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The issue over late or non-payment of 2020 service charges is all set to escalate further. Next week will mark the end of the 30-day legal notice period for property owners to clear all dues. Image Credit: Ahmed Ramzan/Gulf News

Dubai: A majority of property owners in Dubai don’t seem to be in the mood to pay off their service charge dues for first six months of 2020, and with just days left for the 30-day grace period left. It was late last month that OA (owners association) management firms issued legal notices to property owners who had fallen way behind on their payments.

The notices, issued with the consent of RERA (Real Estate Regulatory Authority), state that strict legal action will be pursued in local courts if owners continue to take the stance of non-payment. “But we have also received lots of requests from homeowners for partial payments of dues and for more time to be granted for the full clearance,” said the head of a leading OA property management firm.

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“But even with the legal notices issued, there has been only a slight improvement in collections, which is disappointing from the property managers’ perspective. It is not about getting funds so that we can operate – those are to be used for the upkeep of properties and communities. It’s the property owners who benefit – eventually – from making those payments.”

Tougher stance?

Sources at OA management firms say that if the first-half 2020 dues are not collected in full, they will take the issue a step further. But in all such instances, they will need to get the pre-approval from RERA.

“Even though the notices were issued for the first six month arrears, property owners who haven’t paid need to keep in mind that the third quarter fees are now due as well,” said an OA firm owner. “Most OA funds are nearly depleted and this state cannot be allowed to continue.”

What next?

Go to the courts will be the next logical step… once RERA extends its approval. “OA companies will now look to RERA, the Rental Disputes Centre and local courts for guidance as to the next steps for any action that is needed,” the source added. “Clearly, a delay in payments affects clearing the bills for facilities management companies.

“Where compromises can be reached, this will be done. But the defining period now is what action will be taken by the courts/regulators as the deadline for the legal notices starts to lapse. For now, there is some lack of clarity in terms of the next procedural steps - but the hope is that this will get cleared in the next few weeks.”

Some flexibility

Obviously, for those homeowners who have lost their jobs, some relief will be granted. All that OAs want at this stage is assurance that they will settle their dues at some point. The uncertainty over payments is getting to be a major concern for OA firms – most of them say that whatever cost reductions they can enforce, they already have.

Give it another month?

Some in the OA business say that property owners could be given a further 15-30 days or so to pay up. But at some point, the courts will enter the picture.

Whether it’s Rent Disputes Centre (part of Dubai Land Department) or the local courts that have a say will depend on the nature of the service charge obligations. If the sums owned are in the thousands or tens of thousands, then the RDC will be the obvious go-to place for OAs.

Explaining the delay

The job situation and alterations in their income status is what has forced many homeowners to default on service charge obligations. But at some communities or towers, the problems run much deeper – here, it’s about the service charge itself or intense disagreements with OA companies that have brought on the payment delays.

“We still can’t understand how at a tower in JVC, the OA insists on charging upwards of Dh20 a square foot when most rates at the Downtown are much lower than this,” says a property owner. “RERA needs to come into the picture more forcefully to correct the service charge situation.”

In the next few days and weeks, the agency might just do that.