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31 May 2023

Some developers pay residents' bills

Dubai Electricity and Water Authority (WAM)

By Parag Deulgaonkar

Contrary to the perception that real estate developers in the country are solely preoccupied with devising nifty ways to boost their bottom line, some Dubai developers claim they’ve made utility payments out of their own pockets to avoid any inconvenience to the residents of their communities.

The developers claim that they’ve done so to avoid disruption of utility services to their towers as they still remain legal owners of the buildings, and say will claim back the amount as and when owners associations are formed.

 “Authorities such as Dewa, Empower, PDC, etc., approach us for payment as charges for common areas continue to be billed in the developers’ name until an Owners’ Association is formed. Sometimes, in order to avoid any service disruption, we pay from our own resources,” Mohammed Ali, General Manager, ETA Star Properties, told Emirates 24|7.

“We, however, do recover the money from the owners in arrears. But in case they refuse to pay up, we will have to wait until OAs are formed, and approach them to collect our dues from those owners who haven’t paid up.”

Fereidoun Sanatti, Chief Executive Officer, Saba Properties JLT, adds that they too have cleared Dewa and chiller dues to the respective authorities so they don’t disconnect the power or chiller of their buildings.

He adds: “We had to pay on some occasions from our own pocket or else everyone would have suffered. But we will collect our dues once the OA is formed.”

According to developers, government authorities generally approach them for payment since the Interim Owners’ Associations (IOAs) are not legal entities. This website had reported earlier that IOAs are still not able to open bank accounts due to the fact that they do not have a legal status.

“IOAs are not legal entities until they become licensed under the Department of Economic Development. Hence, no owners’ association will be allowed to open a bank account in its own name,” Ludmila Yamalova, Managing Partner of HPL Yamalova & Plewka JLT, had told this website.

Although developers have threatened to take legal action against defaulters, not many have actually moved court.

“We can’t disconnect an apartment’s utility connection just because they haven’t paid up their service charges… our only recourse is to wait for the OA to be formed, and going to the court is too costly for a minuscule sum,” Ali says.

He adds that ETA does hold annual general meetings regularly and have appointed independent Strata managers to manage their buildings.

“And hence today our service charge defaulter percentage isn’t more than 5 per cent.”