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7 Key Clauses to Include When Drafting a Commercial Real Estate in the UAE

Introduction: Why Lease Agreements in the UAE Need Precision

Drafting a lease agreement in the UAE can be overwhelming, especially for first-time commercial tenants or new business owners. Whether you’re leasing space in Dubai, Abu Dhabi, or a free zone, vague or one-sided lease terms often lead to disputes, financial loss, or even termination of business operations.

This guide helps you avoid those risks by showing you what to include—and why it matters. Below, you’ll find seven key clauses that every UAE commercial lease should have, along with legal context, practical advice, and mistakes to avoid.

Who This Is For / Why This List Matters

This post is for:

Business owners leasing office, retail, or industrial space in the UAE
Landlords or developers offering space to tenants
Legal consultants drafting or reviewing lease terms
Real estate brokers seeking to educate clients on risk areas

Use this list when:

Negotiating a new lease agreement
Renewing or amending an existing lease
Resolving disputes over property use, maintenance, or termination

1. Define the Premises Clearly

Why this matters: Vague definitions lead to scope creep and operational conflicts.

What to do:
Describe the leased premises precisely: floor number, unit number, total square meters (with usable area breakdown if relevant), and any shared areas (e.g., lobbies, parking). In the UAE, especially in mixed-use or tower developments, it’s common for tenants to mistakenly assume rights over common areas.

Avoid:
Relying solely on site plans or marketing brochures. Include a physical description in writing and attach a floor plan in the annex.

2. Spell Out Rent, Service Charges, and Payment Terms

Why this matters: Rent in UAE leases often excludes service charges, utilities, and municipality fees.

What to do:
List the annual rent amount and installment schedule (e.g., 4 post-dated cheques). Clarify:

Whether the rent is inclusive or exclusive of VAT
Who pays service charges (common in DIFC and Dubai free zones)
Whether air conditioning, water, and DEWA/ADDC bills are the tenant’s or landlord’s responsibility

Avoid:
Assuming terms are “standard”—payment responsibilities vary significantly between landlords.

3. Include Fit-Out and Handover Obligations

Why this matters: Disputes often arise when tenants discover fit-out timelines or approvals were not agreed.

What to do:
Define:

Handover condition (e.g., shell & core, white box, fully fitted)
Time allowed for fit-out
Landlord’s responsibilities before handover (e.g., ceiling, HVAC, access permits)
Requirement for prior approval before structural alterations

Tip: In Dubai, many landlords require tenant fit-outs to be approved by the developer or free zone authority (e.g., Trakhees, TECOM).

4. Clarify Maintenance and Repair Responsibilities

Why this matters: Poorly drafted clauses can result in surprise maintenance bills or service disruption.

What to do:
Split responsibilities by:

Landlord: Structure, façade, elevators, central A/C
Tenant: Interiors, plumbing, fixtures, minor repairs

Add clarity on emergency repairs, response times, and how costs are shared in multi-tenant buildings.

Avoid:
Using generic language like “fair use” without specifying standards or benchmarks.

5. Add Renewal, Termination, and Break Clauses

Why this matters: UAE tenancy laws offer limited protection unless contractual rights are well-defined.

What to do:
Include:

Renewal notice period and rent review mechanism
Early termination rights (mutual or one-sided)
Penalties for premature exit
Conditions for break (e.g., force majeure, government regulation)

Example:
“A tenant may terminate the lease after Year 2 with 90 days’ notice and 3 months’ penalty payment.”

6. Protect Use and Compliance with UAE Laws

Why this matters: Authorities in Dubai and Abu Dhabi regularly inspect commercial units. Non-compliance can lead to fines or shutdowns.

What to do:
Define:

Permitted use (e.g., legal consultancy, IT services)
Responsibility to obtain trade licenses
Prohibition on illegal use or subletting without consent
Tenant’s duty to comply with civil defense, labor law, and fire safety

Avoid:
Omitting this clause or relying on oral agreements for changes in business activity.

7. Dispute Resolution and Jurisdiction Clause

Why this matters: Jurisdiction can differ based on whether your lease is in mainland UAE, a free zone, or an offshore structure.

What to do:
State the governing law (e.g., UAE Civil Code) and dispute resolution forum (e.g., Dubai Courts, ADGM Arbitration Centre, DIFC-LCIA).

Tip:
If you’re leasing in a free zone (e.g., JAFZA, DMCC), ensure that your lease is compliant with their real estate and arbitration framework.

Mini Case Example: How One Business Avoided a Major Lease Dispute in the UAE

When a mid-sized logistics company decided to open a new warehouse in Dubai, they were offered a standard lease agreement by the landlord. At first glance, it looked fine—but a closer legal review revealed vague clauses around maintenance responsibility and termination rights.

Instead of signing as-is, the company sought legal help to draft a customized lease agreement UAE landlords would accept but that also protected the tenant’s interests. Their revised lease clearly outlined payment grace periods, clarified who was responsible for HVAC maintenance, and included an early termination clause with agreed penalties.

Three months later, when the landlord requested early termination due to redevelopment, the company avoided a costly dispute by referring to the very clause they had added. Because the lease agreement in the UAE had been carefully structured, the tenant was entitled to a three-month rent refund and compensation for relocation costs.

The key? Getting legal support to draft the lease agreement upfront—not after a conflict arises.

Summary Checklist: Drafting a UAE Lease Agreement

✅ Accurately describe the leased premises (unit, size, annexes)
✅ Specify rent, payment method, and who pays for what
✅ Define handover condition and fit-out responsibilities
✅ Split maintenance duties between landlord and tenant
✅ Include renewal and early termination options
✅ Set clear use, compliance, and licensing obligations
✅ Add governing law and dispute resolution clauses

read this for more information

How to Draft Contracts of Real Estate Rights in the UAE

Closing Thoughts + CTA

Drafting a commercial lease agreement in the UAE is more than filling in a template—it’s about foreseeing legal and operational risks. Whether you’re a landlord leasing to foreign investors, or a tenant entering a free zone for the first time, a strong lease sets the tone for a smooth business relationship.

Need help customizing your UAE lease agreement?
Book a consultation or download our commercial lease checklist to make sure you’re covered.

How to Draft a Lease Agreement for Commercial Real Estate in the UAE