Stock Dubai skyline
The Mollak system removes developers from any involvement in the service charge payment process. Image Credit: AFP

Dubai: Dubai expects Dh4 billion in property service charges to be routed through the electronic payment system ‘Mollak’ and help raise transparency in the process.

“Our partners in the nine banks play a crucial role in the smooth management of this digital process that is of great benefit to the [property] owners,” said Marwan Bin Ghalita, CEO of RERA (Real Estate Regulatory Agency).

These banks, under RERA’s supervision, will open escrow accounts for ‘jointly owned property’ management companies. Property owners - or approved real estate management companies that work on their behalf - will have direct responsibility, instead of developers, to ensure easy payment of service charges through the approved banks.

What RERA wants
RERA will issue necessary circulars to regulate the roles of all parties to "preserve the rights of everyone and ensure that there are no conflicts of interest".

This will reduce abuses related to the management of freehold properties, "thus enhancing the reputation of Dubai’s real estate sector and maintaining its position as a preferred investment destination".

Chosen nine

The nine are Abu Dhabi Islamic Bank, United Bank Ltd., Commercial Bank of Dubai, Abu Dhabi Commercial Bank, Arab Bank for Investment & Foreign Trade (Al Masraf), Dubai Islamic Bank, Emirates NBD, First Abu Dhabi Bank, and Mashreq Bank.

It was in 2019 that RERA activated the bank escrow account mechanism for all ‘jointly owned properties’ using Mollak. It has contributed to preserving property owners’ rights via a “direct deposit service in their bank accounts, without any relationship of the developer with these accounts.

Clear mandate

The account trustee - i.e., the bank - must seek RERA’s prior written approval before making any changes to the terms and conditions of the account creation. The only exception is modifying the fees for the account’s services.

They must commit to not paying, transferring or executing any money deposits in the accounts except in accordance with the duly edited and signed approved authorisation, or with RERA’s written approval. The account trustee must receive a copy of RERA’s written or electronic approval that shows the approved budget and the service and maintenance charges, explaining the suppliers’ contracts.

They should also not allow any payment or cash withdrawal from the escrow account if it exceeds the limits of the allowable amount for any particular service provider or service.

The trustee is obligated to notify RERA in writing and immediately upon submission of evidence indicating any requests related to the escrow account from an entity other than the management company registered with RERA.

What JOP account trustee can and can't do
* They must keep an up-to-date record with the names and signatures of the authorised persons at each management company.

* They should ensure authorisations issued to those represented to sign on behalf of the OAE management company are issued according to official documents duly certified and registered by RERA.

* They should not allow any person not duly authorised or registered with RERA to act alone in escrow accounts.

* The account trustee may not be the owner of any real estate project. The management company will have to submit an application to open an account with the account trustee to avoid a conflict of interest.

* The account trustee is also obligated to maintain an accurate and up-to-date record of the management company’s account and allow RERA to review those records and take copies of them when needed.