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Editorial

What are the rights and obligation of owners association?

The complexity and challenges faced by the mixed-use community (joint owners) have witnessed tremendous growth as compared to single-use projects. The answer for how to create a successful and well-maintained mixed-use community lies in how the sharing is handled.

Shared spaces in mixed-use community comprise of hallways, parking areas, corridors, gardens, utilities. Also, the cost incurred in maintaining such shared spaces is paid by all the owners jointly. Accordingly, the Emirate of Dubai introduced Law Number 27 of 2007 regarding the Ownership of Jointly Owned Properties in Dubai hereinafter referred to as the JOP Law . Dubai Land Department has further laid down guidelines in line with JOP Law for maintenance of the mixed-use community. The last circulars issued by DLD were in 2014 regarding Service Fees Claims and a circular for Property Developers. The Real-Estate lawyers in Dubai have outlined certain important aspects of JOP law under this article and we hope it provides a detailed insight of rights and obligations of owners association in Dubai.

Recapitulation of JOP Law

Mixed-use community or jointly owned property is a most common concept within Dubai where the property is divided into numerous single-owned unit and jointly owned common areas. According to Article 17 of the JOP Law, an owners association is automatically created upon registration of the first unit with the land department, and the owners of private units automatically become the member post registration with Dubai Land Department.

Owners association is a non-profit organization holding a legal capacity to sue and to be sued and to hold assets in its name, pursuant to Article 18 of the JOP Law. The JOP Law further under Article 21 defines the functions of an owners association which mostly includes managing, operating and maintaining the jointly owned properties. Therefore, it is necessary for an owners association to obtain relevant license from Department of Economic Development of Dubai. However, there are numerous short comings in the registration process of the association making it difficult to hold assets, open bank account and take any legal action. Bearing in mind, Real Estate Regulatory Agency (RERA) has recently issued a procedure for establishing an Interim Owners Association which were created for specific purposes. Yet, interim OAs face numerous issues as they require equal support of developers to maintain and manage the development.

Rights and Duties of Owners Association

Owners Association, as well as the individual owners, are responsible for maintaining and managing the development. As expected under the JOP Law, every single owner must maintain his personal property bearing in mind the norms of the building. The individual unit owner cannot undertake any amendments in the property unless prior written approval is obtained from the Owners Association.

The tasks of Owners Association includes a collection of annual maintenance fees, administering the financial accounts, paying collective bills for electricity, municipality, accelerators, common areas, the safety of tenants and guests, maintenance of the building and more. In accordance with Circular number 1 of 2014 issued by RERA regarding regulation of service fees claims, owners association has the authority to collect service fees. It further states that RERA approved auditor shall be appointed by the association for reviewing and certifying the financial report regarding the collection of service fee and it must be in accordance with RERA rules. Nevertheless, if in any case, the owner fails to deposit the service fee, the Association has the authority to discontinue his rights under public utility service and may claim further fees as approved by RERA.

The second circular number 2 of 2014 regarding the property developer which imposes a mandatory obligation of establishing an owners association for completed projects if the developers are managing the building for one year or if a complaint has been received for mismanaging the building. In this regards, the developers shall submit several documents for establishment of the Association which includes the following:

a. Site plan for common areas;

b. Declaration for jointly owned properties;

c. Architectural drawings of the building;

d. Statement for building management and other requested documents.

Interim Owners Association

RERA has issued regulation for establishing an Interim Owner Association (IOA). The objective of establishing IOA is to allow owners and developers to effectively present their views to the authority. The procedure for setting up IOA has been defined by RERA wherein, post the completion of the building irrespective of the fact if it is transferred or not, the developer shall notify for the commencement of Interim General Assembly (IGA). The notification should be sent to all the purchasers by giving a notice period of 21 days. A copy of such notice shall be given to RERA. Upon setting up Interim Board, the developer must provide them with the copy of the purchase and the contact details of individual owners and all other relevant information.

The primary objective of the Interim board (IB) is to establish owners association by allowing:

a. IB must work along with the developer and must have a complete understanding of the building management;

b. IB must review all the contracts entered into by the developer;

c. The board should liaise with RERA for understanding the content of declarations and management statement;

d. The board shall inform the IOA of their findings and suggestions.

It is further significant to note that any decisions made by IOA shall not be binding on OA as IOA’s only objective is to establish OA and not perform their tasks. RERA offers specified legal status to IOA which includes:

a. To monitor the tender process and appoint the service providers;

b. To check the performance of service providers;

c. To verify the budget after liaising with RERA;

d. To suggest improvements and amendments in the building;

e. To collect interim service charges.