FAQ: What Is Key Money In Dubai?

“Key money is considered to be a fee paid to a manager or a landlord in order to secure a lease on a residential or commercial property. The term is often referred to as a security deposit.

Is key money refundable?

Where Does it Go? Usually, key money is refunded to the tenant upon a lease’s conclusion, unless there are damages to the property that must be paid. It is actually illegal for a landlord to hold on to the money or refuse to refund it if there are no outstanding fees.

What is key money in UAE?

The term Key Money in the UAE means a certain amount of money, which is paid to the land owner when signing the lease. It is noteworthy that this amount complements the rent and serves as a kind of guarantor and symbol of the transferring of the right of possession of the property.

Is key money legal?

Key money is sometimes a synonym for a security deposit. Other times it’s a bribe. Payment of key money is legal and acceptable in certain commercial lease transactions.

Is key money an asset?

The key money (lease premium) should be capitalised as part of the amount recognised as an asset under the lease. The key money is an additional payment to the lessor that is included in the present value of the minimum lease payments (IAS17.

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What is key money in hospitality?

Key money is an up-front payment by a hotel operator or franchisor to a hotel owner to secure the entering into of a HMA or franchise agreement. In essence, key money is a financial contribution by the operator to the owner.

Is key money legal in UAE?

Not legal. “In the UAE, such practice is not regulated by any law, hence it is not legal to ask for key money either by landlords, developers or brokers. The Dubai Land Department (DLD) does not encourage such a practice in any way.

Can landlord charge key deposit?

The Act states that “ A lessor must not require or accept a holding deposit.” NSW – The tenant’s application must be approved. The deposit can be no more than 1 week’s rent. The landlord must refund the deposit if they decide not to proceed with the lease.

What determines the size of key money payments?

The net present value differential should be used to determine the maximum amount of key money that Tim is willing to pay to secure the lease of Building A. For example, if the net present value differential is $75,000, Tim could offer up to that amount to secure the lease of Building A.

What is key money in accounting?

Key money is any sort of non-refundable benefit, usually money, paid in exchange for the granting, renewal, extension or assignment of a retail lease.

Is key money amortized?

Key money and ASC 842 Basically, a payment of key money in this context should become a part of the right of use (ROU) asset, which will then be amortized over the term of the lease. It does not impact the lease liability, because the key money has already been paid.

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Is money a liquid?

Cash is legal tender that a company can use to settle its current liabilities. For example, the money in your checking account, savings account, or money market account is considered liquid because it can be withdrawn easily to settle liabilities.

Is key money an intangible asset?

We have accounted for key money payments as an intangible asset under SFAS No. 142, as these amounts represent the right to occupy the underlying properties and the ongoing benefits associated with this right.

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