Law Issued on Joint Ownership of Real Estate in Dubai
With the advent of Cityscape Global, the largest and most influential real estate investment and development event for emerging markets globally, being held in Dubai this week, various announcements regarding real estate in the UAE have been announced by the various authorities.
One such announcement came from the Ruler of Dubai, Vice President and Prime Minister of the UAE His Highness Sheikh Mohammed bin Rashid Al Maktoum with the issuance of Law No. (6) of 2019 (“the new law”) regarding the joint ownership of real estate in Dubai offering greater transparency and enhanced control to the Real Estate Regulatory Agency (“RERA”) in their dealing with jointly owned real estate in the Emirate of Dubai.
RERA is the regulatory arm of Dubai Land Department which sets legislation to regulate the relationship between all contracting parties and to organize the exchange process of properties.
The new law applies to all major real estate development projects and jointly owned property in Dubai, including property within free zones and special development zones and is effective within 60 days of its publication in the Official Gazette.
Under the new law, the Land Department is to prepare a register for jointly owned real estate properties in which required information relating to the property shall be recorded including the names of independent owners, the members of the committee of owners, maintenance procedures in common areas, shares of maintenance costs, details of the facility management company, developer information, as well as those of all operators of the project, amongst others.
In addition, all details regarding contracts related to the management of jointly owned real estate development, the common areas and the areas owned by the developer of the project should be registered with RERA.
According to the new law, the developer is required to submit all necessary documents in respect of the real estate project to the Land Department within 60 days of the completion date and receipt of completion certificate.
The new law identifies three categories for management of common areas: firstly within mega projects, hotel projects and finally in real estate other than mega or hotel projects. The owner's committees, for the first and third of the aforementioned categories, are limited to no more than nine members to be selected by RERA. The owner's committee should be established after 10% of the units in the joint real estate are registered. The developer cannot be part of an owners committee unless there are unsold units. The committee is tasked with ensuring the proper management of common areas as well as to ensure review of annual budgets.
RERA is now in charge of regulating and inspecting the maintenance and management of the jointly owned real estate properties and common areas. Facility Management firms should submit reports every six months to RERA on the management of the project and RERA can request further information regarding the service charges, if required. The facility management company must receive approval from RERA prior to charging any fees for operation or maintenance of common facilities.
According to the new law, RERA's CEO is empowered to appoint another facility management company in the event that the developer, or the management company, fails to ensure proper maintenance of the common areas
It appears that the new law seeks to address issues faced in respect of jointly owned real estate in Dubai. The new regulatory framework is particularly relevant following a variety of disputes suffered in certain Dubai communities relating to common area maintenance and developer responsibility in recent months. As such, the new law is a positive development in the assertion of RERA as the overarching authority over jointly owned real estate in Dubai and a framework to ensure that facility management companies, as well as developer, accountability is properly observed.
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