UAE: Defaulters Have No Place To Hide
Owners' associations managing properties within rights to enforce payment obligations
If you own property in Dubai and have repeatedly failed to meet your obligations by way of service charges, it's time to mend your ways. Those who continue to test the limits may soon have owners associations that have assumed responsibility for properties coming after them for overdue payments.
With that, the neighbourly atmosphere that exists in Dubai's freehold clusters would come under severe strain. Repeated failure to meet payment obligations would also invite stiff penalties as laid out under the Strata Law. It could even have retroactive effect, as non-payments in periods before owners associations took over can also be pursued. And the "good people next door" may well be the ones taking the onus of meting out the penalties to those falling back on their obligations.
But there are things that need to be in place before owners associations can start getting tough. For one, "[An] owners association can only take action after it has assumed management of the development," said Jerry Parks, partner and head of real estate at the law firm of Taylor Wessing. "From that date onwards, however, it can seek to enforce payment obligations which arose prior to the owners association assuming management of the development.
"There should be no loophole for defaulters who may wish to argue that past breaches on their part cannot be addressed by the newly empowered owners associations," he added. All of this will leave little room for defaulting homeowners. The pace of handovers has picked up in recent weeks. But many of these properties are owned by investors who have no intention of actually moving in. "It is certainly the case that the high level of absentee investors in Dubai's real estate market poses unique problems for owners associations seeking to enforce service charge obligations," said Taylor. "Clearly where an investor is domiciled outside the jurisdiction, it presents greater obstacles. However, where a tenant is in occupation of the unit, many owners associations are liaising with the tenant as a means of applying pressure on the owner."
Lawyers Jerry Parks
This article was written by Manoj Nair and features Jerry Parks discussing the implications for owners associations. This article is reproduced with the kind permissions of the editors of Mondaq.
