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Real Estate Brokers’ Rental Scams and Ways to Avoid Them

In recent years the story about real estate brokers in Dubai scamming tenants out of their rental cheques seems to have resonated with a surprisingly large number of people. The story referred to real estate agents running away with tenants’ rental cheques, issued in the name of real estate agents. Many issued cheques in the amount of a full year’s rent, plus other fees, such as deposit, commission and DEWA bills. These amounts were never transferred to the intended landlords and, as such, no tenancy relationship ever materialized. Meanwhile, the real estate agents were nowhere to be found.
This is unfortunate, indeed but not unavoidable. In fact, there are certain steps that tenants can and should take to ensure that they do not fall prey to such scams in the future.

First, tenants should never issue rental cheques in the name of either a real estate agent or the real estate company. Nor should they transfer cash to anyone other than its intended recipient. In the case of rental cheques, the intended recipient is the landlord. Therefore, cheques should only be issued in the name of the landlord, including guarantee deposits and DEWA bills. Only commission cheques should be issued in the name of the real estate agent.

Second, prior to engaging the services of any real estate agent or agency, tenants should confirm that both the agent and the agency are registered with RERA and are properly licensed. Freelance real estate agents are no longer allowed. Under RERA regulations, all real estate agents and real estate companies must be registered with RERA. To be registered with RERA, agents must meet certain academic qualifications, take a specialized course developed by the Dubai Real Estate Institute and pass an exam. All real estate agents must have and carry with them a RERA card. Tenants should always ask agents for proof of the RERA card, before formally engaging them. While being RERA registered does not guarantee that agents will not engage in scams, it does offer additional scrutiny and a system of accountability.

Third, tenants should also ask for a copy of the trade license of the real estate agency for whom the real estate agent works. Should the agent abscond or act improperly, tenants may also have recourse against the company. Noteworthy, under the U.A.E. law, all real estate brokerage companies must be 100% owned by a U.A.E. national. Therefore, at least the abscondence of the owner of the company is unlikely.

Four, tenants should avoid paying for rent in one cheque. Paying in multiple cheques, even monthly cheques, is becoming more acceptable. Such practice will further reduce the chances of rogue real estate agents, insofar as it will minimize the incentive to engage in fraudulent activities.

Finally, tenants should always try to establish direct contact with the landlord themselves to ensure that the agents are their lawful representatives. A copy of the agent’s passport and a power of attorney from the landlord would also be beneficial.

Article brought to you courtesy of
Ludmila Yamalova

www.lyhplaw.com



One Response to “Real Estate Brokers’ Rental Scams and Ways to Avoid Them”

  1. Katherine says:

    Thank you for this article, it addresses several of my concerns.


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