In the interim
Creating an owners’ association (OA) for your development means more transparency and tighter control over financial matters, which is certainly good news for property investors. However, until now, these associations haven’t fully come to fruition, despite a slowly maturing market.
According to the Real Estate Regulatory Agency (Rera), figures showed that in April as many as 161 OAs had been registered. However, Graham Yeates, head of the Owners’ Association Management unit, Cluttons, claims this simply refers to the fact a large number of interim OAs (IOAs) have now lodged budgets, supporting financial documents and minutes of IOA meetings and are compliant in that they are conversing with Rera on a regular basis. “I would refer to this jointly owned property as a ‘recognised IOA’ but certainly not a formally registered OA with a name and number issued by the Land Department, enabling it to open a bank account and transact business,” says Graham.
Several contentious reasons have been cited for this delay. Some developers have set up an OA management division and are happy to continue in this role, claims Graham. “They make a profit on the service charges, which in some instances may exceed a normal profit rate. Businesses are entitled to make a profit for providing a service but the problem is an OA can run the building as a non-profit enterprise, which will lead to lower service charges by cutting out the profit layer created by the developer,” he adds.
Developers are supposed to register their Jointly Owned Property Declaration (JOPD) with Rera, eventually paving the way for the registration of the OAs. Delaying registration, in turn, delays the election of the OA board. Such a situation could put owners at risk of being in the dark on sensitive issues, such as serious structural faults or legal matters involving a timeline to satisfy court requirements.
Jerry Parks, partner and head of real estate at Taylor Wessing, says the registration of OAs was held up following the issue of Law 27 of 2007 pending the release of the Jointly Owned Property Regulations (JOP Regulations). These JOP regulations were finally issued and became law in 2010 in the form of: (i) the Direction for General Regulation Concerning Jointly Owned Properties, (ii) the Direction for Jointly Owned Property Regulations and (iii) the Direction for Association Constitutions.
Lawyers Jerry Parks
This article was written for Gulf News and features Jerry Parks discussing owners associations. This article is reproduced with the kind permissions of the editors.
