Interpreting Dubai’s New Law Governing Jointly Owned Properties

Introduction

On 4th September 2019, in his capacity as Ruler of Dubai, Vice President and Prime Minister of the UAE His Highness Sheikh Mohammed bin Rashid Al Maktoum issued Law No. (6) of 2019, which is related to joint ownership of real-estate in Dubai.

It is believed that the new law will have great positive impact upon the Real-estate market of Dubai, as a large amount of property in the area is held under joint ownership. This law was necessitated because in recent year there arose many conflicts under the previous law,   affecting the value of Real-estate in Dubai. This Law repeals Law no. 27 of 2007 Concerning Ownership of Jointly Owned Property in the Emirate of Dubai, and the new law will come in full effect on 4th of March 2020.

Essential Aspects of the Law

This new law deals with the management and maintenance of the joint ownership spaces of the property and provides that, for these purposes the developer or the management company will be responsible opposed to the earlier law, in which the owner of the property unit will have to make an association of owners and then the board through the association, which will govern the management and maintenance of the property. But in the new law all this was scraped and a new mechanism was created, for this purpose the properties has been divided into three categories , provided in article 18 of the law, they are as follow-

  1. Major projects– the projects that fall under this category are determined according to the criteria determined by a decision of the director general of the Dubai land department, in this regard. In this kind of projects developer shall be responsible for the management operation and maintenance of the common part of property, and for this he may appoint a management company which must be approved by R.E.R.A. (Real Estate Regulatory Authority). An owners’ committee will also be formed in each major project from  the group of owners, the committee shall consist of  maximum  nine members and they have the responsibility of verifying and ensuring that the management company is doing its duty, they will further review the annual budget of maintenance of common property and may provide recommendations for the same, they can also make complaint to R.E.R.A if the management company do not take any action on the complaint of the owner of the property. It is further provided that if R.E.R.A finds out that the developer is incompetent to manage the common property, then the executive director of R.E.R.A can appoint a management company to manage the property.
  2. Hotel project For those real-estate projects which are licensed as hotel project the developer of hotel project shall appoint a management company, who will manage and maintain the whole project and such management company must be approved be R.E.R.A. Further if the hotel management company approves, an owners’ committee can also be formed, however it does not have the right to interfere with the management of the hotel or its components. Further, the developers have failed in appointing a company or are incapable from doing so, RERA may use its own power under article 37 of the law and may appoint a company itself to manage the affairs of common area of the project.
  3. Other projects– These are rest of the projects which do not form part of the above-mentioned projects, in this kind, the R.E.R.A itself will appoint the managing company who shall manage the affairs of the common ownership spaces of the project, in this kind of project also an owners committee shall be formed which shall not exceed more then nine members, it will also check the working process of the management company and it shall have further power to recommend to R.E.R.A. to change the management company. Further if the R.E.R.A. finds that the management company is incompetent it may appoint an alternative management company to look upon the management affairs.

Other Aspects of the New Law

  1. End of owners’ association– According to the previous law there is a joint owned property declaration which shall be registered with R.E.R.A. and the owners of the unit shall be governed by this declaration only, there shall also be an owner association which shall govern them and manage jointly owned area. But according the new law there is no need of such declaration and association, as it is replaced by the bylaws and bylaws of the complex, where the joint ownership common area must be defined, further mention the power of owners’ committee and how shall it be governed. It is further provided that these documents shall be the part of the property deed. The developer has to file these documents to R.E.R.A. within 60 days of getting the certificate of completion of project.
  2. Service charge and Utilization charge In the new law it is further provided that, the owners have to pay to the management body a certain amount of charge so cover the expenses incurred by the management company in managing the affairs of the common area. However the management body cannot charge anything they want they have to first take the permission of R.E.R.A. then they could only charge, R.E.R.A. will also appoint an auditing committee who shall audit and fix the service charge. Further in case of an uncompleted building the master developer can charge the owner to pay certain utilization charge.
  3. Responsibility of the developer– It is further provided in the new law that the developer shall be responsible to repair or replace defective fixture in the common area of the property for the period of one year from the date of the completion of the project. Further he shall also be responsible for the period of ten years to repair or correct structural defects in the commonly owned area of the property.
  4. Dispute resolution according to the new law the rent dispute settlement centre in Emirates shall have exclusive jurisdiction to deal with any dispute arising under the new law and the centre will deal with the disputes according to its procedural law.
  5. A common property register shall be maintained by Dubai land department which shall contain all the particulars regarding the developers, the owners, the committee and the management company.

Conclusion

Therefore, after looking upon each and every aspect of the new law it can easily be pointed out that new law would be welcoming move in the growth of Real-estate industry in Dubai, as it decreases the burden from the owner to manage common area which will attract them more to buy new properties in Dubai.

Author:

Adv. Deepak Azad
Corporate & Commercial – Incorporation of Companies: Corporate Restructuring |
Project and Infrastructure – Construction | Energy – Oil and Gas