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An owners association (OA) is the cornerstone of a planned community. It brings continuity and order, preserves architectural integrity, promotes the concept of community and protects the neighbourhood's property values. It also collectively makes available recreational and other facilities that might not be affordable or available to homeowners and residents.
While the law on OAs was introduced in 2007, many still don't understand its purpose, role and functions and how property owners can play an active role in their association. While there are laws governing an OA's functions, the association can have a powerful impact on your rights as a property owner, so it is important to understand its role and responsibilities.
The OA maintains the common areas of a building or community, manages its expenses and caters to the needs of the occupants. The Dubai Government issued Law No. 27 of 2007 concerning ownership of jointly owned property (JOP) to ensure that all payments made towards the maintenance of the community are appropriately utilised, among other things. JOP is defined as the whole or part of a building or land (or both) divided into units intended for separate ownership, where a part of such building or land has been designated as a common area. The law provides for the establishment of an association, which is composed of unit owners.
An OA is required to register with the Dubai Land Department (DLD) and obtain a licence from the Real Estate Regulatory Agency. Article 17 of Law No. 27 of 2007 states that an OA is legally formed upon the registration of the first sale of a unit in a JOP, but will not be fully operational until the JOP Declaration and other relevant documents are registered with the DLD and the licence is obtained.
Article 18 of Law No. 27 of 2007 states that an OA is a non-profit establishment that is a separate legal entity from its members and has the right to sue in this capacity and own movable assets. It is managed by a board whose members are elected from among the unit owners within the community. The developer of the building or community cannot be nominated unless it owns properties in the development.
An OA's responsibilities may be limited to basic maintenance functions or expanded to include sophisticated and extensive upkeep of the property. Apart from maintenance, the OA board is required to handle all the expenses related to the management of the property. For this purpose, the board is entitled to collect annual ser vice fees from property owners and impose penalties on those who fail to pay up.
The annual service charge is calculated on a per-square foot basis, taking into consideration the area of a unit and its proportion to the building or community. It usually covers the expenses incurred towards the management, operation, maintenance and repair of the common areas of the building or community, which include payment of electricity and water bills, insurance premiums, property service expenses and other related charges.
It is important that the board maintains transparency in its accounts, which should be made available to unit owners. Furthermore, a statement of the annual accounts reflecting the funds collected from unit owners and the maintenance expenses need to be submitted to the Owners Association Section at the DLD. The service fee collected by the board is not considered rent or developer allowance and the funds should be strictly appropriated for servicing the property only.
Pursuant to Article 28 to 30 of Law No. 27 of 2007, the board is obligated to obtain a comprehensive insurance policy to cover any damages arising from unforeseen circumstances, with the OA as the beneficiary. The policy must also cover damage to the external and common areas of the property as well as any bodily injury to owners and occupiers caused by such damage. The premiums should be included in the annual service charge.
OAs are also required to conduct annual general meetings where all unit owners and authorised proxies will discuss various issues, including finances and upkeep of the community, or elect a new board. Property owners must be informed of these meetings through their registered contact details.
Grievances related to maintenance should be addressed to the board, which must look into the matter within three to seven days. If a unit owner is not satisfied with the board's decision, he or she may refer the issue to the Owners Association Section at the DLD, which will then call the unit owner and members of the OA to resolve the matter.
Be a member
Another way of addressing issues concerning the building, community or the board is by becoming an active participant. A member can insist on viewing the accounts and details of various tasks undertaken by the board. It is within an owner's right to request the minutes of annual general meetings and other gatherings and pertinent details, as well as information on the units owned by the board members and their correspondences in relation to the community.
Overall, awareness of your rights and active participation in community activities either as a member of the board or the association can help ensure the efficient functioning of an OA.
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Source: Dr Reyadh Al Kabban, Special to Property Weekly
The writer is Managing Director of Al Kabban & Associates, a legal firm he founded in 1993. The firm specializes in advising commercial and insurance companies, banks, and government and private clients