STRATA Law - New Guidelines Released

The Land Department has released detailed guidelines to implement Dubai’s

‘Strata Law’. The move introduces a new regulatory framework which redefines
the rights, responsibilities and obligations of all parties to jointly owned properties
such apartments, commercial units and master-planned communities.

The following guidelines/ regulations have been issued:

1) Direction for Jointly Owned Property Declarations (“the Direction for

Declarations”);
2) Direction for General Regulation (“General Regulations”); and
3) Direction for Association Constitution (“the Constitution”)

Under Article 6 of the Direction for Declarations, a detailed list of information

which should be listed within such Declaration is provided giving much needed
clarity. These include, among other things, an indication as to whether it relates
to freehold or long term leasehold interest for no more than 99 years in the
building or part of the building to which it relates, the Common Areas site plan
and details of how the units are to be numbered.

Article 11 confers guidelines as to the powers in relation of registration of a

Jointly Owned Property Declaration imposing an obligation on the Master
Developer to submit a Jointly Owned Property Declaration in respect of the total
area of land being master developed.

If the Developer fails to comply with this duty then the Representative Owners
may submit the Jointly Owned Property Declaration in respect of the Existing
Property and recover costs and expenses incurred as a result from the Owners
Association who may in turn recover those costs and expenses form the
Developer. Protection is afforded to homeowners as the Department may refuse
to register a Jointly Owned Property Declaration if the Developer has withheld
areas, services or facilities from the Site Plan or the common areas site plan.

Under Article 7 the Developer is responsible for all costs and expenses
associated with a plot prior to that plot becoming Jointly Owned Property. Once
the plot becomes Jointly Owned Property the Owners Association becomes
responsible for all costs and expense associated with it. A Developer must bear
all costs associated with the rectification of defects in Jointly Owner Property and
must ensure that no costs are passed to an Owners Association. Where this
provision is breached the Owners Association may recover costs from the
Developer. After the date of commencement of these regulations the Developer
or any Sub-Developer must not seek to shift responsibility for the costs and
expenses to any Owners Association and any provision purporting to do so shall
be null and void.
This Article usefully sets out the categories of all costs which the Developer must
bear and states that a Developer must not collect service charges or Utility
Charges without first obtaining written approval from RERA. Once Service
Charges or other charges are collected from purchasers of Units (or proposed
Units) the Developer must, within 3 months of the date on which the Owners
Association was formed, have a registered auditor undertake an audit of all
monies received and expended and pay to the Owners Association any funds
held by the Developer which are certified as unexpended or not properly
expended.

Article 23 of the General Regulations sets out the requirements for Registration
of the Owners Association including all documents to be lodged. We have listed
these separately in the Schedule attached. Article 25 sets out the obligations
and requirements of the Developer in establishing the Owners Association.
Furthermore, the Developer is obliged to keep books and records of the Owners
Association as required under its Constitution.

Under Article 31 a Developer is obliged to supply an Interim Disclosure

Statement which must be signed by the Developer and contain information such
as a description of the building or project and intended land uses within the
building or project. The Developer is deemed to have warranted the information
in an Interim Disclosure Statement and if, within two years on which the Unit is
transferred from the Developer, any of that information is found to be inaccurate
or incomplete in a material way the Developer will be liable to the Consumer to
whom the Unit is transferred for damages, whether the Consumer purchased
from the Developer directly or from another Consumer.

The Constitution sets out the functions and powers of the Owners Association,
ranging from the appointment of the board to the General Assembly. Importantly,
Article 35 gives guidance on voting at meetings. Voting on motions at a General
Assembly, other than motions for a Special Resolution, shall be decided by
simple majority of those present and entitled to vote, by a show of hands. Under
Article 36, for a motion for a Special resolution at a General Assembly to be
approved it must be passed by Owners holding together two-thirds of all
Entitlements in the Jointly Owned Property.

Appointment of an Association Manager may be done by the General Assembly

under Article 40 and the same must be an Owner who is a natural person
engaged in a voluntary capacity or a company licensed and registered by RERA
and engaged professionally on a contract. In either case both must meet
licensing or registration conditions as set out by RERA. The Association
Manager shall be appointed pursuant to a Simple Resolution and delegated by
contract.

The implications of these guidelines are far reaching for Dubai’s property sector.
It is hoped that the effect shall be wholly beneficial and give strength and depth
which all sections of the market will appreciate. Those who take on joint
ownership as a result of their purchase of an apartment or office, for example,
and with specific rights to communal areas, have been empowered by the
provisions of the guidelines.
 ARTICLE 23

REGISTRATION OF OWNERS ASSOCIATION

REQUIREMENTS FOR REGISTRATION.

To establish an Owners Association, the following documents must be lodged:

(a) Application for Registration;

(b) Common Areas Site Plan;
(c) Jointly Owned Property Declaration;
(d) title document for the plot the subject of the Site Plan or a letter from the Department
stating that the title document is under process;
(e) Audit Report prepared under sub-article (10) of article (7) or an undertaking to lodge
it within the specified period;
(f) Transfer of the first Unit;
(g) If the application is made by Unit Owners, evidence of service of and non-compliance
with the notice under article (11), sub-article (3) of the Jointly Owned Property
Declaration Regulations;
(h) Department’s fees; and
(i) Such other documents as the Department may require.