Security Deposit in ADGM Residential Leases

1. Security Deposit Rules under ADGM

Under the ADGM Real Property Regulations 2024, security deposits in short-term residential leases may be used for direct and reasonable losses arising from the tenant’s obligations, including:

• Unpaid rent;

• Breach of lease obligations; and

• Damage caused by the tenant or persons acting on their behalf.

 

However, a landlord cannot deduct amounts for:

• Fair wear and tear;

• Damage caused by the landlord; or

• Repairs and maintenance that fall under the landlord’s responsibility.

 

A security deposit is not intended to cover property upgrades or routine maintenance. It should not be used for improvements, repainting, preventive maintenance, natural ageing, or works that the landlord would normally carry out.

 

2. Fair Wear and Tear and Tenant Liability

Fair wear and tear is a key factor in ADGM tenancy disputes. Tenants are generally not responsible for normal deterioration caused by ordinary residential use, such as:

• Minor marks;

• Faded paint;

• Worn sealant;

• Ageing appliances; and

• Loose fittings.

 

However, tenants may be responsible for damage beyond normal use, including:

• Cracks;

• Breakages;

• Stains;

• Missing fixtures;

• Misuse of appliances; or

• Any damage caused by negligence or misuse.

 

Any deduction must be reasonable and supported by evidence, including photographs, inspection reports, invoices, receipts, or quotations. The landlord should also consider the age, depreciation, and condition of the item before claiming costs.

 

3. Abu Dhabi Mainland Comparison outside the Jurisdiction of ADGM:

Unlike ADGM, Abu Dhabi mainland security deposits are mainly governed by the lease agreement and Tawtheeq-registered terms. Abu Dhabi Lease Law No. 20 of 2006 regulates landlord-tenant relations generally but does not provide the same detailed security deposit framework.

 

Accordingly, deductions depend mainly on the lease terms, evidence of actual loss, and whether the claimed cost is the tenant’s responsibility or the landlord’s maintenance obligation. Necessary repairs required to preserve the property or ensure its proper use generally remain the landlord’s responsibility, while minor rental repairs, such as small fittings or consumable items, may fall on the tenant unless otherwise agreed.

 

Conclusion

In ADGM, security deposit deductions must be based on actual, reasonable, and evidenced losses. Landlords cannot use deposits as a means to recover normal maintenance costs, while tenants remain responsible for damage beyond ordinary use.