Sheikh Mohammed issues new law on joint ownership of real estate in Dubai

A new law has been issued to regulate the joint ownership of real estate in Dubai, official news agency WAM reported.

The law, issued by Sheikh Mohammed bin Rashid Al Maktoum, the UAE’s Vice President and Prime Minister and Ruler of Dubai, applies to all major real estate development projects in the emirate including those located in free zones and special development zones.

The law is aimed at “boosting competitiveness and enhancing investment” in the real estate sector while ensuring the rights of all parties are protected, the report said.

According to the law, developers are required to submit all necessary documents of jointly owned real estate projects to the Dubai Land Department (DLD) within 60 days of the completion date and receipt of completion certificate.

The DLD can extend the deadline by 30 days. If the documents are not submitted, the department can request the documents from another party. In this case, the developer will be charged all related fees and expenses.

The DLD will prepare a register for all jointly owned real estate properties featuring all the information related to the land owned by developers and real estate units meant for independent ownership.

The register will also feature names of owners, members of the committee of owners, and the building management chart outlining maintenance procedures in common areas.

It will also include details of the share of maintenance costs that each owner should pay, the facility management company responsible for managing common areas and amenities, and information about the developers and operators of the project.

The new regulation also divides jointly owned real estate properties into three categories for the purpose of management of common areas.

* The first category includes mega projects where the developer is responsible for managing, operating and maintaining common areas and facilities.

* The second category constitutes hotel projects, where the developer has appointed a company to manage the common areas in accordance with the DLD regulations.

* The third category includes real estate projects other than mega projects and hotel projects, where a specialised facility management company manages the common areas.

The law requires the real estate developer to have a building management system for mega projects and hotel projects managed by them. The system should be approved by Real Estate Regulatory Authority (RERA) before any legal transactions are made for these projects.

The owners’ committees for the first and third categories should not include more than nine members selected by RERA, and should be established when 10 per cent of the joint real estate units are registered. The committee is tasked with ensuring the proper management of common areas and reviewing annual budgets. The developer cannot be part of an owners committee unless there are unsold units.

Other main aspects of the law –

* The developer should allocate parking space for owners of the unit, and cannot sell them separately.

* The facility management company cannot charge fees for operating or maintaining common facilities unless it receives an approval from RERA.

* RERA is in charge of regulating and inspecting the management and maintenance of jointly owned real estate properties and common areas. The facility management firm should submit reports every six months to RERA and the authority can request information on the revenues and expenses related to service charges.

* The RERA CEO can appoint another facility management company in case the developer or the management company fails to ensure proper maintenance of the common areas.

* The developer is responsible for any damage to the structure of the jointly owned real estate property occurring within a period of 10 years, starting from the date of issuance of the completion certificate.

* The developer is also tasked with replacing and repairing any faulty items in the individual units within a period of one year from the date of delivering the unit to the owner. In case the owner refuses to take possession of the finished unit for any reason, this period will be calculated from the date of issuance of the completion certificate.

* The facility management is tasked with obtaining insurance coverage for the jointly owned real estate project.

* The rental disputes centre in Dubai is tasked with reviewing all disputes related to the law.

Violators are subject to financial penalties up to Dhs1m. Penalties will can reach up to Dhs2m in case of repeat violations within a year.

The new regulation comes after Sheikh Mohammed recently announced plans for a higher committee of real estate planning in Dubai and also issued a new law pertaining to RERA.

The new law is effective within 60 days of its publication in the official gazette.