Beginning today: A new freehold ownership era starts in Dubai

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After handover of projects, developers will have no say in the setting up and running of the homeowners associations associated with their handed over projects.
Image Credit: Gulf News

Highlights

  • The new law allows homeowners to have a direct say in the management of their properties
  • Law kicks in today, November 19, 2019
  • It allows homeowners, or their representatives, to set service charges
  • When disputes over service charges arise, adjudicators will rule over cases on the same day
  • Also possible to do remote litigation — no need to attend hearings — to adjudicate cases related to homeowners
  • A “Mollak” database system run by Rera and Dubai Land Department will detail funds collected and spent by homeowners
  • It is designed to ensure transparency and up-to-date information for all stakeholders

Dubai: A new era has dawned on property owners in Dubai.

From today, November 19, 2019, property owners in Dubai have been legally empowered with the latest update to the emirate’s real estate laws.

The new rules allow homeowners to have a more direct say in the management of their properties and in how service charges are set and the funds collected.

Conversely, developers will find their roles once they handover projects have been vastly cut.

In particular, they will have no say in the setting up and running of the homeowners associations associated with their handed over projects.

There’s also a new system, with a database system called Mollak run by regulators, to ensure transparency for all stakeholders in the way homeowners run their affairs.

These changes form the basis for Dubai’s Common Properties Law No. 6 of 2019.

Collecting funds

What is the role of property management companies?

Instead of developers collecting service charges on behalf of their property owners, under the new system, the responsibility for all such funds are with “property management companies” acting on behalf of homeowners associations.

For added transparency, details of funds collected and for what purpose need to be updated on the “Mollak” system operated by RERA (Real Estate Regulatory Agency) and Dubai Land Department.

What’s the role of financial auditors?

RERA has so far approved 10 financial auditors to oversee the smooth running of owner associations and the handling of the funds raised from them.

As a result of this move, no one can unilaterally raise service charges without the approval of the auditors — or of RERA.

Unlike in the past, developers will not have any say in the setting of charges. Nor can they decide to have their own property management subsidiaries come on board.

What is the role of banks?

Until now, RERA has approved 10 local banks where the funds collected as service charges from homeowners can be deposited.

The total service fees audited by the Mollak system has crossed Dh1.3 billion.

Approvals for up to Dh4 billion are expected in the next phase.

What developers should do 60 days upon project completion

Under the new Law, the developer is required to submit all necessary documents of the freehold project to the Dubai Land Department within 60 days of the completion date and receipt of completion certificate.

The Department can extend the deadline for this by 30 days. If documents are not submitted, the Department can request the documents from any other party. In this case, the Department will charge the developer all related fees and expenses.

We managed a complete technical system for this type of case and have formed trial chambers, appeals, and implementation requests for service fees. There are adjudicators who will rule over cases on the same day, in addition to the option of remote litigation — without the need to attend hearings — to adjudicate this case.

– Judge Abdulqader Mousa, Chairman of the Rental Disputes Center.

How can disputes over service charges be resolved?

The Mollak database system will play a key role.

When disputes arise on issues related to service charges, the Rental Disputes Center under Dubai Land Department will adjudicate based on data. Judgements will be passed on the same day.

“We managed a complete technical system for this type of case and have formed trial chambers, appeals, and implementation requests for service fees,” said Judge Abdulqader Mousa, Chairman of the Rental Disputes Center.

“There are adjudicators who will rule over cases on the same day, in addition to the option of remote litigation — without the need to attend hearings — to adjudicate this case. “



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