26 February 2012
Dubai Strata Law, officially known as the "Condominium Law No. 27 of 2007 Regarding Ownership of Jointly Owned Property in the Emirate of Dubai" was published in the official gazette on 31 December 2007 and came into force on 1 April 2008. The Dubai Strata Law was enacted to establish the subdivision requirements for buildings with a multiple ownership and provide a mechanism to govern their management.
As per Article 2 of Law No. 27 of 2007, Jointly Owned Property is the term used to describe a building or land, which has been divided into units and where part of the land is designated as common areas. The units are separately owned by the owners and the common areas are owned collectively by all owners within the building [or part of the building that has a multiple ownership].
Common areas are all those areas designated for use in common by the unit owners within the development, comprise everything that is not part of the units and often include such things as the building foyer, elevators, fire stairs, passageways, recreational facilities, roofs and the surrounding land and gardens. This article envisages to cover the manner in which the Dubai Strata Law governs and regulates the ownership of the common areas with specific focus on the nature and establishment of Owners' Association.
The nature and composition of an Owners Association
The Dubai Strata Law requires the unit owners in a building or community to form an Owners' Association that will take care of the management and maintenance of common areas. The Owners Association is a not-for-profit legal entity, which has a separate legal existence from its members. The said association has a governing body called a "Board" and an executive officer called a "General Manager". The Board is elected by the unit owners at an annual general assembly and the Board appoints the General Manager and delegates powers and functions to the General Manager.
The Owners' Association is regulated by a Constitution promulgated by the Dubai Land Department and a Jointly Owned Property Declaration prepared by the developer and filed at the Dubai Land Department. The Constitution will contain all the obligations and rights of the Owners Association and will also stipulate the rules for General Assemblies, Board Meetings and the role and responsibilities of the General Manager. The Jointly Owned Property Declaration will specify an entitlement or shareholding of the Owners Association's members. This entitlement determines the voting power of the unit owner and also the owner's share of the service charges which the Owners' Association is empowered to impose and recover.
The Owners' Association is empowered to recover service charges and impose fine on late payment of the same. Apart from imposing financial obligations, the Owners' Association has the power to issue community rules enforcement notices pursuant to Articles 18 and 19 of the General Regulation. Furthermore, there is no provision in the Dubai Strata Law or the Directions that restricts the Owners' Association from obtaining court orders to enforce obligations of the unit owners.
In sum, the Association is responsible for maintenance, building improvement, fiscal management for future building upgrades and maintenance.
The position of the unit owner is similar to 'shareholders' in a company where each unit owner owns a share of the common areas which is proportional to the space of their unit corresponding to the overall space of the common areas of the building. Owners further have the right to vote on budgets that determine the annual service fee to award the maintenance contract to a facilities management company. The rules are legally enforceable and owners can be fined or may even lose their apartments if they continually breach agreed-upon rules or refuse to pay service fees.
Formation of an Owners Association
As per Article 17 of Law No. 27 of 2007, the Owners Association is formed upon the registration of the first sale of a unit in a development. And all further unit owners in the jointly owned building will automatically become members of such previously formed Owners Association. Nevertheless, the Owners Association will not be fully operational until the Jointly Owned Property Declaration and other relevant documents are registered with the Dubai Land Department and the licence is sought from the Real Estate Regulatory Agency (RERA)
Law No. 27 of 2007 imposed requirement for the formation of Owners Associations, but there were no regulations how an Owners Association should be formed.
The detailed guidelines which the Dubai Land Department has released to implement Dubai's strata law were unveiled in May 2010. The requirements for registration of the Owners Association are set out in Article 23 of the General Regulations[1]. Accordingly, the following documents have to be lodged with RERA for an Owners Association to be registered:
1. Application for registration;
2. The common areas site plan;
3. The Jointly Owned Property Declaration;
4. The title document for the plot the subject of the site plan or a letter from the Dubai Land Department stating that the title document is under process;
5. The audit report prepared under sub-article (10) of article (7) of the General Regulations or an undertaking to lodge it within the specified period;
6. The transfer of the first unit;
7. If the application is made by unit owners, evidence or service and non-compliance with the notice under article (11), sub-article (3) of the Jointly Owned Property Declaration Regulations;
8. The Dubai Land Department's fees; and
9. Such other documents as the Dubai Land Department may require.
Conclusion
The boom in the Real Estate Property in the mid 2000 saw a big change in property management in Dubai. Property owners have now the right to decide who will manage their building and at what price. With the Dubai strata law, many properties have already changed the management from the initially selected maintenance company which was earlier assigned by the developer. As many properties in Dubai are owned by the landlords who are located out of Dubai and from different backgrounds and cultures, the strata law is a benefit to all the owners, the building and the reputation of the developer. The strata law gives units' owners control of their properties and caters a democratic control and management of the common areas.
But on the other hand, the strata law places the onus for property maintenance on owners through the creation of an Owners' Association. All unit owners are now responsible for maintenance and upkeep of their jointly owned properties. Once a property is constructed, the developer stops doing the maintenance of the project (unless the Owners' Association decides to employ the developer to do so) and every owner of the unit automatically becomes part of the Owners' Association and works with the other units' owners to form a board, which takes over all property maintenance issues from the developers and runs the Owners' Association.
Marcela Junkova is an associate at The Legal Group. The views expressed in this article do not necessarily constitute the views of Zawya.
