Under the previous JOP (Jointly Owned Property) law, all owners of units automatically became members of the owners association of their building when they purchased the unit. The owners association, through its board, was then entrusted with the management of the common areas, and they could delegate these responsibilities to an association manager to perform.
The new JOP Law replaces this management system with a three-tiered system:
* Major projects
For projects that are considered to be “major” by the director-general of Dubai Land Department, the Law provides that the developer shall now be responsible for the management, operation, maintenance and repair of their common parts and the utility services. The developer may appoint a management company to carry out these responsibilities on its behalf, but the management company must be approved by RERA.
* Hotel projects
For projects licensed for use as hotel establishments, the Law provides that the developer shall appoint a hotel project management company approved by RERA to manage the common parts.
* Real estate projects other than major or hotel projects
The common parts in these projects shall be managed by specialised management companies, which shall be selected and engaged by RERA in accordance with regulations to be issued by the director-general.
Here’s an overview of the role of owners’ committees:
Major projects: An owners’ committee must be formed for each project with its members selected by RERA, which shall not exceed nine members. The functions of the owners committee are set out in Article 24 of the Law and include:
* Verifying that the management company manages the common parts;
* Reviewing the annual budgets for the maintenance of the common property and making recommendations; and
* Receiving complaints from owners and submitting them to RERA if the management company fails to address them within 14 days of being notified.
Hotel projects: If the hotel project management company wishes, an owners’ committee may be formed for each project, with its members selected by RERA which shall not exceed nine members. However, Article 18(a)(2) provides that even if an owners’ committee is formed, it is not entitled to interfere in the management of the hotel project or the common areas.
Real estate projects other than the major or hotel projects
An owners’ committee must be formed for each real estate project with its members selected by RERA, which shall not exceed nine members.
The functions of the owners committee are set out in Article 24 and include:
* Verifying that the management company manages the common parts;
* Reviewing the annual budgets for the maintenance of the common property and making recommendations;
* Receiving complaints from owners and submitting them to RERA if the management company fails to address them within 14 days of being notified; and
* Importantly, this owners committee has the power to request RERA to replace the management company and provide RERA with advice on the selection and appointment of the new management company.
The owners committee may receive complaints and suggestions provided by the owners and occupiers of the units concerning the management, operation, maintenance and repair of the common areas. The committee may then makes suggestion and/or notify the management company, provided that it submits such complaints and suggestions to the Real Estate Regulatory Agency if the management company does not address such concerns within 14 days from the date of its notification.
* Major projects
If the developer is found to be incompetent or unable to manage the common property under this first category in a manner that ensures their sustainability and serviceability, the executive director at RERA may appoint a specialised management company to manage and operate the common property (Article 37).
* Hotel projects
If the hotel project management company is found to be incompetent or unable to manage the common property under this second category in a manner that ensures their sustainability and serviceability, the executive director of RERA may appoint a specialised management company to manage and operate the common property (Article 37).
* Real estate projects other than the major or hotel projects
If RERA finds that the management company is incompetent, inefficient or unable to manage the common property, it shall appoint an alternative management company to manage the common property (Article 38)
The new Law was implemented on September 4, 2019; however, developers, management companies and owners committees were given a six-month transition period to comply. The transitional period expired on March 3, 2020.
We expect that over time RERA or Dubai Land Department will publish application forms for membership to the owners committee and the exact procedure to be followed to form it. As of this date, no application forms have been published.
- Shahram Safai is Real Estate Partner at the law firm Afridi & Angell.
