Articles

The New JOP Law and Its Effect on Owners Associations

03 October 2019

OA Replacement

Per the previous law, the owners’ associations were responsible for the management, operation, maintenance and repair of the common areas of the building and were allowed to delegate these responsibilities to external contractors. However, Article 49 now replaces the owner’s associations and assigns the respective rights and obligations to management entities as specified under the new system in Article 18.

New three-tier system for management:

Per Article 18, the new law has set in place a three tier-system for the management, operation, maintenance and repair of the common areas of the building:

  • First Category (Major Projects):

Real estate projects that will come under this category will be determined by the Director General of the Dubai Land Department (DLD). And as per Article 18(a)(1), the developer shall now be responsible for the management, operation, maintenance and repair of the common areas and facilities services. The developer does have the authority to delegate these responsibilities to a management company per Article 18(c), provided that the management company is approved by the Real Estate Regulatory Agency (RERA) (Article 2). An owners committee will be required to be formed for projects under this category.

  • Second Category (Hotel Projects):

For Hotel Projects, the New Law provides that the developer is to entrust management of common areas to a hotel project management company approved by RERA per Article 18(a)(2).

Unlike the first category, an owners’ committee may be formed for each Hotel Project with its members selected by RERA, if the hotel project management company wishes and the owners’ committee does not have the right to interfere in the management of the hotel project or the common areas.

  • Third Category (Real estate projects other than major projects and hotel projects):

The common areas of these projects shall be managed by specialized management companies, which shall be selected and contracted by RERA in accordance with the controls determined by a decision of the Director General in this regard, per Article 18(a)(3). An owners’ committee is required to be formed for projects under this category, with members being determined by RERA operating in accordance with Article 24. Further, per Article 24(5), this committee also has the power to request RERA to replace the Management and to advise RERA about the selection and appointment of the new Management.

Owners Committees

The owner committees formed as per requirements of Article 18 cannot exceed nine members in number, including the chairman and his deputy and to be selected by the RERA and should be established when 10% of the joint real estate units are registered.

A member of the Owners’ committee shall:

  1. have full legal capacity.
  2. be occupier in the common property.
  3. have good conduct and behavior.
  4. be committed to pay the service and utilization charges.
  5. Attend at the meetings of the Owner Committee and actively participate in its meetings.

Functions of the Owners Committee:

Further, for each Category Project, it is mandated that an owners’ committee be formed with the members to be selected by RERA. Article 24 states the functions of the owners’ committee will include, but are not limited to:

  1. Verifying that the Management Company manages, operates, maintains and repairs the Common Areas;
  2. Reviewing the annual budgets prepared for the maintenance of the common property and submitting recommendations.
  3. Receiving complaints and suggestions submitted by the owners and the occupants of units regarding the management, operation, maintenance, repair of the Common Areas, and notifying the Management Company. The owners’ committee can submit these complaints to RERA if the Management Company does not address them within 14 days from the date of notification.
  4. Notifying the Management or RERA about any defects in the structural parts of the common property or for any damage or defects requiring emergency treatment.

 

This article is offered for general information only and does not constitute legal advice. If you are in need of assistance with regards to the new law or real estate matters, please do contact or schedule a meeting with one of our consultants at: info@germela.law or +971 4 554 1201.