Law No. 27 of 2007 on Ownership of Jointly Owned Properties in the Emirate of Dubai - a summary
We have been advised by the Dubai Lands Department that Implementing Regulations shall be issued in due course and it is expected that many of the concepts referred to in the Strata Law will be dealt with in further detail in the Implementing Regulations.
Below is a summary of the key provisions of the new Strata Law, followed by an unofficial translation of the Strata Law prepared by Al Tamimi & Company.
Registration of Title
Article (23) of Law No. (7) of 2006 Concerning Real Property Registration in the Emirate of Dubai (the "Title Registration Law") envisaged the Strata Law as it provides that an apartment shall be deemed to be a "Real Property Unit" as defined in the Title Registration Law and therefore titles created in accordance with the Strata Law will come under the ambit of the Title Registration Law and the procedures regarding registration in the Real Property Register at the Dubai Lands Department shall apply.
Article (4) of the Title Registration Law applies to ownership of Jointly Owned Property, and provides that:
UAE and GCC nationals, their wholly owned companies and public joint stock companies may own Real Property situated anywhere in the Emirate of Dubai; and
subject to the Ruler's approval and in designated areas in the Emirate of Dubai as determined by the Ruler, foreigners may be granted the right to freehold ownership without time restrictions or usufruct rights or leasehold rights over a Real Property for a period not exceeding 99 years.
Concepts of Subdivision
The definition of "Jointly Owned Property" provides that this law will cover two concepts of subdivision, namely (1) subdivision within buildings where common areas will be created; and (2) subdivision within conventional methods of horizontal subdivision of land where common areas will be created.
Master Developer's Ownership of Common Areas
From our preliminary discussions with the Dubai Lands Department it is our understanding that Master Developers will have a choice as to whether to retain ownership of all common areas within a Master Community; (ii) retain ownership of some of the common areas within a Master Community; or (iii) not retain any of the common areas within a Master Community.
Where a Master Developer chooses to retain ownership of some of the common areas within a Master Community, the balance of the common areas will become Jointly Owned Property (as defined in the Strata Law). The Jointly Owned Property will be owned by the property owners within the Master Community in undivided shares and the Owners' Association to which these owners are members will be tasked with the administration and management of the Jointly Owned Property.
Where a Master Developer chooses not to retain any of the common areas within a Master Community, then all the common areas will become Jointly Owned Property.
We anticipate that the Implementing Regulations will deal with a fore mentioned issues in further detail.
How many tiers of Jointly Owned Property shall be permitted?
The Strata Law implies that there will be numerous tiers of Jointly Owned Property within a single strata development. It is our understanding that in practice, a maximum of three tiers will be permitted.
The Implementing Regulations are expected to provide further detail and clarity on these issues.
Building Management Statements
Where there is a mixed use building consisting of, say, a commercial lot and a hotel lot, the Strata Law envisages that a document known as a 'Building Management Statement' must be prepared to document the maintenance and cost sharing arrangements between the lot owners in relation to the building's common facilities. If such Building Management Statement is required, then the Building Management Statement must be registered at the Dubai Lands Department.
The Implementing Regulations will probably describe in further detail the prescribed information to be incorporated in the Building Management Statement and procedures for registration thereof.
Units within a Jointly Owned Property Development
A unit within a strata development and the unit's undivided interest in the common areas will be capable of being sold or mortgaged in favour of a bank.
A unit owner's interest in the common areas cannot be separately disposed of from the unit itself.
A unit owner may lease his unit on condition that the unit owner and tenant remain obliged to comply with the Association Constitution and the Master Community Declaration towards other unit owners, occupiers and the Owners' Association.
Disposal of Units of Jointly Owned Property
A unit co-owned by two or more persons may not be divided amongst the co-owners unless the Dubai Lands Department's approval is obtained.
The Strata Law creates a right of first refusal to purchase another co-owner's share in a unit offered for sale to a non owner. The right of first refusal does not apply to a sale between spouses, lineal ascendants, lineal descendants, brothers or sisters, or their descendants.
The right of first refusal lapses after one month after notification through the Notary Public of the name and address of the third party purchaser and conditions of sale in the event the co-owners fail to agree to the conditions of sale.
If it is proved that the sale to the purchaser was completed on better terms than the terms in the notification sent to co-owners, they may have the right to claim compensation for the damages suffered in the Dubai Courts.
The Strata Law also specifies the time periods and procedures to be followed in the event the co-owners agree to purchase the property.
Strata Development
If a developer plans to develop its strata development in stages, the developer must disclose such arrangement in the master community declaration.
The original documents for the site plan, the master community declaration and the Owners' Association constitution must be lodged with the Dubai Lands Department and such documents will be registered with the title deed of the Jointly Owned Property.
A developer is liable for building structural defects up to a ten (10) year period from the completion of the building and liable for defective appliances up to a one (1) year period from the completion of the building.
Owners' Associations
As regards Owners' Associations, the Strata Law provides that:
an Owners' Association will be formed upon the registration at the Dubai Land Department of the first owner (other than the developer) of a Unit in the strata development.
the Owners' Association is a not-forprofit legal entity and has a separate legal existence from its members.
Accordingly, the Owners' Association has the right to sue and be sued in its own capacity.
unpaid service charges can be recovered by the Owners' Association as a debt in Court.
the Owners' Association must insure the building and also maintain public risk insurance to cover against personal injury to owners and occupiers within the strata development and such insurance premiums will form part of the service charges of the Owners' Association.
Payment of Service Charges
Each unit owner shall pay the Owners' Association his share of the annual service fee to cover the cost of the management, operation, maintenance and repair of the common areas. Such fee shall be calculated in proportion to the unit area of the total area of the Jointly Owned Property. The master or sub developer pays his share of service charges with respect to unsold units.
The Owners' Association shall have a lien on every unit for unpaid service fees and any other obligations levied against the unit owner in accordance with the provisions of the Strata Law or the Association Constitution. This right shall exist even when ownership of the unit has been transferred to a new owner.
If the unit owner does not pay his share of service fees or defaults on any of his other obligations, the decision the manager of the Owners' Association takes against the unit owner shall be, after three months of being notified to him through the Notary Public, enforceable by the Execution Judge in any Competent Court. In all cases the affected person may object to the decision within the three month period, and in such event the execution shall be withheld until a decision in the subject of the objection has been made.
By Sydene Helwick Proper ty Department
© Al Tamimi & Company 2008
