Strata Law unclear about rights of building owners

The new Strata Law is unclear about the rights of building owners and communities, according to a legal expert. "The law was drawn up to establish the ownership of individual apartments and office spaces in a development and give legal status to homeowners' associations. But it does not cover the election of association office bearers and how resolutions are adopted and implemented," said Ali Al Haddad, owner and Senior Lawyer at Al Haddad & Associates. "Also there is no mention about the accounts and balance sheet of the homeowners' associations," he added. The Strata Law came into effect through Law No27 of 2007, which contains 33 Articles with no mention of any penalty clauses. Also, Law No7 of 2006 concerning property registration in Dubai also does not contain any penalty clauses. "Considerable rights were given to the master developers regarding the constitutions of homeowners' associations, but they should be given powers to amend their constitutions. According to the law, master developers make the constitution, rules and regulations for the homeowners' association. If the master developer prepares the initial constitution, the association must have powers to amend it when it is fully set up. A senior official of another Dubai-based law firm says the rights of buyers and sellers will remain in a state of transition until the Strata Law is finalised by the Real Estate Regulatory Agency. "One cannot really decide what rights people have or don't have without the regulations of the Strata Law being finalised," said DLA Piper Middle East's Real Estate Practice chief Tom O'Grady. The Strata Law is very dependent on the regulations, which are still at the draft phase. Hence, the law will not have much of an effect on the market, he added. "However, there will certainly be more sense of an involvement by the community in decision making in terms of how budgets are struck for developments. More involvement by owners will imply empowerment of people who will feel more involved in their development." O'Grady suggested the legislation should not be viewed in terms of owners versus buyers, or developers versus buyers but as a partnership between residents and developers. "The law is not about control. You can't really have a system of freehold ownership of horizontal property without creating a strata law. In most common-law jurisdictions, you either have a landlord and tenant relationship or you create some sort of a condominium and strata law ownership. "Any mature jurisdiction has seen hundreds of years of an active property market, but for a nascent property market such as the UAE to come up with rules and regulations is going to be a little complicated affair. I think if you looked at the building level the strata law could work but at the community level it could get more difficult. "In more mature jurisdictions such as Australia and the US which have had condominium laws for years you tend to have different layers of control. "So if you take somewhere in Dubai like the Meadows or the Greens you have a management company managing the community and all basic infrastructure such as the roads and district cooling. "Right now, the owners' associations are concentrating on individual blocks rather than the larger community level. "Thus, the complexity of the strata law is heightened because of competing interests in communities in the UAE."