New joint ownership real estate law issued in Dubai
A new real estate law was announced in Dubai on Tuesday.
His Highness Sheikh Mohammed bin Rashid Al Maktoum, in his capacity as Vice President and Prime Minister of UAE and Ruler of Dubai, issued Law No. (6) of 2019 pertaining to the joint ownership of real estate in Dubai.
The new law applies to all major real estate development projects and jointly owned properties in Dubai, including those located in free zones and special development zones.
The Law forms part a regulatory framework designed to boost competitiveness and enhance investment in the real estate sector and ensure the rights of all parties are protected. The issuance of the Law follows directives issued by His Highness to form the Higher Committee of Real Estate Planning in Dubai, chaired by Deputy Ruler of Dubai HH Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, and the issue of Law No. (4) of 2019 pertaining to the Real Estate Regulatory Authority (RERA) of the Land Department.
According to Law No. (6) of 2019, the Land Department will prepare a register for jointly owned real estate properties. This will feature all information related to the land owned by developers and real estate units meant for independent ownership. The register will also feature names of owners, members of the committee of owners, and the building management chart outlining maintenance procedures in common areas created according to the laws and regulations of the Land Department.
In addition, the register will include details of the share of maintenance costs that each owner should pay, the facility management company responsible for managing common areas and amenities of the joint property in accordance with this Law, and information about the developers and operators of the project.
All details regarding contracts related to the management of jointly owned real estate development or the common areas and the areas owned by the developer of the project should be registered. The Land Department is responsible for issuing ownership certificates and documents related to individual units in jointly owned real estate properties as per the terms and conditions of Law No. (7) of 2006 pertaining to real estate registration in Dubai.
According to Law No. (6) of 2019, the developer is required to submit all necessary documents of the jointly owned real estate project to the Land Department within 60 days of the completion date and receipt of completion certificate. The Department can extend the deadline for this by 30 days. If the documents are not submitted, the Department can request the documents from any other party. In this case, the Department will charge the developer all related fees and expenses.
Common areas and amenities in the building are clearly defined in the Law, which regulates the ownership of developer-owned areas. The developer should allocate parking space for owners of the unit, which cannot be sold separately.
According to the law, jointly owned real estate properties are divided into three categories for the purpose of management of common areas:
– The first category includes mega projects where the developer is responsible for managing, operating and maintaining common areas and facilities.
– The second category constitutes hotel projects, where the developer has appointed a company to manage the common areas in accordance with the regulations set by the Director General of the Land Department.
– The third category includes real estate projects other than mega projects and hotel projects, where a specialised facility management company manages the common areas.
The Law also obliges the real estate developer to put in place a building management system for mega projects and hotel projects managed by them. The system should be approved by RERA before any legal transactions are made for these projects.
The owners committees for the first and third categories should not include more than nine members selected by RERA, and should be established when 10 per cent of the joint real estate units are registered.
The developer cannot be part of an owners committee unless there are unsold units. The committee is tasked with ensuring the proper management of common areas, and reviewing annual budgets. The owner is also required to pay the management his share of the cost of maintenance of the jointly owned real estate property.
According to the law, the facility management company cannot charge fees for operating or maintaining common facilities unless it receives an approval from RERA.
RERA is in charge of regulating and inspecting the management and maintenance of jointly owned real estate properties and common areas. The facility management firm should submit reports every six months to RERA on the management of the jointly owned real estate property and common areas. At any time, RERA can request information on the revenues and expenses related to service charges.
According to the Law, RERA CEO can appoint another facility management company in case the developer or the management company fails to ensure proper maintenance of the common areas.
For projects in the third category, RERA can appoint another facility management firm to oversee the common areas of the jointly owned real estate project.
The developer is responsible for any damage to the structure of the jointly owned real estate property occurring within a period of 10 years, starting from the date of issuance of the completion certificate. The developer is responsible for replacing and repairing any faulty items in the individual units within a period of one year from the date of delivering the unit to the owner. In case the owner refuses to take possession of the finished unit for any reason, this period will be calculated from the date of issuance of the completion certificate.
The facility management is tasked with obtaining insurance coverage for the jointly owned real estate project.
The Rental Disputes Centre in Dubai is tasked with reviewing all disputes that fall under the purview of this Law. Violators are subject to financial penalties upto Dh1 million. Penalties will be doubled in case of repeat violations within a year upto Dh2 million.
This Law annuls Law No. (27) of 2007 pertaining to the joint ownership of real estate in Dubai and any other law that contradicts it. The clauses and regulations of Law No. (27) of 2007 will continue to be in effect till the issuance of new regulations of Law No. (6) of 2019, unless it contradicts it.
The Law is effective within 60 days of its publication in the Official Gazette.