Can a factory be sold without the landlord’s consent? Selling the business is different from transferring its lease. Article 729(1) of the Civil Transactions Law ordinarily requires written consent for assignment or subletting.
Article 728 addresses a necessary sale of a factory or shop established on leased property. The court may continue the lease if the buyer provides sufficient security and the landlord suffers no actual harm.
Summary
Selling factory assets and transferring the factory’s lease are separate legal questions. Owners can generally sell what they own, subject to contractual restrictions and the landlord’s statutory rights over movables. Lease assignment or subletting ordinarily needs written consent.
Article 728 provides a court route for a necessary sale of a factory or shop on leased property. The buyer must provide sufficient security, and the landlord must suffer no actual harm. Share sales also require checking any change-of-control clause.
Can A Factory Be Sold Without The Landlord’s Consent?
| Issue | Legal Position And Source |
|---|---|
| Assigning or subletting | The tenant cannot assign the lease or sublet the premises, fully or partly, without the landlord’s written consent. A later consent, express or implied, counts as prior written consent (Article 729(1)). |
| Lease clause | The landlord can give the tenant the right to assign or sublet in the lease. A sublease can differ from the main lease but not conflict with it, and cannot be longer (Article 729(2)). |
| With consent | If the tenant assigns the contract with the landlord’s permission, the new tenant replaces him in all rights and duties under the lease (Article 727). |
| Factory or shop sold of necessity | Article 728 applies where necessity requires selling a factory or shop established on leased property. The court may continue the lease if the buyer provides sufficient security and the landlord suffers no actual harm (Article 728). |
| End of the main lease | If the main lease is canceled or ends, the landlord can end the sublease and take back the property (Article 729(4)). |
| Subletting in Dubai | Unauthorized subletting can support eviction under Article 25(1)(b), subject to the applicable tenancy law (Dubai Law 26/2007, as amended). |
Review The Lease Before Signing The Sale
Before signing a factory sale, send the lease and proposed transfer terms to Leaders Advocates on WhatsApp.
What Can Be Sold And What Cannot
The answer depends on what is being sold.
- Owners can generally sell factory machinery, stock, and transferable business rights. Contractual restrictions and the landlord’s statutory rights over movables must still be checked under Article 723. Contract transfers may also require the relevant counterparty’s consent.
- The tenancy itself needs the landlord’s written consent to be assigned (Article 729(1)).
- If the tenant is a company, selling its shares does not assign the lease, because the company has legal personality that begins on registration (Commercial Companies Law, Article 21). Check the lease for a clause that treats a change of control as an assignment.
A share sale raises different mechanics from an asset sale; see transferring company shares in the UAE.
- A buyer who takes over the premises without consent risks eviction, and the original tenant stays liable to the landlord.
Steps For A Tenant Who Wants To Sell
- Read the lease for clauses on assignment, subletting, change of control and the landlord’s pre-emption.
Before agreeing the transaction, consider company due diligence before a transaction.
- Ask the landlord for written consent, stating the buyer’s identity, financial strength and intended use.
- Offer a guarantee, such as a deposit or a bank guarantee, because the court looks at the buyer’s guarantee and the landlord’s harm (Article 728).
- Put the consent and the substitution of the tenant in a written agreement signed by the landlord, the seller and the buyer (Article 727).
- If the landlord refuses without a real reason, take advice on asking the court to keep the lease under Article 728.
- Register the new tenant and update the license and the tenancy registration where the emirate requires it.
If continuation is impractical, consider the separate rules on ending a tenancy contract early.
Applicable Federal And Local Rules
The cited Civil Transactions Law is Federal Decree-Law No. 25 of 2025, effective June 1, 2026. Earlier transactions require transitional analysis. Local tenancy rules also apply within their scope.
Article 723 limits the landlord’s retention rights where removal follows ordinary business or life, or remaining movables sufficiently secure rent.
Frequently Asked Questions
Discuss Your Factory Sale And Lease Transfer
To discuss a factory sale involving leased premises, share the lease and sale terms with Leaders Advocates on WhatsApp.
Legal source: Civil Transactions Law
Legal source: Commercial Companies Law
Legal source: Dubai Tenancy Law
Legal source: Dubai tenancy amendments
