Property owners groups can't sue defaulters

Owner associations are looking at taking legal action against service charge defaulters, but their move is hindered since they are not legal entities, experts say.
“An action against an 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, told 'Emirates24|7'.

Ludmila Yamalova, Managing Partner of HPL Yamalova & Plewka JLT, states that until IOAs are registered under the DED trade license, they are not legal entities.
“Until they become legal entities, they cannot bring action against either owners or even developers or any third parties.”

Brent Baldwin, Associate, Hadef & Partners, mentions there are a range of options available for collection of service charges, but this is still a challenging issue.
“As the law is further developed it should become easier. Having a good association manager or lawyer on side is the best suggestion.”

Graham Yeates, Head of Owners Association Management, Cluttons, adds that during the interim phase the Real Estate Regulatory Agency has been most helpful in recovering service charges.
“There are few legal guidelines and some doubt about the developer's right to collect service charges and until we have case law to determine the status of arrears there will be no clarity of the legal position.”

NOC - an issue

On the issue of whether IOAs can issue no-objection certificates (NOCs), Yamalova says property owners are still required to obtain NOCs from developers to sell their properties off to third parties, even if the title deed is in the name of the owner.

“This contradicts the very idea of a title deed being an unnumbered, unrestricted, exclusive, evidence of freehold ownership.”

O'Brien too says the developer still must give the NOC until such time the bank account is in the name of the owners association and administered by the manager.

Yeates says the IOA often supplies a disclosure statement which provides an outline of the service charge position for the unit being purchased so that an accurate cut-off can be determined by the seller and buyer.

Print Email