News & Insights
Ever since its inception in 2007, RERA has tried to cover the best interests of the investors and developers alike. Due to specific regulations favouring developers, enabling them to develop a conducive environment for realty, the purchaser or the owners were granted relief by Law No. (6) of 2019 issued by the Real Estate Regulatory Authority (RERA) in Dubai and two subsequent laws:
- Dubai Law No. 6 of 2019 on the joint ownership of properties (Joint Ownership Law)
- Dubai Law No. 4 of 2019 on the Real Estate Regulatory Agency (RERA Law)
LAW OF JOINT OWNERSHIP
The law for joint ownership regulates the management of the common areas of any building or a real project. The new law has specific implications on the management circuit of possessed Dubai Properties.
There are three broad classifications instituted through the Joint Ownership Law:
(i) Megaprojects, the likes of master development communities should now be managed through a conveyancer or a property management company appointed by the developer or RERA (in case the project does not possess a developer);
(ii) Hospitality industry projects, including but not limited to hotels and lodges must be managed by a suitably qualified hotel management company appointed by the respective developer (and approved by RERA); and
(iii) all other projects which do not fall within the category of mega-developments, major projects or hospitality projects, will be managed by a conveyancing company approved by RERA.
THE TERMINATION OF THE OWNERS’ ASSOCIATIONS
Owner’s Association is absolved from any further responsibility to manage common areas of the property. The entire organisation features will be conducted by the relevant management company in accordance with the respective building management systems to be endorsed for all units in the property. The best interest of all the investors is now monitored through a collaboration of the owners’ committee and RERA.
THE SUBSEQUENT AUTHORITY OF RERA
The nascent law authorised RERA a broader spectrum of authority in supervising the operations, management, maintenance, MEPS and repair of jointly owned properties, common areas and utilities. RERA’s prerogative also includes conducting inspections, maintenance of infrastructural belongings auditing cost-benefit analysis and costs connected to the service and usage charges and requesting relevant information and documents. Another vital infrastructure avenue, known as the internet, will also fall in the collective powers of RERA.
Furthermore, this new law stipulates that all service charges, as a prerequisite, must possess a pre-approval from RERA, further based on a budget that is approved by an external auditor. Hence, the earlier problems created by conveyancers and the developers by charging higher prices per square feet for maintenance has been avoided through this regulation. RERA strictly adheres to the MKS system of measurements, enabling all plot sizes, net or gross calculations of units now been calculated in square meters. In the case of a sub-developer, the entity managing the property is required to open a separate bank account and deposit all service charges within seven working days from the date of collection. If an owner defaults for more than 30 days, then the management company can impose the respective penalty. This period is significantly shorter than the three months provided under the previous law. All other funds collected by the Master Developer will be deposited into this new account as well. The conveyancing company and the developer are also required to use state of the art Mollak e-system for the generation of invoices, service charges including but not limited to drainage, consumption, district cooling and other usage charges. Cementing quality services, RERA also launched a consolidated web portal to compliment an owner’s association for jointly owned properties. The Mollak vision stems very effectively for remote situations, as the Smart Dubai office launched in 2015, strengthens its grip on Dubai Public Sector. The law was enacted within 60 days of its publication in the Official Gazette.
THE SCOPE OF RERA
The subsequent repeal all previous laws and stipulates a much more cemented operational framework for RERA. The most significant changes are:
- Transferring the jurisdiction to regulate matters related to leasing contracts from RERA to the Dubai Land Department.
- Adding explicit reference to RERA’s responsibility to regulate and supervise the operation, management and maintenance of the jointly owned property and common areas and utilities.
- Providing RERA with an express power to investigate and review those complaints filed against persons conducting real estate activities.
All developers, property managers and owners’ associations are eligible to commence operations according to the new law, and all of them are required to review their internal management systems to be in cent per cent compliance with the Joint Ownership Law. This law provides a grace period of six months from the effective date, for everyone to converge under the new law. The new law abrogates the previous determination of the developers charging heavy fees on the owners, and now RERA will be the sole decision-maker on issued complaints filed against realty’s, subject to their non-compliance with the new law, by initiating action against the non-complying parties through the issuance of penalties.
Adding credence to RERA’s role by vetting all real estate advertisements, it now possesses the right of jurisdiction for essential approvals for the content of adequate advertisements in Dubai. In this regard, RERA’s jurisdiction and scope now also encompasses significant development zones and free zones (such as the DIFC) in coordination with their competent authorities.
Moreover, RERA exercises the right to issue the necessary approvals for the content of such allocations in Dubai, and in this regard, her scope now encompasses significant zones and free zones (such as the DIFC) in coordination with their competent authorities. In conjunction with the DREI, RERA is eligible to conduct educational, informative and abiding programs on the rights and duties of the developers, consumers, conveyancers in the real estate realm of Dubai, in addition to updating laws and studies to achieve a balance between demand and supply paradox in the realty sector of Dubai.
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