In this article we briefly outline the enforcement powers of
Owners' Associations described in Law No. 27 of 2007 on
Ownership of Jointly Owned Properties in the Emirate of Dubai (the
"Strata Law"), the Direction for General Regulation
Concerning Jointly Owned Properties (the "General
Regulation") and the Direction for Association Constitution
("Association Constitution").
What is the legal capacity of an Owners'
Association?
An Owners' Association (being an association constituted in
accordance with Article 17 of the Strata Law) is a legal entity not
for profit and has a separate legal existence from its members. It
also has the right to sue in this capacity and to own movable
assets.
Every Owners' Association is subject to the provisions and
terms of the Strata Law, any Master Community
Declaration1, Jointly Owned Property
Declaration2, Building Management Statement and the
Association Constitution.3
An Owners' Association may, in its own name and on behalf of
its members, sue others including other unit owners, occupiers and
any other person occupying a Jointly Owned Property (as defined in
the Strata Law) for breach of the Strata Law or the Association
Constitution.
The Owners' Association shall be represented before the Courts
or other government authorities by its Manager.4
Creation of a Lien
In terms of Article 25 of the Strata Law, the Owners'
Association shall have a lien on every unit for unpaid service
charges and any other obligations levied against the unit owner in
accordance with the provisions of the Strata Law or the Association
Constitution. The right shall exist even when ownership of the unit
has been transferred to a new owner.
If the unit owner does not pay his share of service charges or
defaults on any of his obligations, the Manager may decide to
institute legal action against the owner. The Manager will serve a
3 month notice on the owner through the Notary Public. On the
expiry of the 3 month period, in the event the owner has not
remedied the default or submitted its objection at court, the
Manager's decision is enforceable by the Execution Judge of any
Court.
The owner may object during the 3 month period at Court, in which
event execution will be withheld pending a decision by the
Execution Judge on the owner's objection.
What is the practical procedure for enforcement of a
Lien?
The Court procedures applicable to the enforcement of liens
pursuant to Article 25 of the Strata Law is as far as we are aware
untested before the Courts. Below is a summary of what is
considered will be the relevant procedure:
- There is no need for the Manager to file a substantive case at Court. The Manager shall open a file at the Execution Section of the Court. The Manager will submit the prescribed documents and pay the filing fee of 1% of the amount claimed (minimum fee is AED 10 and maximum fee is AED 5,010). Further fees may be payable depending on the action that the Execution Section must take. For example, if the property is sold at auction, the fees for conducting the auction will be deducted from the sale proceeds.
- The Execution Section will issue a summons to the owner and require the owner to pay the amount claimed to the Execution Section within 15 days. The Owners' Association must provide the Execution Section with an address for service of the summons.
- The owner has the right to object to the execution and stop the execution procedures either before a Judge or before the execution agent when execution procedures are commenced.
- If the amount claimed remains unpaid and the owner has not objected to the execution, the Court can sell the unit by public auction according to the procedures set out in Federal Civil Procedures Law No. (11) of 1992, and in which case the owner or occupier will be evicted from the unit.
- The Owners' Association's expenses incurred in the recovery of the amount claimed in this manner can be recovered from the owner by adding these fees to the outstanding amount of the amount claimed, and the Execution Judge will order the payment of these amounts. However, lawyers' professional fees incurred by the Owners' Association cannot be recovered from the owner.
Community Rules Enforcement Notices
The General Regulation at Articles 18 and 19 provides for the
issuance of community rules enforcement notices whenever an owner
or occupier breaches a Community Rule. Community Rules are those
rules that are set out in the Jointly Owned Property
Declaration5 and regulate amongst other things, the use
of the common areas, parking areas, behavior of owners and
occupiers, appearance of units, alterations and improvements to
property, security, health and safety rules and restrictions, and
all other rules and restrictions related to the Jointly Owned
Property.
Whenever an owner or occupier has breached a Community Rule, the
Manager will serve notice in the prescribed form on the owner or
occupier. If the owner or occupier (as applicable) does not remedy
their default within the notice period, the Manager may serve a
further notice (in the form prescribed by the Land Department) and
include a monetary penalty not exceeding AED 2,000.
A monetary penalty imposed by the Owners' Association may be
recovered by the Owners' Association as a debt.
In addition to the punitive steps above it is considered there is
nothing in the Strata Law or Directions to prevent the Owners'
Association from obtaining orders of the Court in relation to the
obligations of owners.
Direction for Association Constitution
In relation to enforcement powers of Owners' Associations, the
Association Constitution contains the following provisions:
- If service charges are owing and overdue with respect to a unit, no vote may be cast in respect of that unit at a General Assembly.6
- If an owner fails to pay a service charge or a utility charge when it becomes due and payable, then the Owners' Association may give such owner a notice of no more than one month to pay, and may impose a penalty for non-payment calculated on a daily basis at the rate of 12% per annum.
- The Owners' Association may also claim from an owner any costs incurred by it to recover outstanding service charges or utility charges.
- An owner must not lodge, or allow another person to lodge, with the Land Department a transfer of their unit without first obtaining from the Owners' Association a certificate confirming that there are no service charges or other monies owing to the Owners' Association in respect of the unit the subject of the transfer.
In conclusion, Owners' Associations derive their enforcement
powers from the Strata Law, General Regulation and Association
Constitution. Owners' Associations have the power to recover
payment of service charges and recover any other financial
obligation owed by an owner pursuant to the lien procedure. In
addition the Owners' Association has the power to impose a
penalty for late payments not exceeding 12% per annum. In respect
of non monetary obligations, Owners'Associations have the power
to issue community rules enforcement notices and impose a fine not
exceeding AED 2,000.
The above is a summary of the enforcement action available to any
Owners' Association. It should be noted that there are
references to dispute resolution procedures in the Strata Law and
Association Constitution and further procedures may be implemented
by the Real Estate Regulatory Authority in future. In the event of
any legitimate dispute such procedures should be followed prior to
commencing enforcement action.
Footnotes
1 Defined in the Strata Law as the terms and conditions
governing the development and operation of a Jointly Owned
Property
2 Described in the Direction for Jointly Owned Property
Declarations
3 Described in the Direction for Association Constitution
4 Means the manager of the Owners' Association
5 Described in the Direction for Jointly Owned Property
Declarations
6 Defined in the Direction for Association Constitution as an
assembly of Owners of Units convened and held in accordance with
the Constitution and the Regulations
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.