Dubai issues new law covering jointly owned properties

Developers will be responsible for fixing faults in individual units for a year, and for building structures for a decade

A view of towers along the Jumeirah Beach Residences coastline in Dubai. Chris Whiteoak / The National
A view of towers along the Jumeirah Beach Residences coastline in Dubai. Chris Whiteoak / The National

A law governing jointly owned properties was passed in Dubai with the aim to “boost competitiveness and enhance investment in the real estate sector”.

A Dubai government statement issued on Tuesday evening stated Law No 6 of 2019 will create a register for jointly-owned properties, featuring “all information related to the land owned by developers and real estate units meant for independent ownership”.

The register will include details of owners, any ownership committee and information such as responsibilities for common areas and maintenance costs. It places obligations on developers of mega-projects to put suitable building management systems in place, which need to be approved, and establishes roles for owners’ committees. An owners’ committee needs to be set up once 10 per cent of a jointly-owned property’s units have been sold and developers can no longer be part of committees unless there are unsold units in a building.

The committee will be responsible for ensuring proper management of common areas and reviewing annual budgets.

Under the new law, jointly owned properties fall into three categories: mega-projects, hotel projects and any project that requires a facilities management company to look after common areas. Rules regarding ownership committees are not applicable to hotel projects.

As per the law, developers will retain responsibility for a building’s structure for up to 10 years after completion and for “replacing and repairing any faulty items” within individual units for a year after it is finished. They must also allocate the required number of parking spaces to owners and cannot charge separately for these.

Owners' committees should appoint facilities management companies, who can only charge fees for operating and maintaining common areas once they gain approval from the Real Estate Regulatory Agency.

Rera will take charge of regulating and inspecting jointly-owned properties and oversee revenue and expense reports related to service charges. Facilities managers who fail “to ensure proper maintenance of the common areas” can be replaced by Rera. Facilities managers will also be responsible for insuring buildings.

The statement said that violators of this law face financial penalties of up to Dh1 million, which can be doubled for repeat offences.

The latest law follows a ruling last week which split responsibilities for Dubai’s real estate sector between Rera and Dubai Land Department, with the former given responsibility for much of the regulatory oversight, including escrow accounts, and the latter for handling landlord and tenant disputes.

Earlier this month, Dubai Land Department and law firm BSA Ahmad Bin Hezeem & Associates signed an agreement “to streamline Dubai’s real estate sector processes”.

The entities are looking at how to make it easier for businesses with ultimate foreign ownership to buy Dubai properties by streamlining approval processes for corporate structures looking to invest.

A spokesman for BSA told The National it was looking at products that would “promote ownership through collective real estate investment funds as opposed to simple direct ownership”.

Updated: September 25, 2019 04:31 PM

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