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Jeremy Scott - Partner - Real Estate
Law No. 27 of 2007 on Ownership of Jointly-Owned Properties in the Emirate of Dubai (the “JOP Law”) came into force on 1 April 2008. The Law laid the foundation for a regulated and transparent regime concerning the management of strata developments and ownership of Units in Dubai.
In terms of Article 32 of the JOP Law, the Chairman of the Land Department was entitled to implement regulations as required to ensure a comprehensive strata title regime.
In April 2010 these regulations (“JOP Regulations”) were released as “Guidelines” by the Land Department.
In this article we briefly outline the purpose of each of the JOP Regulations. We then list in simple terms the steps developers need to take to ensure they comply with the JOP Regulations. We then review how these laws are being applied and implemented to date in practical terms.
I. IMPLEMENTING REGULATIONS
The JOP Regulations comprise the following:
Below we provide an Overview of the JOP Regulations by considering briefly the purpose of each regulation. A more detailed analysis of the JOP Regulations is completed under the section On-Going compliance below.
a) Consumer protection;
b) Developer disclosure;
c) Financial disclosures;
d) Apportionment of costs as between developers and the Owners Association;
e) Collection of service charges;
f) The requirements for lodging of Jointly Owned Property Declarations and setting up of Owners Associations;
g) The form and content of Building Management Statements;
h) The form and content of Supply Agreements;
i) Community Rules Enforcement Notices;
j) Appointments of Administrators;
k) Interim measures.
2. JOPD Regulation
This Regulation sets out in more detail what is required to set up on a jointly owned property scheme and register an Owners Association. A default procedure is specified allowing Unit Owners to establish a Jointly Owned Property scheme where the developer fails to do this. A new procedure is also introduced allowing developers to stage their developments as well as provisions allowing up to three layers of Jointly Owned Property within any one Jointly Owned Property development.
3. Survey Regulation
This Regulation provides for the following:
a) The accreditation and registration of surveyors;
b) The duties of registered surveyors;
c) Suspensions and cancellations of surveyors;
d) Standards to be used and the ability for the Land Department to issue binding Directions;
e) Transitional provisions relating to the preparation of plans are also specified.
Directions have also been put in place which describe how areas must be calculated and survey requirements.
4. Constitution Regulation
This Regulation specifies the form of constitution for each Owners Association formed. If developers have specified their own form of constitution in their sale contract they will need to be aware that such documents will now not apply.
III. ON-GOING COMPLIANCE WITH THE JOP REGULATIONS
In this section we briefly summarise the effect of the JOP Regulations on an on-going basis. Each topic is discussed under the heading of the JOP Regulation setting out the obligations.
Article 4 – of the General Regulation – Disclosure Statements
(a) The description of the building or project of which the proposed Unit will be part;
(b) The intended land use within building project (for eg. residential, serviced apartments or retail);
(c) Any features pertaining to ecological sustainability;
(d) Any special use that applies to the proposed Unit ( e.g. serviced apartment);
(e) Facilities on the Common Areas that will be available for use by owners and occupiers as of right;
(f) Facilities within the building or project that will be available for the use of owners or occupiers on a commercial basis;
(g) Items of furniture and furnishings (if any) for the proposed Units that the developer commits to make available without additional charge;
(h) A draft plan for the proposed Units showing the areas of the units required by the survey Directions to be shown on the plan for registration purposes but showing no other areas;
(i) A schedule of materials and finishes for both the proposed Common Areas and the proposed Unit;
(j) Whether any Supply Agreements are to be entered into by the proposed Owners’ Association and, if so which agreements;
(k) If available, an estimate of the Service Charges payable in respect of the proposed Unit and, if not available, a statement to that effect;
(l) Proposed arrangements for the supply of utility services to the Jointly Owned Property and the Unit;
(m) Where any utility service will be provided by non-Dubai government entity, other than the Owners’ Association, a statement identifying the utility service and indicating how charges will be paid for that utility service;
(n) Whether the Owners’ Association will on-sell any utility service to Unit Owners and, if so, details on the supply arrangements;
(o) Whether construction has commenced and if not a reasonably estimated date for commencement of construction;
(p) A reasonably estimated date on which the property will be handed over to the purchaser;
(q) A statement directing the purchasers’ attention to the development and purchasing obligation to register the contract in the Interim Real Estate Register in accordance with Law No. 13 of 2008 and related laws including the statement explaining the consequences of non-registration.
(r) Any ecologically sustainable development ratings applying to the building project including details of the rating authority will be included;
(s) A copy of the proposed Jointly Owned Property Declaration will be included;
(t) Copy of the proposed Building Management Statement will be included;
(u) A budget prepared on a reasonable basis and including provision for general fund and reserve fund and catering for the first two years of operation will be included;
(v) An estimate (based on the budget) of the Service Charges for the Unit will be provided;
(w) Details of utility service providers will be disclosed including whether the entity is related to the developer and a reasonable estimate of the annual cost except where the utility service provider is a government entity.
Al Tamimi’s Comments and Observations
Article 7 – of the General Regulation – Financial Matters
Articles 8, 9 and 10 – of the General Regulation – Building Management Statements
Articles 14, 15, 16 and 17 of the General Regulation – Supply Agreements
Al Tamimi’s CoMments and Observations
Articles 23, 24, and 25 – of the General Regulation – Registration of Owners Associations
Article 11 – Preparation of Plans
Al Tamimi’s Comments and Observations
IV. PROGRESS WITH THE IMPLEMENTATION OF THE JOP REGULATIONS
The JOP Regulations round out a comprehensive ownership system that goes beyond the mere management of buildings through the inclusion within the scheme of provisions relating to the subdivision of land, including Master Communities.
The comprehensive disclosure regime will place additional obligations on developers but should not prejudice significantly quality developers who complete extensive planning or their projects and will therefore hold the relevant data at the time they are ready to go to market.
The establishment of Owners Associations and the consumer protection provisions in the JOP Regulations should see a knock on effect with regard to service charges and the accompanying transparency should improve confidence in the sector.
The implementation process has as predicted lead to some challenges however there is now a strong and committed Jointly Owned Property community and a good understanding of the respective rights and obligations of the stakeholders.
It is anticipated that licenses for Owners Association will issue in due course and the transition will be complete. The fully implemented JOP Regulations should once again emphasise why the Dubai real estate market is the logical choice for investment in the region.