft: Establish contractual competition restrictions within the limits of applicable law.
Property and Rental Agreements
draft tenancy agreement: Prepare residential tenancy agreements addressing landlord and tenant responsibilities under the relevant local legislation.
draft rental agreement: Document rental payments, security deposits, maintenance arrangements, and other property rental conditions.
Corporate and Investment Agreements
draft partnership agreement: Define partners’ contributions, management responsibilities, and financial arrangements.
draft operating agreement: Prepare internal management arrangements appropriate to the company’s legal structure.
Draft Shareholders Agreement: Establish shareholder rights, governance provisions, share transfers, and exit arrangements.
Draft Investment Agreement: Document investment commitments, funding conditions, and investor rights.
Draft Joint Venture Agreement: Define the contributions and obligations of parties participating in a shared business project.
Commercial and Financial Agreements
draft business contract: Prepare agreements governing commercial transactions and business relationships.
Draft Sales Agreement: Establish contractual terms concerning the subject of a sale, price, delivery, and performance.
Draft Supply Agreement: Define specifications, quantities, delivery schedules, and payment obligations.
draft loan agreement: Document financing arrangements, repayment conditions, and applicable security provisions.
Franchise Agreement Draft: Establish contractual provisions addressing franchise operations, fees, and intellectual property.
Draft Agreement Between Two Companies: Define the commercial arrangements and obligations of separate corporate entities.
Services and Confidentiality Agreements
draft consulting services agreement: Establish consultancy deliverables, professional responsibilities, and agreed fees.
Draft Service Agreement: Define service requirements, performance standards, and payment arrangements.
draft nda agreement: Establish restrictions concerning the disclosure and use of confidential information.
Draft Confidentiality Agreement: Document confidentiality obligations for commercial negotiations and ongoing business relationships.
Personal and Dispute-Related Agreements
Prenuptial Agreement Draft: Examine legally available arrangements for documenting financial understandings before marriage under the applicable personal status framework.
Draft Settlement Agreement: Document negotiated resolutions, agreed obligations, and settlement conditions.
Each agreement should be prepared according to its specific transaction and applicable legislation.
Request Commercial Lease Drafting Assistance
Whether you are a landlord preparing a lease for commercial premises or a business reviewing an agreement before committing to a property, the contractual terms should reflect the intended use and relevant legal requirements.
Abdulrahman Alshaali Advocates & Legal Consultants assists clients with preparing and reviewing commercial lease agreements in the UAE.
Contact our team to discuss your proposed leasing arrangement and contractual requirements.
Frequently Asked Questions
1. Can a Landlord Seek Eviction If a Commercial Tenant Leaves the Premises Unoccupied?
Under Article 25 of Dubai’s tenancy legislation, as amended, a landlord may seek eviction where commercial premises are left unoccupied without a valid reason for 30 consecutive days or 90 non-consecutive days in one year, unless the parties agree otherwise.
The circumstances and applicable legal procedures must be considered before an eviction claim is pursued.
2. Can a Landlord Evict a Commercial Tenant to Sell the Property?
Dubai Law No. 33 of 2008 recognises an owner’s intention to sell the property as a ground for seeking eviction upon expiry of the lease.
Article 25 requires at least 12 months’ notice stating the eviction reason, served through a notary public or by registered mail.
The intention to sell does not automatically permit immediate eviction.
3. Can a Commercial Tenant Remove Fit-Out Improvements When Vacating?
Article 23 of Dubai Law No. 26 of 2007 provides that, unless the parties agree otherwise, a tenant may not remove leasehold improvements upon vacating and surrendering the property.
Commercial tenants should therefore consider negotiating the treatment of installed improvements and equipment before undertaking substantial fit-out expenditure.
The agreement should distinguish between removable business equipment and improvements subject to the applicable legal and contractual arrangements.
4. Can a Landlord Increase Commercial Rent During an Existing Lease Term?
A rent increase cannot be assumed to apply simply because the landlord proposes a higher amount.
The existing contractual terms, the parties’ agreement, and applicable Dubai rental legislation must be considered.
Articles 13 and 14 of the amended tenancy legislation regulate changes to rent and other terms in connection with renewal, including the relevant notification requirements.
A proposed increase during an existing lease should be assessed separately against the applicable contractual and legal framework.
Sources
Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai.
Dubai Legislation Portal – Official Legislation
Law No. 33 of 2008 Amending Law No. 26 of 2007 Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai.
Dubai Legislation Portal – Official Amendment
Dubai Land Department – Register / Renew Tenancy Contract.
