NEW LAW GOVERNING JOINTLY OWNED PROPERTIES IN DUBAI

The Law No. (6) of 2019* regarding Ownership of Jointly Owned Properties in the Emirate of Dubai has been issued to regulate the joint ownership of real estate in Dubai.

The Law applies to all major real estate development projects and jointly owned properties in Dubai, including those located in free zones and special development zones.

The new Law repeals Law No. (27) of 2007 Concerning Ownership of Jointly Owned Property in the Emirate of Dubai and any other law that contradicts it.

Jointly Owned Properties (JOP) are now divided into three categories with different rules for their management of common areas. The Law has enhanced the powers of RERA such as selection of the members of the Owners’ committee, appointment of specialized management company for third category of jointly owned properties and to replace the management entity in case they are found inefficient. The Law is designed to boost competitiveness and ensure the rights of all parties are protected.

Key Elements of the new Law
  • Components of the common area of the building and land of the JOP along with components of the unit are clearly defined in the Law, which regulates the ownership of developer-owned areas.
  • The Developer should allocate parking space for owners of the unit, which cannot be sold separately.
  • The Management Entity cannot charge fees for managing, operating, maintaining common facilities or for any other purpose unless it receives an approval from RERA.
  • The Management Entity shall provide RERA with a periodic report every six months on the management of the jointly owned properties, common areas and the maintenance works carried out therein. At any time, RERA can request for information on the revenues and expenses related to service charges.
  • The Developer shall establish the building management system for major projects and hotel projects managed by them which must be approved by RERA. RERA shall establish the building management system on the other common properties.
  • Service charges and utilization charges collection, disposal and use are clearly set out under the new Law. The Management Entity shall deposit the service charges and the Utilization charges into the licensed bank account within seven (7) working days from the date of payment of service and utilization charges. The competent execution judge may, when necessary, sell the unit through public auction in the event of continued payment default by the owner.
  • RERA can appoint a specialized Management Entity to manage and operate common property in case the developer or hotel project management company are proven inefficient. Similarly, in the case of an inefficient management entity, RERA may appoint an alternative Management Entity to manage the common property.
  • As per Article 41, the Management Entity must maintain comprehensive insurance coverage for the JOP.
  • The Management Entity, which includes the developer, the management company or the hotel project management company, as the case may be shall be, shall replace the owner’s association in rights and obligations stated before the application of provision of new Law (Article 49).
  • The Rental Disputes Settlement Centre in Dubai will now have jurisdiction to hear and settle all disputes that fall under the purview of this Law. Violators are subject to financial penalties up to AED 1,000,000 and can be penalized up to AED 2,000,000 in case of repeat violations within one year of the previous violation.
Common Property Register
The Dubai Land Department shall prepare a special register of Jointly Owned Properties which would include details about the ownership of land and units, area owned by the developer, members of the owners’ committee, building management system, contracts for the management of common areas and details about the common areas and private jointly owned parts.

The developer is required to submit all necessary documents of the jointly owned real estate project to the Land Department within 60 days of the completion date and receipt of completion certificate. The Department can extend the deadline for this by 30 days. If the documents are not submitted, the Department can request the documents from any other party it deems appropriate and will charge the developer all related fees and expenses.

Management of Common Areas
Under the previous Law, the Owners’ Association board was formed and was entrusted with the management of the common areas of the building, and they could delegate these responsibilities to an Association Manager to perform.

According to the new Law, jointly owned properties are divided into three categories: (1) Major projects, (2) Hotel projects, (3) Real estate projects other than major projects and hotel projects, with different rules pertaining to the management of each type of jointly owned property.

Owners’ Committee
An Owners’ Committee for the first and third categories must be formed with its members selected by Real Estate Regulatory Agency (RERA), which shall not exceed nine members and should be established when at least 10 percent of the total number of units in the jointly owned property are registered.

The Developer cannot be part of an owners’ committee unless there are unsold units.

The functions of the Committee are listed under Article 24 of the law which mainly relate to advisory, reviewing and verifying the operations of the Management Entity. The Owners’ Committee shall be required to hold quarterly meetings every 3 months with a total of four meetings in a year.

Obligation of the Property Developer
The Developer is under the obligation to repair or correct any damage to the structure of the jointly owned property occurring within a period of 10 years from the date of issuance of the completion certificate.

The Developer is further obligated to replace or repair any defective fixtures in the individual units within a period of one year from the date of delivering the unit to the owner.

*The new law is effective within 60 days of its publication in the Official Gazette.

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