© The Legal Group 2012
Dubai Strata Law, officially known as the "Condominium Law No. 27 of 2007 Regarding Ownership of Jointly Owned Property in the Emirate of Dubai" was published in the official gazette on 31 December 2007 and came into force on 1 April 2008. The Dubai Strata Law was enacted to establish the subdivision requirements for buildings with a multiple ownership and provide a mechanism to govern their management.
As per Article 2 of Law No. 27 of 2007, Jointly Owned Property is the term used to describe a building or land, which has been divided into units and where part of the land is designated as common areas. The units are separately owned by the owners and the common areas are owned collectively by all owners within the building [or part of the building that has a multiple ownership].
Common areas are all those areas designated for use in common by the unit owners within the development, comprise everything that is not part of the units and often include such things as the building foyer, elevators, fire stairs, passageways, recreational facilities, roofs and the surrounding land and gardens. This article envisages to cover the manner in which the Dubai Strata Law governs and regulates the ownership of the common areas with specific focus on the nature and establishment of Owners' Association.
The nature and composition of an Owners Association
The Dubai Strata Law requires the unit owners in a building or community to form an Owners' Association that will take care of the management and maintenance of common areas. The Owners Association is a not-for-profit legal entity, which has a separate legal existence from its members. The said association has a governing body called a "Board" and an executive officer called a "General Manager". The Board is elected by the unit owners at an annual general assembly and the Board appoints the General Manager and delegates powers and functions to the General Manager.
The Owners' Association is regulated by a Constitution promulgated by the Dubai Land Department and a Jointly Owned Property Declaration prepared by the developer and filed at the Dubai Land Department. The Constitution will contain all the obligations and rights of the Owners Association and will also stipulate the rules for General Assemblies, Board Meetings and the role and responsibilities of the General Manager. The Jointly Owned Property Declaration will specify an entitlement or shareholding of the Owners Association's members. This entitlement determines the voting power of the unit owner and also the owner's share of the service charges which the Owners' Association is empowered to impose and recover.
The Owners' Association is empowered to recover service charges and impose fine on late payment of the same. Apart from imposing financial obligations, the Owners' Association has the power to issue community rules enforcement notices pursuant to Articles 18 and 19 of the General Regulation. Furthermore, there is no provision in the Dubai Strata Law or the Directions that restricts the Owners' Association from obtaining court orders to enforce obligations of the unit owners.
In sum, the Association is responsible for maintenance, building improvement, fiscal management for future building upgrades and maintenance.
The position of the unit owner is similar to 'shareholders' in a company where each unit owner owns a share of the common areas which is proportional to the space of their unit corresponding to the overall space of the common areas of the building. Owners further have the right to vote on budgets that determine the annual service fee to award the maintenance contract to a facilities management company. The rules are legally enforceable and owners can be fined or may even lose their apartments if they continually breach agreed-upon rules or refuse to pay service fees.
Formation of an Owners Association
As per Article 17 of Law No. 27 of 2007, the Owners Association is formed upon the registration of the first sale of a unit in a development. And all further unit owners in the jointly owned building will automatically become members of such previously formed Owners Association. Nevertheless, the Owners Association will not be fully operational until the Jointly Owned Property Declaration and other relevant documents are registered with the Dubai Land Department and the licence is sought from the Real Estate Regulatory Agency (RERA)
Law No. 27 of 2007 imposed requirement for the formation of Owners Associations, but there were no regulations how an Owners Association should be formed.
The detailed guidelines which the Dubai Land Department has released to implement Dubai's strata law were unveiled in May 2010. The requirements for registration of the Owners Association are set out in Article 23 of the General Regulations[1]. Accordingly, the following documents have to be lodged with RERA for an Owners Association to be registered:
1. Application for registration;
2. The common areas site plan;
3. The Jointly Owned Property Declaration;
4. The title document for the plot the subject of the site plan or a letter from the Dubai Land Department stating that the title document is under process;
5. The audit report prepared under sub-article (10) of article (7) of the General Regulations or an undertaking to lodge it within the specified period;
6. The transfer of the first unit;
7. If the application is made by unit owners, evidence or service and non-compliance with the notice under article (11), sub-article (3) of the Jointly Owned Property Declaration Regulations;
8. The Dubai Land Department's fees; and
9. Such other documents as the Dubai Land Department may require.
Conclusion
The boom in the Real Estate Property in the mid 2000 saw a big change in property management in Dubai. Property owners have now the right to decide who will manage their building and at what price. With the Dubai strata law, many properties have already changed the management from the initially selected maintenance company which was earlier assigned by the developer. As many properties in Dubai are owned by the landlords who are located out of Dubai and from different backgrounds and cultures, the strata law is a benefit to all the owners, the building and the reputation of the developer. The strata law gives units' owners control of their properties and caters a democratic control and management of the common areas.
But on the other hand, the strata law places the onus for property maintenance on owners through the creation of an Owners' Association. All unit owners are now responsible for maintenance and upkeep of their jointly owned properties. Once a property is constructed, the developer stops doing the maintenance of the project (unless the Owners' Association decides to employ the developer to do so) and every owner of the unit automatically becomes part of the Owners' Association and works with the other units' owners to form a board, which takes over all property maintenance issues from the developers and runs the Owners' Association.
Marcela Junkova is an associate at The Legal Group. The views expressed in this article do not necessarily constitute the views of Zawya.
© The Legal Group 2012
