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Condominium Law

On December 10 2007, Dubai issued the Joint Properties Ownership Law (Number 27 of 2007, the Dubai Strata Law) contemplating the rights and obligations pertaining to jointly-owned properties (also known as condominiums or strata property). The law applies to jointly-owned property such as apartments, townhouses and master planned villa communities.

Article 5 confirms that joint properties may be owned by foreign nationals. Foreign nationals may own joint properties on a freehold or 99-year leasehold basis in designated areas in Dubai.

The site plan, the main regulations and the articles of association shall constitute the deed of title of the joint property project, and the owners of units in the joint property project shall comply with such regulations and articles (Article 6).

Unless otherwise specified in the site plan, the joint parts (or common areas) include car parking bays, swimming pools, gardens, lifts, main water pipes, roads, green areas, and the like (Article 7). Such a definition provides a developer with the flexibility to designate a garden or a road or other area to not be part of the common areas, but instead to be retained by the sub-developer or otherwise not subject to the indirect ownership or control of the unit owners through the Association. Although this scheme provides much flexibility for planning and sales for the sub-developer, it is questionable whether it is protective of the interests of the unit owners in general, who would benefit from having any and all non-unit space designated as common areas.

Unit owners own an undivided share of the joint parts (or common areas) proportional to the ratio of the areas of their unit to that of the joint property project (Article 9).

The Association shall come into existence upon registration of the first sale of a unit within the Joint Property project. A unit owner shall become a member of the Association when he or she is registered at the Land Department as owner, and expires when such registration expires (Article 17).

The Association is to be a non-profit organisation and it shall be a legal entity, with rights to litigate and own assets (Article 18). A unit owner shall have the right to attend and vote at meetings of the general assembly of the Association pursuant to the provisions of the articles of association. A unit owner shall have such number of votes that are proportional to his or her shares in the joint property project (Article 19).

The Association shall be responsible for administering, managing, maintaining and repairing the joint parts, and shall obtain a business licence from the Land Department. In addition, the Association may delegate some of its powers to a person or company upon fixed fees and agreed terms (Article 21). This means that the Association can delegate some of its responsibilities to a management company in return for fees.

Each unit owner shall pay its proportionate share of Association fees to cover expenses for administration, management, maintenance and repair of the joint parts (Article 22).

The Association shall have a claim against every unit for unpaid Association fees, which may be enforced through a court order three months after the unit owner is notified of such unpaid amounts through the Notary Public (Article 25).

Finally, the Association may in its name file lawsuits and take actions against third parties (including unit owners and/or occupants) with respect to their defaults under the Dubai Strata Law or the articles of association.

The sub-developer shall be responsible for 10 years from the date of the completion certificate for repairing any structural defects in the joint property project. This warranty is a broadening of the existing 10-year warranty under the UAE Civil Transactions Code (Law Number 5 of 1985, as amended) that holds architects and contractors responsible for major structural defects in such projects.

In addition, the sub-developer shall be responsible for one year from the date of the completion certificate for repairing or replacing any and all mechanical works, electrical works, civil works and the like (Article 26).

The Association is obligated to obtain insurance for the joint property project in an amount to sufficiently cover the repair or reconstruction of such property in the event of damage or destruction; other liability for damages to the joint property project; and harm and/or physical injuries to unit owners and/or occupants (Article 28 and 29).

The Dubai Strata Law is a major step in the maturity of the real estate market in Dubai. Its issuance will add further credibility and confidence to the market by providing a legal framework with respect to the rights and obligations relating to jointly-owned properties.

By Shahram Safai

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