Homefront: 'Will I be penalised for bouncing a cheque to avoid a fraudulent agent?'

The Dubai resident signed a rental deal for a studio apartment but now suspects the real estate agency is not legitimate

The landlord says the tenant has 'effectively lived in the apartment for free' for eight months. Bloomberg

I signed rental cheques for a studio in a five-star hotel. Since then lots of red flags have been raised about the agent and I fear I may lose Dh70,000. The hotel's management say there is no company managing the studio I plan to move into, also they say it's booked by someone else. On top of that, the agency is not verified by the Real Estate Regulatory Authority and it prepared the contract for me rather than the hotel. Once I figured all this out, I immediately transferred the money from my account somewhere else to protect it. Could there be any repercussions from this, such as the cheque bouncing? The agency is not operating officially but I am still concerned I have made the wrong move. How can I solve this as I do not want to lose my hard-earned money? AF, Dubai 

You are right to be cautious, especially when dealing with an agency that is not Rera-registered. However, nobody should deal with unregistered brokers or companies as Rera is your guarantee should anything go wrong.

I cannot condone your actions regarding moving your funds in order to bounce the cheque as this will be regarded as going against the law. That said, it would appear you didn’t have much choice in trying to protect your funds.

A bounced cheque used to attract a jail sentence in some cases, however the law was revised in November 2017. It meant that bounced cheques were no longer put through the court system and instead were treated as a misdemeanour subject to a financial penalty.

Given the cheque amount is between Dh50,000-Dh100,000, the punishment is likely to be a fine of Dh5,000. However, I do not think this will not necessarily lead to any further issues for you due to the apparent fraud.

The red flag for me is the fact that the agency prepared the rental contract which is not correct. All rental contracts for the five-star hotel you were dealing with must be done through the management only. In addition, all the payments (the rent and deposit) go to the hotel brand directly. The only payment a tenant would need to make (having gone through an agent) would be the rental commission the agency charges. This leads me to believe that the agency you used is either unaware of the proper procedures of this five-star hotel or they are acting fraudulently.

My advice now would be to raise your concerns with the hotel's management. Dealing with them directly will insure you get the correct unit. Alternatively, you can safely deal with real estate agents for properties in this particular hotel as long as they all Rera registered and qualified.

Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for 35 years in London and Dubai

The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to [e-mail]