Dubai Tenancy Dispute: Landlord Ordered to Refund Excess Rent After RDC Finds Major Discrepancy in Leased Area

Commercial lease disputes in Dubai frequently arise from ambiguity surrounding the concepts of “rentable area” and “usable area”. A recent ruling by the Rental Dispute Settlement Centre (RDC), applying Dubai Law No. (26) of 2007, has clarified the legal consequences of calculating rent based on a contractual area that exceeds the space physically delivered to a tenant. The decision underscores the importance of aligning contractual terms with factual reality.

The dispute involved a tenant and a landlord in relation to two commercial units leased under multiple agreements over several years. The leases stipulated a total area of 9,027 square feet, with rent calculated on a per-square-foot basis. The stated area included portions of common areas. The tenant challenged this calculation, arguing that rent had been charged for space beyond what was exclusively usable, as common areas had been improperly included in the leased area.

The RDC appointed an independent expert to inspect the premises, measure the actual usable area, and assess the financial impact of any discrepancy. A joint site inspection found that the actual usable area was 7,703.04 square feet, significantly lower than the contracted 9,027 square feet, resulting in a shortfall of 1,323.96 square feet. The expert concluded that the difference largely comprised common areas that were not physically usable by the tenant.

While “rentable area” may, in certain contexts, include common spaces, the expert emphasised that “usable area” refers strictly to space available for the tenant’s exclusive occupation. On this basis, the expert determined that rent should be calculated according to the usable area alone and rejected the inclusion of common areas as part of the leased benefit.

The landlord argued that the lease agreements expressly specified an area of 9,027 square feet, that the tenant had paid rent on this basis for several years, and that common areas formed part of the leased benefit. These arguments were rejected by the expert and later by the Court.

In its ruling, the Court applied Article 765 of the UAE Civil Transactions Law, which provides that where the contractual area exceeds the area actually delivered, the landlord is required to proportionately reduce the rent. The provision also allows the tenant to seek rescission of the contract if the discrepancy materially affects the intended use of the property. The Court prioritised the actual usable area over contractual assumptions, reinforcing principles of fairness and proportionality in commercial lease obligations.

The RDC ultimately ruled in favour of the tenant, ordering the landlord to refund excess rent amounting to approximately Dh1.5 million for the relevant period, along with court fees and litigation costs.

The decision highlights the critical importance of ensuring that lease agreements accurately reflect the space actually delivered to tenants. By clearly distinguishing between rentable and usable areas, the ruling promotes greater transparency, fairness, and precision in commercial leasing practices across Dubai.

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