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The proper management and cost-effective maintenance of a development's facilities are necessary for a property's upkeep. It was originally the developer's responsibility to maintain common areas, such as gardens, pools, car parks and gyms, but when Dubai introduced the jointly owned property (JOP) law in 2007, the administrative rights of common areas were transferred to unit owners through an owners' association (OA). The regulation aims to protect the interests of all parties, namely the developer, owners and tenants of the property. Therefore, understanding how an OA functions is important before buying or renting a home.
The JOP law is not a new concept. It was first introduced in Australia in 1961 and has been adopted by various governments around the world. Brent Baldwin, Partner at Hadef and Partners, says, ''The JOP law is underpinned by a number of supporting directives issued by the Real Estate Regulatory Agency. Owners of apartments and villas in communities that have a JOP component become members of an OA for the relevant community.
''The OA has a number of responsibilities relating to the maintenance and management of the [property]. These are generally exercised by voting and through an elected board [of directors] and an appointed association manager.''
In recent years, OAs have become essential for all JOP developments and are predominantly formed by the property owners themselves, says Jodie Louise Smith, CEO of JLS Properties. ''The association consists of a board of up to seven members [along with] three reserve members as voted in by the owners, [and] actions and manages the building funds regulated under [the law].''
However, despite the law being around for seven years, property owners are still unable to take over full responsibility of managing their buildings, she says. ''This is because there is a delay in certain developers registering the OA, which has caused some difficulties. But these are just teething problems.'' Smith adds that hundreds of interim owners' associations (IOAs) have been created by developers and unit owners instead to encourage communication and cooperation between owners and developers, although these are not recognised and lack legal privileges under the JOP law.
The main goal of OAs is to monitor, manage and set rules for shared spaces and services in a development, says Mario Volpi, Managing Director of Ocean View Real Estate. These include:
• Maintaining records such as minutes of general assembly meetings and financial statements and other records as specified by the Dubai Land Department and keeping files of relevant documents, contract agreements, and registers of occupiers, owners and assets.
• Collecting service charges from owners and establishing and maintaining general and reserve funds in the name of the OA as well as accurate accounts of all income and expenditures in accordance with its constitution.
• Insuring the building and common areas. However, the contents of individual units are not the responsibility of the OA.
• Enforcing OA rules.
• Supervising the performance of contractors and suppliers in common areas.
Areas of dispute
Service charges, maintenance of the property and usage norms for shared spaces are key areas where disputes can arise between OAs and unit owners or tenants. Volpi explains, ''The cost of service charges can often be contested as the perception is that it continually rises. The maintenance of the property comes into question when owners are paying charges, but the level of maintenance is perceived to be lower than their expectations.''
Tenants must either contact the OA directly or ask their agents about the rules and potential consequences for violating any. It is also important to be familiar with the process of changing or adding new regulations. If a buyer is not comfortable with the OA's rules, it is best to look for residential property elsewhere.
''The OA enforces the rules set out in the JOP declarations [JOPD] for a specific property,'' says Nick White, Head of Association Management at Asteco. ''The JOPD sits beneath the general directions and regulations that include a generic constitutional document and provides uniform regulation across properties.
''The structure of the property and the preferences of the OA will subsequently affect the differing JOPDs. Most properties differ in structure and design, which, in some cases, subsequently affects how the property is to be managed and what rules are applicable. A mixed-use property will have different rules from a single-use property. A [community] in one area might have different rules from another.''
White explains that the owner of a unit will have obligations set out by the JOPD and other Dubai regulations, such as how much and how often to make payments for service charges or the responsibility to submit correspondence details or follow certain procedures for alterations to the property. These directly involve the owner, but not usually the tenant.
He adds that there are more general community rules and management procedures. Unit owners and tenants are obliged to abide by these rules through the sales and purchase agreement or JOPD.
''In general, what all residents want is peaceful enjoyment of their place of residence,'' says White. ''The rules of the association are formed to provide a foundation to achieve [them] in the most efficient and painless manner [and] to suit all owners so there is uniformity each and every time.
''However, while one person's lifestyle might be easily accommodated by the OA rules, at the same time another's could be compromised. But at a macro level, the norms stipulated by each OA should go some way to providing a good lifestyle to the majority so that harmonious living is achieved.''
A word of caution though: Owners need to be aware that breaching community rules could result in penalties and claims by the OA, says Baldwin.
For their part, tenants need to be aware that violating community rules can lead to liabilities under the terms of the lease, and even the loss of privileges within the community.
Simon Gray, Managing Director of Chestertons Middle East and North Africa, shares tips to maintain harmony between the owners' association (OA) and owners and tenants.
• Community rules are very specific to each OA, so find out about them before selecting a home. The most common rules concern pets (whether they are allowed or not), alteration and occupancy restrictions, usage of common areas (timings and etiquette), and balconies, noise regulations and so on.
• Most tenants do not read the details of a tenancy contract, which could favour the landlord. Disputes are usually about rent hikes, evictions and security deposits. Law No. 26 of 2007 provides clear directives regarding these issues.
• Community rules and maintenance charges differ across developments, so tenants must know these beforehand. It is also advisable to check if there are any unpaid dues against the property, as these could lead to a disruption of services.
• Paid on a quarterly basis, service fees are normally computed per square foot and vary based on location and property type. They range from Dh10-Dh20 per square foot for apartments in secondary locations, Dh70-Dh100 for prime properties and Dh2-Dh7 for villas.
• Maintenance fees generally include the common areas. All faults related to individual units are the responsibility of the owner or occupant.
Read more on the need to empower owners' associations
Source: Hina Navin, Special to Property Weekly