Regulations to clean up the act

Q Strata management is new to Dubai; can you clarify what the term means and how it can help homeowners?

A Strata refers to the horizontal and vertical subdivision of space or land and buildings to form an ownership right that can be registered against the title of a common plot of land. This is different from property law, which deals with single ownership rights registered against a single plot of land. Strata law creates multiple ownership rights within one development. All rights will be registered against the single lot on which the building stands.

Strata law in freehold developments in Dubai gives full ownership rights to the co-owners who have an interest registered on the title of that plot of land. Strata management, therefore, derives from this definition. It is the management of the relationship between all co-owners in a development and it involves the administration of a legal entity that brings together all these owners to operate the development the Owners' Association.

The impact of strata management will be immense in as much as the owners will have a specialist company contracted directly by them, independent of the developers and the government that will manage the day-to-day affairs of the Owners' Association.

Many people in Dubai confuse property management with strata management. The property manager looks after the individual apartments that's different from the management of the Owners Association.

Q The upcoming strata regulations may provide homeowners with more flexibility to choose service providers, via an Owners' Association. Do you see this as a win-win for end-users?

A The new regulations will set in place the mechanism for registering the title deed and ownership interests of all co-owners, allowing an Owners' Association to be formed. Once the association is formed and the general manager appointed, the association can then elect a board of management and make decisions as to who they wish to contract and how much they want to spend. The association's decision making process will be supreme as long as the regulations are followed in making those decisions. The end-user in a strata development will be in control.

Q Why are these strata regulations needed for homeowners?

A These are implementation regulations necessary for the registration of multiple interests against the title of a common plot of land. The title deeds are registered so that all requirements run with changes of ownership within the development. No one can choose not to be part of an Owners' Association. The interest in the land and apartment are inseparable. Furthermore, the regulations set out the rules for calling and holding meetings and any administrative matters such as approving budgets and the notice period for calling meetings.

Q If strata regulations are implemented effectively, is this likely to encourage sales in certain areas where service charges have been an issue?

A Yes. This will make developments more transparent as it relates to the level of charges. A purchaser will know what he will be paying when he buys into the development. All service charges must be approved with the owners in a general meeting and not thrust upon them by developers, who often hold an interest in the company providing the services.

Q How should developers prepare for the upcoming regulations?

A The developer must appoint a specialist strata planning and management consultant (such as Strata Global) to coordinate the title subdivision planning and the management structure post-completion. If this is not done properly, some of these developments will become an absolute mess and future values [are likely to be] affected. Developers must plan to exit these developments as soon as handover has occurred. If this is not done; a conflict of interest exists. And from my experience in other jurisdictions, constant disputes prevail and the environment becomes very litigious. Developers as managers tend to allow defects to become long-term maintenance and for that reason Owners' Associations should be cautious.

Q Will the new strata regulations ultimately help homeowners save money?

A Yes. The ability to control what is being spent and to attain value for their outlays will be possible. In the past, developers have forced [on the owners] the contract they want. For example, Nakheel provide all contracts to its developments with no competition the strata manager, the facilities manager, the security, the gas supplier, the district cooling are all owned by the developer. The Owners' Association will be able to replace many of these contracts if found uncompetitive.