Abu Dhabi Jointly Owned Property: Governance, Service Charges, And Asset Quality

Last week, we examined how off-plan sales are now regulated from escrow to cancellation, but what happens once the units are delivered and the building fills up?

Abu Dhabi’s reforms do not end when a unit is sold or a project is handed over. They also govern what happens after owners move in: the management of buildings and shared facilities, the operation of owners’ committees, and the collection of service charges. 

Before Administrative Decision No. 25 of 2025, jointly owned property in Abu Dhabi was governed by Law No. 3 of 2015, which established the joint property framework and the “Owners’ Union” concept (referred to as the “Owners’ Committee” following the 2025 amendments to that law) but did not prescribe detailed rules for the day-to-day operation of shared buildings.

Pre-sale disclosure, service charge collection, management company appointment, and reporting were left largely to the parties and their contractual arrangements. That gap left developers, management companies, and owners’ committees working from a comparatively thin set of requirements, increasing the potential for disputes over service charges, common area management, and disclosure.

Administrative Decision No. 25 of 2025 changes that position by introducing a comprehensive operational framework for the management of common parts and shared facilities.

Developers must now attach a disclosure statement before a purchaser signs a purchase contract, covering matters such as: 

• the building or project description
• common facilities
• a draft management system
• an estimate of service fees for the first two fiscal years and
• estimated dates for commencement of works and handover.

The developer remains liable to the unit purchaser for materially inaccurate or incomplete disclosures for two years from the date of transfer (i.e., the date on which ownership of the unit is registered to the purchaser). 

Management companies must be Abu Dhabi Real Estate Centre (ADREC)-accredited and appointed by the developer within 30 days of delivering the first unit to a purchaser and must use an electronic management and accounting system and report to ADREC every six months. Annual service fees must be payable in monthly or quarterly installments rather than as a single lump sum, and unpaid service fees create a preferential right (a lien) over the unit that remains enforceable against any new owner following a change of ownership. 

For transacting parties, this has a direct due diligence consequence: unpaid service charges should be confirmed as nil or indemnified by the outgoing seller before completion, because the lien attaches to the unit and will follow it to the new owner regardless of any private arrangement between the parties. These changes are supported by a supervisory framework that strengthens ADREC’s role in approving management systems, annual budgets, and service fees, with any fees charged without ADREC approval deemed unlawful and unenforceable. 

Administrative Decision No. 26 of 2025 complements this by introducing a standardized, unified bylaw for owners’ committees applicable across Abu Dhabi. An owners’ committee must now be formed once at least 30% of units in a development are registered to multiple owners, comprising five to nine resident unit owners elected on a one-owner-one-vote basis, with developers expressly excluded from membership even where they retain unsold units. 

The committee’s role is supervisory rather than executive. It reviews budgets and monitors the management company’s performance, and can request that the Department of Municipalities and Transport (DMT) compel a change of management company where there is evidence of negligence. ADREC retains the power to dissolve the committee or remove members. 

This gives unit owners a clearer, more structured voice in shared-space management than existed previously. While the developer itself is not permitted to act directly as the management company, the chairman of the DMT retains the authority to designate certain projects in which the developer assumes management responsibility through an ADREC-accredited specialized company, with the owners’ committee exercising only such powers as the chairman determines. This creates a pathway for developer-led management in specific cases, subject to regulatory oversight, and should be checked as part of governance diligence on any acquisition of units in a development where the developer retains a significant stake. 

These changes should be treated as asset management reforms. Developers should review disclosure materials, handover procedures, and service charge budgets against the new disclosure and liability requirements. Property managers should check whether their ADREC accreditation, appointment timing, reporting obligations, and collection processes, including installment billing and lien enforcement, align with the new framework. Investors and lenders should consider whether service charge governance, including the owners’ committee’s formation and composition, affects net operating income, recoverability of costs, and exit value. 

What this means for your next transaction 

Service-charge and governance diligence should start before signing. Investors and lenders should review disclosure statements, management company accreditation, and appointment status, owners’ committee formation and composition, budgets, recovery mechanics (including lien rights), and reserve or facility obligations. 

A poorly formed or inactive owners’ committee weakens the budget oversight and dispute-resolution function the reforms are designed to provide, which can leave service charge shortfalls unaddressed, funding gaps for reserves and maintenance, and unresolved arrears that attach to the unit as a lien. All of this can affect net operating income, cost recoverability and, ultimately, the price and speed of an exit. 

Next week: a single announcement that changed every landlord’s renewal calculation overnight.