Sheikh Mohammed issues joint ownership law for real estate
The law will be applicable to all major real estate development projects and jointly owned properties in Dubai
HH Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai has issued Law No. (6) of 2019 related to the joint ownership of real estate in Dubai, with the law being applicable to all major real estate development projects and jointly owned properties in Dubai, including those located in free zones and special development zones.
UAE's state-held news agency, Wam reported that as part of the law, Land Department will prepare a register for jointly owned real estate properties, whch will feature all information related to the land owned by developers and real estate units meant for independent ownership.
Additionally the register will also include names of owners, members of the committee of owners, and the building management chart highlighting maintenance procedures in common areas that have been created in line with the laws and regulations of the Land Department.
In addition, the register will include details of the share of maintenance costs that has to be paid by each developer, the facility management (FM) company responsible for managing common areas as well as information about the developers and operators of the project.
Wam reported that the Law was formed as a part of a regulatory framework designed to boost competitiveness and enhance investment in the real estate sector and ensure the rights of all parties are protected.
The issuance of the Law followed the directives issued by Sheikh Mohammed to form the Higher Committee of Real Estate Planning in Dubai — chaired by Deputy Ruler of Dubai HH Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum — and the issue of Law No. (4) of 2019 pertaining to the Real Estate Regulatory Authority (Rera) of the Land Department.
As per the law, the developer is required to submit all necessary documents of the jointly owned real estate project to the Land Department within 60 days of the completion date and receipt of completion certificate, with the deadline being extended by 30 days by the department when needed.
According to the law all details regarding contracts related to the management of jointly owned real estate development or the common areas and the areas owned by the developer of the project should be registered.
Under the law jointly owned real estate properties have been divided into three categories for the purpose of management of common areas, with the first category including megaprojects where the developer will be responsible for managing, operating and maintaining common areas and facilities.
The second category comprises hotel projects where the developer has appointed a company to manage the common areas in accordance with the regulations set by the director general of the Land Department.
The third category included real estate projects other than megaprojects and hotel projects, where a specialised FM company will manage the common areas.
According to the law, the owners’ committees for the first and third categories should not include more than nine members selected by Rera, and should be established when 10% of the joint real estate units have been registered.
The developer cannot be part of an owners committee unless there are unsold units. The committee is tasked with ensuring the proper management of common areas, and reviewing annual budgets. The owner is also required to pay the management his share of the cost of maintenance of the jointly owned real estate property.
According to Wam, the Law will be effective within 60 days of its publication in the Official Gazette.
Under teh new law, chief executive officer of Rera will be authorised to appoint another FM company when the developer or the management company fails to ensure proper maintenance of the common areas.
For projects in the third category, Rera can appoint another FM firm to oversee the common areas of the jointly owned real estate project.
The developer will be responsible for any damage to the structure of the jointly owned real estate property within a period of 10 years, beginning from the date of issuance of the completion certificate, in addition to replacement and repair of any faulty items in the individual units within a period of one year from the date of delivering the unit to the owner.
In situations where the owner refused to take possession of the finished unit for any reason, the period will be calculated from the date of issuance of the completion certificate.
Additionally the FM firm will be responsible with obtaining insurance coverage for the jointly owned real estate project, while the Rental Disputes Centre in Dubai will review all disputes that fall under the purview of the new Law.
According to Wam, companies violating the law will have to pay penalties of up to $272,260 (AED1m) with double penalties in case of repeat violations within a year upto $544,520 (AED2m).