Not enough property owners’ associations in Dubai, it is claimed

Dubai’s real estate watchdog is calling for more property owners in the emirate to come forward in order to formally register their Interim Owners’ Associations (IOAs).

The hold up in registering hundreds of IOAs in the emirate stems from difficulties bringing homeowners together for a compulsory meeting, according to the Real Estate Regulatory Authority (RERA).

In order to get registered they have to call for a general assembly meeting, and the majority of the home owners need to be there, said Marwan bin Ghalaita, chief executive officer of RERA.

‘Sometimes the developer themselves own some of the property, so they would also need to be there. But it is very difficult to call all the owners into a meeting. It’s up to them. We are ready,’ he added.

Under strata law, a developer must hold a meeting known as the First Annual General Assembly in order to register a building’s OA with the emirate’s land department. For the registration to be approved, it must be passed by at least two thirds of the building’s owners.

Once registered, OAs are entitled to manage the maintenance budgets and contracts of their properties.
Approximately 400 home owners associations have now obtained interim status, Ghalaita said, but are still waiting to become formally registered entities who can oversee their building’s upkeep.

Without registration, OAs have no legal standing, meaning they are unable to open a bank account, pay bills or hire contractors to oversee building maintenance.

Lawyers say the lack of registration is leaving home owners and developers in legal limbo, sparking rows over service fees and a decline in building maintenance quality.

In projects such as Nakheel’s Discovery Gardens and the Palm Jumeirah, default rates on service charges among home owners are estimated to be as high as 50%.

Nick Clayson, a partner at the Dubai branch of law firm Norton Rose, believes it is in everyone’s interest to get owners associations registered as quickly as possible.

‘Many buildings have not yet registered an OA or completed the formalities for creating the OA, so developers who have provided services and complied with their obligations may find difficulties in recovering the necessary service fees,’ he said.

‘Additionally many developers consider that they are owed outstanding service fees for the period prior to the promulgation of the Strata Laws,’ he added.