New law clears issues of property ownership - Emirates24|7

New law clears issues of property ownership

(DENNIS B MALLARI)   

 

The real estate sector in Dubai is about to experience a major shake-up with the introduction of the long-awaited Strata law.

 

The legislation, which will come into force in three months’ time, has taken three years to prepare. Experts from abroad were flown in by the Dubai Lands Department to help with the process. Major changes include new rules covering jointly owned properties and the introduction of owners’ associations for freehold buildings.

 

Emirates Business quizzed three leading officials about the new set of rules – officially known as Strata Law No27 for the year 2007 – Sultan bin Butti bin Mijrin, Director-General of the Dubai Lands Department, Marwan Ahmed bin Ghalita, Chief Executive of the Real Estate Regulatory Agency, and Mohammad Sultan Al Thani, Assistant Director-General for Institutional Arbitration.


 

What does the new jointly owned property law cover?

It includes the mechanism to transfer ownership of a property from a developer and the framework for setting up owners’ associations. The law covers the material, financial and social ownership, as each is related to the others. It helps to define the parts of a building that will be owned by an individual and those that will be under general ownership. The Dubai Lands Department will establish a mechanism to deal with disputes.

 

What is a jointly owned property?

This is whole or part of a building or land, or both, divided into units intended for separate ownership where parts of such a building or land have been designated as common areas.

 

What is a property unit?

Any flat, floor, plot of land or villa, connected or not connected to another house, that is part of a jointly owned property.

 

Who is the owner?

The person who is registered as the owner of a unit in the Lands Department’s register. This would include someone with a long-term lease or a limited-period usufruct (a legal right to use and make a profit from a property belonging to someone else) agreement and the master developer or the sub-developer in respect of unsold units.

 

What is the building management statement?

A document complying with relevant regulations that is recorded on the register and sets out arrangements for maintenance and cost-sharing relating to common areas and facilities, and including equipment and services in any part of a building that is subject to this law.

 

What is an owners’ association?

An organisation formed upon the registration of the first sale of a unit in a jointly owned property. The owners of all the flats in a freehold building or villas in a compound will select members to represent them in the owners’ association.

 

How will the Dubai Lands Department register disposal of these properties?

The department will prepare and maintain special registers of jointly owned properties and their unit owners and issue title deeds. It will regulate the sale or mortgage of jointly owned properties and the registration of long-term lease contracts and usufruct rights. Access to the registers shall be provided to all concerned parties.

 

Does the law cover car parks in jointly owned properties?

Yes, parking areas are included in the registered site plans at the Lands Department, which show units and their communal parts such as watchman rooms, recreational facilities and equipment, swimming pools, gardens, storage facilities and areas designated for use by the owners’ association or whoever the body assigns or contracts to manage the property.

 

Is an owner allowed to alter the structure or external appearance of a unit?

A unit owner may not make any alterations or modifications to the structure of his unit or any part of the jointly owned property that would materially affect the unit or property or its external appearance. A unit owner who contravenes any of these provisions shall be liable to repair the resulting damage at his own expense and in the manner requested by the owners’ association. If the owner fails to comply with this requirement, the association shall repair the damage and recover the costs from the owner.

 

Can the association delegate the running of a building to another company?

The association is responsible for the management, operation and maintenance of the common areas and must obtain an appropriate licence from the department for this purpose. The association may delegate all or some of its powers to a person or company it appoints at such remuneration and on such terms as agreed by the parties.

 

Each unit owner shall pay the owners’ association his share of the annual service fee to cover the costs of management, operation, maintenance and repair of the common areas. Such fees must be calculated in relation to the space of the unit out of the total space of the property. The master or sub-developer shall pay his share of the fee in respect of unsold units.

 

How is a jointly owned property insured?

An owners’ association must maintain comprehensive insurance to cover the repair or replacement value of the property in the event of its destruction by any cause. The association will be the beneficiary of the insurance. The association must arrange insurance against liability for damage to property or bodily injury to owners and occupiers. The insurance premiums payable by each unit owner will be covered by the annual service fees paid to the association.

 

What happens if a property collapses?

Usually the owners of the flats will have fractional ownership of the land and will also receive the insurance payout. However, in some cases where the land is owned by the master developer the owners will receive only the insurance money.

 

 

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