Dubai security deposits and early exit: what the law says versus what the lease says

Two questions come up constantly from tenants in Dubai: how much deposit can a landlord legally demand, and what happens financially if a tenant needs to leave before the lease ends. Both answers are shorter than most guides suggest, because the statute that governs Dubai tenancies, Law No. 26 of 2007 (as amended by Law No. 33 of 2008), says less than the market has built on top of it. This article separates what the law actually requires from what is standard contract practice, using the text of the law itself rather than the figures repeated across property-marketing pages.

A newer federal law is also relevant context. Federal Decree-Law No. 25 of 2025, the UAE's new Civil Transactions Law, took effect on 1 June 2026 and replaced the old 1985 Civil Code. It left Dubai's own Law No. 26 of 2007 and Law No. 33 of 2008 in place as the specialised legislation that governs deposits, early termination and eviction notice for Dubai tenancies, so everything below still applies.

What the law actually says about deposits

Article 20 of Law No. 26 of 2007 does two things. It permits a landlord to take a security deposit from the tenant to ensure the property is maintained, and it obliges the landlord to refund the deposit, or whatever remains of it, once the lease contract expires. That is the entire statutory text on deposits. The article does not set a percentage, a formula, or any method for calculating the amount, and it does not fix a number of days for the refund.

That gap matters because it is routinely filled in by marketing copy that states, as if it were law, that deposits are fixed at 5% of annual rent for unfurnished units and 10% for furnished ones. No provision in Law No. 26 of 2007 or Law No. 33 of 2008 sets a deposit percentage. The 5%/10% split is market custom, one that RERA and the Rental Dispute Settlement Centre recognise as the prevailing arrangement, but it is not legislated.

The 5%/10% split is practice, not a published rate

Dubai brokerages and property managers commonly charge 5% of the annual rent as a deposit for an unfurnished unit and 10% for a furnished one. This is standard market practice rather than a rate published by any regulator. RERA has not issued a mandatory, uniform deposit percentage; its statutory role under Article 4(2) of the law is registering tenancy contracts and their amendments through the Ejari system, which gives a lease its registered legal basis, not setting the deposit figure itself.

For a tenant working out what to expect, the practical math is simple even though it isn't in the statute. On an annual rent of AED 100,000, the customary deposit would work out to AED 5,000 for an unfurnished unit or AED 10,000 for a furnished one. Landlords are free to ask for a different figure, and some do, because nothing in the law caps or fixes it.

Getting your deposit back: refund and deduction rules

Article 20's refund obligation is tied to one event: the expiry of the lease contract. It does not specify a deadline in days. Property managers and brokerages commonly advise returning the deposit, minus any agreed deductions, within about 30 days of the tenant handing back the keys, but that is an industry norm, not a statutory deadline, and a landlord who takes longer is not automatically in breach of Article 20 for that reason alone.

What a landlord can deduct is governed by Article 21, which requires the tenant to return the property in the same condition it was received, except for ordinary wear and tear. That exception is the legal standard a landlord has to meet before any deduction is justified. Faded paint or minor scuff marks sit outside what Article 21 allows a landlord to charge for, so deducting for them is not permitted under the law's own condition standard, whatever a particular contract clause claims. Standard property-management practice operationalises this by limiting deductions to damage that clearly exceeds wear and tear, such as broken fixtures, large holes in walls, or stained flooring, and by expecting the deduction to be supported by an invoice.

Breaking the lease early: what the contract decides, not the law

Article 7 of the law provides that a valid lease cannot be unilaterally ended during its term by either the landlord or the tenant. It can only end by mutual agreement or under the law's own provisions. Because unilateral mid-term termination is barred, any fee a tenant owes for leaving early is created entirely by the individual tenancy contract's own early-termination clause. There is no article in Law No. 26 of 2007 or Law No. 33 of 2008 that sets an early-termination penalty figure.

That means the widely repeated claim that Dubai law fixes a two-month penalty for ending a lease early is not correct. Many Ejari-registered contracts do include a clause of that kind, commonly set at around two months' rent, but the figure and the notice period it requires are negotiated between landlord and tenant at signing and vary by contract. Where a lease is silent on an early-exit fee, no such penalty is automatically owed.

It also follows that a tenant who breaks a lease early does not automatically forfeit the entire deposit. The law provides no blanket forfeiture rule. What the tenant owes is whatever the contract's own early-termination clause specifies, and a landlord may set that amount off against the deposit rather than treating the deposit itself as the penalty. The two are legally distinct even when a single payment settles both.

Don't confuse the early-termination notice with the eviction notice

One recurring source of confusion is between two different 90-day-adjacent figures in the amended law, and it is worth being precise about both. Article 14, as amended by Law No. 33 of 2008, requires a party who wants to amend a lease term, such as the rent, under Article 13, to notify the other party no less than 90 days before the contract's expiry date. That is the full scope of Article 14: it covers amending terms, and it does not address non-renewal or ending the tenancy.

A separate provision, Article 25(2) as amended, lets a landlord evict a tenant at the end of the lease term only for demolition, major renovation requiring vacancy, the owner's or a first-degree relative's personal use, or sale, and it requires at least 12 months' notice delivered via notary public or registered mail stating the reason. Guidance aimed at tenants frequently conflates these two: the 90-day Article 14 notice for term amendments and the 12-month Article 25(2) notice for an expiry eviction over sale, owner use, or demolition are different notices serving different purposes, and neither one is a general right to end the lease for any reason on short notice.

Documenting condition at move-in and move-out

The law does not mandate a condition report. Neither Law No. 26 of 2007 nor its amendments require a formal move-in or move-out inspection document. A signed condition report with dated photographs at handover is a market practice, one that both tenants and landlords use to build evidence for a later deposit dispute, not a legal filing requirement.

That evidence matters in practice because of how disputes are actually decided. Dubai property lawyers advising on deposit disputes commonly note that the Rental Dispute Settlement Centre expects whichever party alleges damage to produce dated photographic or written evidence of the property's condition at both move-in and move-out before it will award a deduction. A tenant or landlord without that record is arguing from memory against a standard of proof the Centre applies consistently.

Taking a deposit dispute to the Rental Dispute Settlement Centre

Decree No. 26 of 2013 gives the Rental Dispute Settlement Centre exclusive jurisdiction over "Rent Disputes," defined broadly enough in the decree to cover disputes between landlord and tenant over leasing and renting, which includes security-deposit refund disagreements. The decree itself, in Article 23(a), does not state a filing-fee percentage. It leaves the Centre's fees to a separate resolution of the Chairman of the Executive Council, meaning the fee is set in subordinate regulation rather than in the decree's own text.

The Centre's own fee page sets the filing fee at 3.5% with a floor of AED 500. The AED 20,000 cap applies to claims valued by annual rent (eviction, renewal, rent, termination), while a stand-alone deposit-refund claim is a monetary claim valued by the amount in dispute and capped at AED 15,000. The Executive Council fee resolution itself was not retrieved for this review; the figures above are the Centre's own published schedule. One structural detail from the decree is worth knowing regardless: Article 10 provides that half of the registration fee is refunded if the case settles at the Centre's Conciliation Department before reaching the Judicial Committee, which gives both sides a financial reason to settle a deposit dispute early rather than litigate it in full.