Dubai building residents in service charge row

Residents of a Tameer-developed building in International City are embroiled in a service charge row — they risk having essential utility services disconnected owing to a few owners playing truant on service fee payments. Owners in Al Dana 1 claim to have received mail from BCS Strata Management Services, a strata management company hired by Tameer, warning them to make outstanding payments or face disconnection.

"While all possible options are currently being investigated, common services currently maintained by third-party providers such as pool, landscaping and elevator maintenance are likely to be suspended in the future due to non-payment issues, inconveniencing not only those owners defaulting on payments but unfortunately even those who have made regular contributions, as well as tenants currently renting units in the project," says Federico Tauber, president, Tameer.

However, strata experts explain that it is not legal to disconnect the whole building because a small number of residents are in arrears with their utility costs. "It would be permissible to disconnect [services to] individuals who are in arrears, after giving adequate notice - such as two reminders - and those more than a month behind [on payments]," suggests Graham Yeates, head of strata management, Cluttons. Concurring with him, Adrian Quinn, chairman, Essential Community Management, says: "It is illegal to disconnect any essential service to residents. The only item that is not an essential service is district cooling, which is supplied via a supply agreement, and they have the right to disconnect if residents do not pay their chilled water charges. If it's disconnected, it would normally be done by the district cooling company whose supply agreement allows disconnection for non-payment of chilled water costs."

Requesting anonymity, an owner in Al Dana 1 says: "I am concerned because we live on the 9th floor and this could affect fire alarms and the sprinkler systems. I am also concerned because I am 65 years old and climbing stairs would be impossible."

According to the developer, 40 per cent of owners in Al Dana 1 have overdue service charges for the past 12 to 24 months. "With regards to serving notices, Tameer and BCS have formally notified defaulting owners on several separate instances as to the consequences of unpaid fees. While services have not been discontinued to date, payment of third-party service and utility providers requires considerable funding that owners are obligated to contribute. While Tameer has been honouring these payments to date, the continuation of funding is unsustainable," Tauber observes.

As per the Jointly Owned Property Law, only licensed owners' association (OA) managers are allowed to manage interim OAs prior to and after they are registered with Rera (Real Estate Regulatory Agency). Tameer has appointed BCS to oversee the day-to-day management of Al Dana 1, contracts and financials, as well as offer advisory and educational services to the interim OA Board (IOAB). "BCS' current responsibilities include administrative, secretarial and treasury services, as well as interaction with the IOAB in the management of day-to-day operations. People need to understand that they are now part of a defined community who have elected to live together in a building which they jointly own. The developer's role has ended," the Tameer executive adds.

According to Peter Crogan, CEO, BCS: "At all times, we act under the direction of Tameer and it is the developer who has made the decision to restrict services to try and encourage payment of many long outstanding debts."

Fines, a deterrent

Interim committees have the power to put pressure on owners whose service fees are in arrears. "There is no buffer in the event of slow payers. The OA will not be able to meet its expenses and service providers will decline to work. Community liabilities must be met from existing reserves. OAs should impose the maximum penalties, starting with 20 per cent discount if paid by the due date. Normally, that means 30 days after the issuance of the approved service charge invoice. Additional penalties will be imposed at the maximum rate allowed by Rera," explains Graham Yeates, head of strata management, Cluttons. If an owner continues to ignore breach notices, eventually the unit can be put up for auction after Rera has approved the process to have the courts put up a ‘sale of the unit' notice on the defaulter's property.