UAE corporate lawyers have entangled the finance law to include the rights and obligations of lessor by releasing new Finance Lease act in UAE
What is New Finance lease act in UAE
Finance Lease act is a concept where a legally approved business firm Financial leasing is a concept wherein a licensed company (the lessor) obtain the asset of their customer (the lessee) on lease for a period of time by mutually accepting an agreement. The Finance lease act is same like any other lease agreements.
- As per Engaging in financial leasing activity the company must be registered and should have relevant license -Article 2 of the Law
- The company must get a license from the Central Bank till then they are not allowed to practice financial leasing activity
- If the person is not authorized by the Central Bank must not use the term “finance lease” or any similar name.
According to Article 3 of New Finance lease act in UAE the agreement shall be registered in accordance with the In line with the foregoing, the Article 3 states that the lease contract shall be written and should be registered or an indication thereof in a special register in accordance with the regulations of of this Finance lease act or else it will be invalidated.
Article 4 of the New Finance lease act in UAE:
- Name of the lessor and relevant address and details;
- The description of the leased property;
- Duration of the contract;
- Purpose of the used property and limits on the usage of the property;
- The amount of the rent and the payment schedule;
- Conditions and provisions to be imposed on the tenants;
- The rights of the tenants to the owned premise;
- Information regarding the lessee;
- Rights and obligations of both the parties;
- Substantial obligations that may result from the breach of contract or dissolution of contract;
- Any statements, conditions or provisions agreed upon between the parties in the manner not contrary to this law.
Rights of the Lessor and Lessee
- Taking ownership of the leased belongings from the lessor after the approval of the agreement;
- The money transfer as per the mutual agreement;
- The The utilization of the leased property as per the contract and within the appropriate use;
- Keep the leased property as stated in the contract and there should be any alterations without the knowledge of both parties;
- Provide the leased property as agreed condition, and allow him to use the same;
- Notify the supplier in writing at the conclusion of the contract of supply of his intention to rent the property under the contract along with the name of the tenant;
- Insurance on leased premises.
- Perform the required maintenance/alterations required by the Leased Premises, in accordance with the terms agreed upon in the contract;
- The option of the supplier, and to decide the terms of the agreement;
The law forces strict penalization including fine and imprisonments for those who breach any provision of this law. Article 33 of the Law imposes of imprisonment and a fine of not less than two hundred thousand dirhams and not exceeding ten million dirhams or one of these penalties on anyone engaged in financial leasing activity or using a lease term Finance in its trade name without a license.
Read More: https://elaws.moj.gov.ae/UAE-MOJ_LC-En/00_FINANCE/UAE-LC-En_2018-12-18_00008_Kait.html?val=EL1