An interesting and detailed article examining some of the nuances of insurance and liability questions, along with brokerage best practice.

Resulting from a recent string of fire incidents in high rise towers in the Emirates, more focus is being directed towards issues of insurance coverage. Insurance is an issue for all stakeholders in Jointly Owned Properties, one of these stakeholders are heavily regulated … Owners Associations (common areas), but individual owners and landlords (consequential cover for tenants) & tenants (stand alone contents insurance) are not.

The issue of the quality of maintenance of buildings and apartments is also raised, with a strong emphasis on may the buyer beware.

A growing question for purchasers and even tenants in this competitive market is “what is the quality of the maintenance of this property and how can I find this out?“. Unfortunately it is difficult to answer although some suggestions are given in the article. Tenants would be wise to negotiate maintenance packages with their landlords, but how to ascertain the quality of building maintenance is a much more difficult task. The answer to this will usually lie with service charge collection rates from owners to ensure a properly funded Owners Association, the quality of the Association Manager and the FM contractor, the quality of the MEP in the building and construction undertaken by the developer.

As the market matures through ongoing Jointly Owned Property regulation and individual building issues become clearer as buildings age, strata inspections will become the norm for purchaser solicitors to conduct an inspection of the records of the Owners Association. Given time greater transparency and record keeper will reveal most issues, any serious issues effecting the lifecycle of the building or the underfunding of reserve funds to cater for this will become much clearer, building brands will rise and others will fall, all with far reaching consequences for the value of the collective real estate in the building.

Anthony Bugden
PRDnationwide Business Development Manager

For just Dh500 UAE residents can insure their property against fire

Low awareness of contents insurance leaves people exposed

Content insurance is now in the news because over 100 families may have lost all their savings and belonging in a massive fire that broke out on the north side of the Al Tayer buliding in the Al Nahda area of Sharjah on Saturday.

In January, a fire had ravaged the Al Bakar ‘A’ Tower in the Al Tawuun area of Sharjah as well.

“Policies are based on the insured value of the property. For contents insurance alone, we have agreements with a number of insurers available for our tenants and individual owners for as little as Dh500 per annum for a fixed level of cover,” says John Stevens, Director, Asteco Property Management.

“But hardly any tenant buys a contents insurance policy,” he states.

Contents insurance is insurance that pays for damage to, or loss of, an individual’s personal possessions while they are located within that individual’s home. It is usually sold alongside home insurance, but can also be purchased as a stand-alone policy, especially for those who are renting rather than owning their home.

Asked if the property owners they deal have property insurance policies, Stevens says that landlords do for industrial all risk (in case of loss), third party liability (in case of accidents caused) and what is also becoming more in demand is loss of rent insurance, in the situation that a building is damaged or uninhabitable.

“On projects that we are managing, we are implementing a standard requirement where proof of appropriate insurance is necessary when leasing out their unit or upon payment of service charges.”

As a case scenario – ‘A’ owns an apartment and is cooking but leaves urgently forgetting to turn off the saucepan. This causes a fire and damages neighbouring apartments as well as the building itself. In this situation the unit owner would be liable for the consequential damage.

“So it is very important as an owner whether residing in the property or renting it out that they have contents as well as consequential insurance in place,” Stevens adds.

Asha Ramesh, an Indian expat buying a hi-rise apartment in Al Wadha Road, Sharjah, says: “I have been staying on rent since I moved to the UAE. I haven’t in seven years taken any home insurance policy.”

He adds: “I always thought about it, but I may consider taking one now after hearing about the two building got ravaged in fire in the past four months.”

But do interim owners associations in Dubai take adequate insurance cover for their full buildings?

Adequate insurance of the owners associations is mandatory under the current regulations and is the responsibility of the owners association manager and board to ensure that it is in place and at the correct level.

“Owners associations should ensure that regular reinstatement valuations are undertaken to guarantee the insured value is correct at least every two years.”

He estimates the cost for a formal reinstatement valuation to be in the range of Dh10,000 to Dh35,000 depending upon the size and complexity of the project.

“The risk of under-insuring a property would mean that in the case of a total loss there may not be sufficient cover to allow for the reconstruction and rebuilding of the project. So by trying to reduce the service charge, at the expense of appropriate insurance cover, could ultimately cause the owner a much greater loss,” he emphasises.

