Dubai: With delays in the registration of owner associations and developers yet to vacate their facilities management roles, the provisions of the Strata Law could end up being tested in local courts.
This begs the question as to the legal options — and the legal platforms — that are available to property owners here.
Under the provisions of the country's legal system, no class action can be taken in local courts. But under the strata regime, a separate dispute resolution process is to be implemented to deal with any such future disputes.
At the same time, Shahram Safai, partner in the law firm of Afridi and Angell, said: "There is uncertainty whether disputes can be brought before the Dubai Courts pending the implementation of the new dispute resolution process."
October 13 was set as the cut-off date for developers to provide details of their owners' associations and get them formally registered with the Real Estate Regulatory Agency.
But while interim associations have been recognised, this cannot be said of the formal owners' associations.
"If a developer failed to comply with the October 13 deadline, then unit owners are entitled to take steps to register their own Jointly Owned Property Directions and apply for the formation of the owners association," said Safai.
"The developer would be responsible for the unit owners' costs in this regard. Once the owners' association has approval from RERA for its service charges, it is able to levy those charges on individual unit owners."
Based on anecdotal evidence, things have not reached that situation yet. Property owners were still waiting for developers to take the lead. But such passiveness may not be there forever.
Brent Baldwin, associate, Hadef and Partners said: "We believe a faster and cheaper option than going to court is needed".
"There has been a call for a ‘Small Claims Tribunal' in Dubai some time," he said.
"This type of tribunal may provide a better platform for dealing with such issues, because many disputes are likely to be of relatively low value and there may be a large number of them. "So a cheaper ‘fast track' process would be beneficial. This need not be run by fully trained judges, and people with appropriate professional experience could be appointed to make a ruling in such claims.
"[But] for claims over a certain value, it may be that the courts will remain the most appropriate forum."
It may be kept in mind that disputes related to Nakheel and Nakheel group companies were brought before a special Dubai World Tribunal, and not before the Dubai Courts or any other dispute resolution forum.
Phil Sheridan, CEO of Fine and Country said: "The need to address how maintenance charges are calculated and applied, are long overdue and fundamental to a mature real estate market. To date, the issue has been haphazard and those homeowners rightfully paying fees have in all likelihood be paying too much, not least in subsidy of those owners who have simply chosen not to pay," he said.
"This is having a massive negative impact on the real estate market where investors are hesitant to acquire properties with the anomaly of unknown maintenance charges.
"And rumours abound that certain commercial unit purchasers are now letting their units, if the ingoing tenants will pay a rent equivalent to the maintenance charges."
The developer and the homeowner communities in Dubai are hoping that the differences they have now don't reach a point where the courts or tribunal must adjudicate.
But that would still require "interim" owners' associations to be made into formal owners' associations much more quickly.
"We currently pay Dh13.75 a square foot and have the developer appointed firm handling facilities management this year," said a member of an interim owners' association in Jumeirah Lakes Towers.
"Obviously we are looking to make the switch from interim status and then look at the options that are available on the service provider side."
Legal sources emphasise that interim owners' associations have had their use, but not for much longer.
"For example, a group of owners signing contracts as an interim owners' association may not be legally able to bind the other owners in the development to that contract unless all owners sign it," said Baldwin.
Having won a round in the local courts against errant investors, Al Fajer Properties is pursuing legal action against investors with defaulted payments at their projects in Jumeirah Lakes Towers.
In the earlier court case, the judge ruled that the defaulting investor should pay 40 per cent of the contract price to the developer for not meeting the payments on their delivered property in the Jumeirah Business Centre development in JLT.
"The ruling is in line with the sales and purchase agreements that are signed in good faith by the customer and the developer under UAE laws," said a spokesperson with the developer. "At AFP we believe in win-win situations for both customers and AFP, but customers have been misled into believing they do not have to meet their contractual obligations."
The developer has to date handed over five commercial towers in JLT.