Brent Baldwin, a specialist on JOP and Real Estate law, provides some tips for owners and board members.
- JOP Law enables owners of property in Dubai to directly manage their communities.
- Effective transition from developer to an Owners Association can be assisted by having an organised Owners Association and following JOP Law and JOP Directions accurately.
- Furthermore, an effective Owners Association is facilitated by following our suggested tips.
Dubai's Law No.27 of 2007 relating to Jointly Owned Property (JOP Law) introduced into the Dubai real estate market the concept of shared management by owners of common areas and facilities within residential and commercial communities. The continued refinement of the JOP Law over the past 12 months, through the issuance of its associated Directions (JOP Directions), has provided owners with further practical opportunities to become involved in such management and, from what we have observed in the market, an increasing number of owners now wish to take over the direct management of their communities.
The transition of control of a community from developer to owners has been problematic for some. There remain many unanswered questions regarding the manner in which developers may step out of managing a community in order for the relevant Owner Association (OA) to take over. One way OA's can facilitate this process is by organising themselves effectively and accurately following the applicable provisions of the JOP Law and JOP Directions. In this short article, Hadef & Partners offers tips on developing an effective OA and Board.
1 Choose your Board representatives wisely
One of the first steps is to identify owners in your community who could serve as the Board members of your OA, and who will be nominated and voted on by your fellow owners. We recommend owners choose board representatives that represent the best match of skills (e.g. that work in a number of different fields) and who are also willing to put the time in to attend meetings and perform unremunerated work.
2 Understand the legal structure of your community
The process of registering an OA generally requires the legal structure of the community to be determined, a draft Jointly Owned Property Declaration to be prepared and approved by RERA and compliance with RERA's registration requirements. In many cases we have observed that the structure of the community can be a problematic issue and give rise to complaints from owners regarding the treatment of common facilities. Board members that have the opportunity to provide input into the structure should consider the different elements making up the community. For example, Board members should seek to enhance the desirability, marketability, reputation and overall management of their community. They should further raise related issues with the developer in effort to shape the community in a manner that best suits the interests of owners.
3 Information gathering
We recommend that Board members collect as much information as they can about the community including all the technical, legal and financial information that is currently in the possession of the developer. This may require Board members to work with the developer on a good faith basis to conduct a full due diligence of the community in order to avoid long and drawn-out disputes about access to such information. Such disputes may affect the reputation and desirability of the community.
4 Awareness of Board responsibilities
Article 12 of the Direction for Association Constitution states that the Board is responsible for ensuring the OA carries out its functions under the law. This includes supervising, maintaining, repairing, managing and controlling the common areas, enforcing the JOP Declaration, promoting harmony among owners, entering into contracts, setting the strategic direction of the OA and a range of other matters. Board members need to be familiar with these responsibilities and educate themselves accordingly.
At some point the OA will need to enter into supply contracts with various service providers such as association managers, building maintenance companies, auditors, lawyers etc. Board members should ensure they comply with RERA's requirements, the JOP Law and the JOP Directions in relation to such matters, including running fair and transparent tender processes and ensuring bids have been objectively considered.
6 Registering your OA
Once elected, the Board should on behalf of all owners coordinate with the developer and RERA to have the OA officially registered. Owners should bear in mind that interim Boards are generally not legal entities within the meaning of the JOP Law and in the majority of such cases, the developer will still be maintaining the community or development and service charges will be payable to the developer and not the interim Board. It is therefore important for owners to commence the OA registration process as soon as possible. It is also important to register an OA in order for Board members to protect themselves from any personal liability arising from contracts they may be signing on behalf of unregistered OA's while management of the community is still the developer's responsibility.
7 Service Charges
A common issue that will be faced by Board members relates to the recovery of service charges. There can be ramifications arising from different remedies chosen by a Board to enforce payment, such as denying access to services and facilities or "name and shame" campaigns. Board members should ensure rights to carry out such actions are reserved to the OA through the Jointly Owned Property Declaration. In addition, legal claims can be made based on personal rights against owners and statutory liens against the property. The JOP Law for example, allows a fast track mechanism to serve a notice through the notary and then attach a lien to the defaulter's property, which may ultimately allow sale of that property by public auction. Such a procedure has not yet been tested however, and interim OAs currently have no legal right to go to court or sue so they are relying on the developer to assist with the recovery.
Developing an effective OA requires careful consideration and due diligence. Boards are well advised to do their homework up front, invest the necessary time and resources to get the foundations right and reduce potential future risks and liabilities by taking account of the issues described above.
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.
Specific Questions relating to this article should be addressed directly to the author.