Dubai’s Real Estate Regulatory Authority (Rera) has been calling on homeowners from all freehold developments in the emirate to register their interim owners’ association. (IOA). But despite the requests, there is a hold-up, and it seems to stem from a variety of hiccups and hassles.
The first rule to forming an IOA is a general assembly meeting. Under Dubai’s Strata Law, it is the developer who calls for the meeting, known as the First Annual General Assembly, to initiate the process of registering the IOA with the Dubai Land Department. For that to be approved, members of the IOA have to be elected at this meeting that must be attended by two thirds of the building’s owners.
While this may seem easy in a residential complex, it is complicated in mixed-use buildings where owners of commercial and retail spaces remain reluctant. In some cases, developers who own parts of the property are reluctant to organise the first meeting, and in others, they wield enough control to gain greater representation within the IOA — an unpalatable situation for all other owners.
No legal standing
Once they are formed, IOAs are entitled to oversee the budgets and contracts of their respective properties. According to Rera, about 400 owners’ associations obtained interim status at the start of the year and are waiting to become formally registered entities. However, without final registration, these IOAs do not have a legal standing, which means that despite having a say in the financial management of the property, they remain unable to open a bank account, pay bills, or hire new contractors to oversee maintenance and security.
This has left things in limbo, with IOAs demanding more authority, developers refusing it, and tenants or owners guessing what changes they can expect and when. The legal impasse also means that residents are pretty much helpless when developers do not take proper care of the building or unjustly increase service fees.
Elizabeth Jorge, an IOA member at a Jumeirah Lakes Towers building, says: "Having an interim association is definitely better than not having any kind of representation, but it is a slow and uphill battle to get things done and put new systems in place. It is a daunting task to represent more than 400 owners in our building; if we had legal status we could get more done and quickly."
Jorge says her IOA’s priority list includes changing service providers, lowering service fees, cleaning the façade of the building, and investing in a superior fire alarm system. "We spend hours in meeting and planning and find ourselves stuck because all our money is still managed by the developer."
Another bone of contention between IOAs and developers is the default rate on service charges, which in some communities is as high as 60 per cent. Jorge points out that some developers are in such a hurry to get out that they have assigned the task of collecting dues to the IOAs. On the other hand, the IOAs find themselves restricted in their roles because they are still not legal.
The good news is that once it is formally registered, a full-fledged Owners’ Association (OA) is empowered to act as an entity in its own right. Rera clarifies: "The Owners’ Association is a non-profit organisation that has an independent legal entity. It shall operate as a business in its own right with the sole purpose of administrating, maintaining and operating the building and common areas for the benefit of the owners. It can be sued or be sued. It can employ staff or contractors."
Time is ripe
Marwan Bin Ghalaita, CEO, Rera, says the authority is more than ready for the process, and it is up to the owners now to take the initiative.
Those who have yet to form an IOA can take recourse in professional assistance. "We assist developers in processing all documentation for the formation of IOAs," says P.R. Vijayakumar, Managing Director, Pacific Owners Association Management Services. "Separately, we work with IOAs in our role as a registered firm for Owners’ Association Management Services (OAMS). We lead them to the registration process and well beyond, helping them run their properties effectively and efficiently."
OAMS firms are registered and closely monitored by Rera, and a few who set up shop when the Strata Law was first announced have since lost their licences.