Dubai: Can tenant be penalised for ‘bounced’ direct debit payment?

Dubai: Can tenant be penalised for ‘bounced’ direct debit payment?

The online registration system Ejari has allowed landlords to debit rent from the tenant’s account directly, thus doing away with the need for post-dated cheques

Published: Mon 6 Feb 2023, 3:24 PM

Dubai has integrated the real estate online registration system Ejari with a direct debit system of the Central Bank, thus allowing landlords to debit rent from the tenant’s account directly, doing away with the need for post-dated cheques.

But one of the challenges to date with the transition for some landlords to migrate from post-dated cheques to direct debit has been the issues around enforcement in the case of ‘bounced’ direct debit.

Previously, there was a perception that the payment of future rental instalments without a cheque in hand is not protected. But real estate brokers and property management firms said this is not true, as the tenant has to sign the direct debit mandate again – forming a binding, legal undertaking that they will honour the rental payments just the same as a post-dated cheque.

Although the UAE decriminalised cheque bounces in December 2021, the payee of the cheque may file an execution case against the payor, according to legal experts.

In the event of a ‘bounced’ direct debit payment due to lack