The term owners association comes from Dubai’s earlier Law No. 27 of 2007 on jointly owned property. Under that law, the owners of a building or community formed their own association, which managed the shared areas and collected the charges. Many buyers search for the American term home ownership association, or HOA. In every case it means the community of owners.
Dubai Law No. 6 of 2019 on jointly owned real property repealed the 2007 law. It was issued on 4 September 2019 and came into force 60 days after its publication. All rights and obligations of the former owners associations passed to the management entity (Art. 49 and 51, source: Dubai Legislation Portal). When people speak of the owners association of a Dubai development today, they usually mean the management entity and the owners committee under the new law.
The law sorts developments into three categories (Art. 18). In major projects the developer manages the common parts, in hotel projects a hotel management company does, and in all other developments a specialised management company selected and contracted by RERA takes over. Owners take part through an owners committee. It is formed once at least 10 percent of the units are registered to their owners, and it has up to nine members, appointed by RERA from owners who live in the development (Art. 22). The committee checks the work of the management entity, makes recommendations on the annual budget and passes on owners’ complaints. In third-category developments it can ask RERA to replace the management company (Art. 24).
The community is funded through the service charge. Each owner pays a share based on the ratio of the unit area in the property register to the total area (Art. 25). The management entity may not collect anything that RERA has not approved, and RERA approves a budget only after a recognised audit firm has reviewed it (Art. 27). The money sits in a separate bank account for each development and may only be spent on set purposes such as cleaning, security, maintenance, insurance and management (Art. 30). All of this runs through the Dubai Land Department’s Mollak system. Its public side lists the Service Charge Index with the approved rate for each development and the licensed management companies (source: Dubai Land Department).
One point matters most to buyers. The management entity holds a lien on every unit with unpaid service charges, and such a unit cannot be transferred until the arrears are paid. If an owner does not pay within 30 days of a written notice, the management entity can enforce the claim through the execution judge at the Rental Dispute Settlement Centre, in the last resort up to a public auction of the unit (Art. 32). Before buying a ready property, ask for proof that all charges are paid.
Law No. 6 of 2019 applies only in Dubai. The Mollak system does not apply in Ras Al Khaimah, where management and charges are set out in the purchase contract and the developer’s documents. How management and charges work together in a villa development is shown in our entry on the gated community. See how we keep charges and operation under control for owners on our property management in Dubai page.
