What is “Jointly Owned Property”?
Jointly Owned Property is a real estate development that has been subdivided into “Units” being the saleable area of a development and “Common Areas” being the shared areas of a development. A Unit would comprise the title area of an apartment for example. Common Areas would comprise the corridors or foyer of a building or any swimming pool and recreational facilities. Property designated as freehold is Jointly Owned Property.
Any Investor who invests in Jointly Owned Property becomes a member of an Owners Association. This means that they have certain obligations as an owner including: (a) paying service charges for the management, administration and upkeep of the Jointly Owned Property; and (b) complying with building management rules and regulations.
What are the applicable laws with respect to Jointly Owned Property? Jointly Owned Property is the subject of Law No. (27) of 2007 (“JOP Law”). In addition, the “Directions” to the JOP Law were also released in 2010 to provide greater guidance to developers and Investors as to their rights and obligations in relation to Jointly Owned Property. The principal governmental body responsible for enforcing the JOP Law and the Directions issued pursuant thereto is the Real Estate Regulatory Agency or “RERA” as it is better known. In addition, the Dubai Land Department also performs a function in terms of approving Unit plans and Common Area plans.
RERA performs the following functions:
- Assisting developers with establishing a fair and equitable management structure for their developments through the use of a Jointly Owned Property Declaration.
- With respect to developments being sold “of plan”, encouraging developers to disclose all relevant information pertaining to their developments in “Disclosure Statements”.
- Reviewing budgets and service charge information and approving service charges.
- Licensing firms to provide community management services to Owners Associations.
- Generally assisting to facilitate the compliance of developers, owners and owner’s association managers with their obligations under the JOP Law and Directions.
As an investor, why are the JOP Law and Directions important?
The JOP Law and Directions provide a framework, firstly to ensure that investors understand the nature of their investment (through the use of the Disclosure Statement) and secondly ensure that their Jointly Owned Property is managed in accordance with good industry practice.
Accordingly, if an investor is interested in purchasing an apartment or villa, the investor may like to enquire as to the following:
- Is there a Disclosure Statement available?
- Is there a Jointly Owned Property Declaration or other similar documents for the project?
- What are the applicable service charges?
- Who is the owner’s association manager and are they licensed with RERA?
Whilst not all of the above may be available for any particular project, the provision of the same will assist the investor to understand the nature of the project and any ongoing rights and obligations. Moreover, production of such documents would generally indicate that the developer strives for best practice and works collaboratively with RERA and the Dubai Land Department.
In addition, investors also need to keep in mind that the transfer of title to any property will require a “no objection certificate” from the manager of the owner’s association in question, or from the developer (if no such owner’s association exists), confirming that the transferring owner is in compliance with its obligations under the JOP Law and in particular that its service charge payments are up to date.
Investors should also be aware that a slightly different but similar system in relation to Jointly Owned Property exists for property in the Dubai International Financial Centre (DIFC) free zone.
Dubai Land Department Guide ‘Know your rights for investors in Dubai”