Whose responsibility is to ensure that the developer’s service charges have been paid before an apartment is leased out? Is it the owner, the property agent, the regulator/developer, or the tenant herself?
This Sunday, Nakheel banned residents of more than 1,300 units at Shoreline Apartments in Palm Jumeirah from using the facilities, including beaches, pools and gyms, because their owners had failed to pay the master developer's service fee.
However, since most apartments have been rented out, it's the tenants who are at the receiving end of service disruption, and not the defaulting owners. Tenants at the Shoreline Apatrtments are being told they will get access only when the owners pay up the outstanding service charges.
Brian, a British expatriate, who chose to give first name only, said: “My landlord hasn’t paid the service charge and for his mistake I was stopped from using the facilities. I called him and he assured me that he would pay his outstanding soon.
“I have never asked an agent or the property owner to give me some sort of proof that he has been paying his service charges. Next time, I will certainly ask the owner/agent to show me service charge payment receipts,” he added.
Brian isn’t alone. There are scores of tenants in Discovery Gardens, Dubai Marina and elsewhere who have faced the potential threat of service disruption because their, or their neighbours’, landlords failed to cough up the developer’s or the facility manager’s fees.
Emirates 24|7 took the initiative on behalf of our readers and asked Dubai’s real estate agents on who should be responsible for ensuring that the tenants, who have to furnish post-dated cheques for the full amount of the annual rent before they are handed over the keys to a unit, do have access to the facilities promised along with the subject of the tenancy?
Agents do admit that they never ask property owners on whether they are service charges defaulters or not before listing their units, Emirates 24|7 can reveal.
A number of property agents, who didn’t wish to be named, did acknowledge that neither they nor the tenant has ever asked them if the property owner is a service charge defaulter.
“We don’t check with the property owner on whether they have paid their service charges… we just lease the property and that’s all,” a real estate agent from a top Dubai-based real estate consultancy, said on conditions of anonymity.
Many of them said they are not responsible if the tenant is barred from using any of the facilities in a building such as gym, swimming pools, etc., by the interim owners' association or the property developer if their landlord turn out to be a service charge defaulter.
“We feel sorry for them, but we can’t help. Tenants can complain only if we are managing the building or the apartment, otherwise they need to take up the issue with the owner,” added another agent.
“We generally ask the property owner to give us a copy of the title deed or the sale and purchase agreement. Questions such as - are they are paying their mortgage or service charges on time - are too personal for us to ask. For certain, they will move to another agent/agencies if we ask them such questions.”
A rulebook on ethics of real estate agent has been issued by the real estate regulators in Dubai, but it does not specify that agents need to check the property owners’ status with the developer or the bank, said another property broker.
This website reported earlier this month that even interim owners' associations are looking at taking legal action against service charge defaulters, but their move is hindered since they are not legal entities.
"An action against defaulting owners can be commenced with support of the owners association group. Legal action is being supported by owners' groups as it relates to long-term defaulters and it is only a matter of time before we see this tested in the absence of formal registration," Kent A O'Brien, Chief Executive Officer, SG Community Management Services, had said.
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