Dubai homeowners can now move court against property management companies

Dubai: Homeowners in Dubai can now file formal complaints with Dubai Land Department if they believe there are serious deficiencies in the quality of their building’s upkeep. The Rental Disputes Centre – which falls under the Land Department – are taking such filings from homeowners, in what is seen as a landmark move in Dubai’s freehold property market.

It was recently that he RDC started delivering verdicts in cases brought against homeowners for not filing their annual service charges with owners association (OA) management companies. According to market sources, there are lots of buildings – and even within communities – where service charge collections are not even at the 50 per cent mark.

But with the latest move, homeowners now have a forum to present their complaints against OA management companies and get a full accounting of what they are doing with the service charges. “This evens up the situation – homeowners get to voice their concerns and ask for the real estate authorities to intervene on their behalf,” said a homeowner with an apartment in Dubai Marina.

To file their case at RDC, the homeowner must pay Dh200.

The 2021 service charges for the various buildings are still being finalized. Many homeowner groupings are calling for a major reduction in service charges, and have been constantly citing the decline in property rentals and sales values to drive home their point.

At fault

Top executives at OA management companies, however, believe that if there are quality issues in a building’s upkeep, then the homeowners themselves must take a lot of the blame. “Service fees have been in arrears - in many cases for over a year,” said Saeed Al Fahim, CEO of Stratum, the property management company. “It’s because many homeowners have not paid the expenses relating to their buildings that the asset quality is deteriorating.”

According to Al Fahim, OA companies are not obliged to use their own funds when a building’s service charge collections fall short.

“OA companies do not possess the capital reserves… nor are they required to fund from their capital,” said Al Fahim. “This is what homeowners are failing to grasp. The Land Department has been supportive of this fact - owners need to pay their service fees.

“If they don’t, then there is little that can be done to upkeep the building.”

Check 'em out

Now, having received the complaints from homeowners, the RDC is likely to appoint independent auditors to see whether there is merit in these. They will do so in a marketplace where buildings within the same location have sharp differences in their service charge tariffs, in some cases by well over Dh10 a square foot and over.

And then, there is the question of the unpaid service charges. It was last year that this problem saw a sudden escalation, with homeowners citing the pandemic, the job and business situation for defaulting on service charge dues.

Following this, the OA management companies started filing plaints against individual homeowners with the RDC and calling for urgent intervention from the regulator. In recent verdicts, the RDC has directed that the concerned homeowner cannot rent or sell their unit until the arrears are cleared. But even then, payments – and clearing of arrears – are still not proceeding at speed.

“There have been initiatives taken by some homeowners to pay in installments, but collections still need to improve substantially,” said Al Fahim. “There are issues with job losses and mortgage defaults – that’s understandable.

“But there is not much that the OA companies can do without infusions from property owners.”

The ball is now in the RDC’s court for that final settlement.