When renting a house, looks may be deceptive, say experts

Some of the older buildings in areas like Karama and Deira may scare potential tenants because they may look rundown, but experts claim that branding areas as “unsafe” for living is unfair as some of the older buildings have a much more efficient maintenance and service record than some of the newer buildings.

As the rental market in the emirate becomes more competitive, an increasing number of people are keenly reviewing the upkeep of the building they intend to live in as one of the most important factors to consider.

“There are many options to choose from. Why should I go to an older place, which may have problems right from start? At the end of the day, it’s all about safety and convenience,” said a resident of Ghusais, who is now looking to move out of the area to JLT.

However, experts say that a simple glance of the building/villa should not be the only factor to assess whether the place is safe or unsafe.

According to John Stevens, Director, Asteco Property Management, some buildings in older areas of the city are in a much better state than others in newer locations, which may come as a surprise to many.

“You could well find a property in Old Dubai that has a quicker, more responsive and efficient maintenance service than in some buildings in New Dubai. Similarly, two identical buildings next to each other in the same area might well be receiving very different maintenance services,” he told Emirates 24|7.

“The difference comes with the landlord and their commitment to their customers – the tenants. With this comes the ability to charge higher rentals. So, in the case of the buildings mentioned above, one charges a higher rent to deliver a better service,” Stevens added.

According to another expert, some old buildings in Deira are perfect examples how good maintenance can extend the life of a building.

“Maintenance is becoming a more and more talked about subject in Dubai. In theory, the economic life of a building should be 100-years plus. However, if the buildings are not properly maintained throughout, their life expectancy can reduce vastly,” said Saeed Hashmi, Head of Valuation & Advisory at Landmark Advisory.

“Good examples of this can be seen in Abu Dhabi and Deira. Traditionally, in Western markets, landlords mostly enforce the upkeep of their buildings (commercial) through the provision of a full repairing and insuring lease to their tenants or through a service charge provision for residential. Proactive maintenance also improves the financial performance of a building over time, hence tightly worded leases being the norm in mature markets,” he said.

However, many residents in the city complain their landlords are not bothered about the upkeep of the apartment/villa once they lease it out.

“I’ve been in this villa for just six months but there are so many problems here. Right from the AC to the water motor to sewage…all have been giving me trouble. My landlord lives in London and wouldn’t care to even reply to my e-mails. He should get me an annual contract from a maintenance company but he’s not willing to spend a single dirham,” said a resident of Springs 11 (one of the oldest freehold villa communities in Dubai).

For such tenants, experts advise a through check-up of the place before a contract is signed.

“Clients should be careful and conduct due diligence no matter where or what they lease. If it is a new building, it is advisable to see who the owner is (or are in the case of owners association properties) and if they have other properties, then check how their reputation for performing maintenance stands with these other buildings. For older properties, try and speak with existing tenants – visual appearances can be very deceptive so it is always best to investigate further,” said Asteco’s Stevens.

On the other hand, Laura Adams, Manager, Residential Sales & Leasing, Head Office, Better Homes, believes that it is not possible to instruct clients. “I do not see any reason to advise tenants to be careful. I believe it is all down to taste, budget and expectation requirements of the individual on which building they would choose,” she said.

“[Moreover], I do not know of any building deemed unsafe due to age; as long as a sound maintenance team is in place, all buildings should not be a threat for health and safety. In some developments, gyms or pools are not maintained well but that could be for many reasons, e.g., the developer is not receiving all the service charges paid, etc,” said Adams.

“One of the most presentable buildings I have seen at all times is Tiara on the Palm Jumeirah, the communal areas are very well maintained and the pool is always clean but this is one example out of many and a high-end example – maintenance is high because the relative cost is higher,” she told this website.

Commenting on the average life of a building in Dubai, Asteco’s Stevens expert said: “This is difficult to say since few buildings have reached the end of their lifespan and been redeveloped/refurbished. There are some properties from the 1970s and 1980s that have been well maintained and continue to be economically viable.”

Better Homes’ Adams shares his views. “It is very difficult to tell. In this environment, like none other in the world, we really cannot predict how long each building will last, but the buildings constructed with higher quality materials and that were built more recently will last longer,” she said.

“A lot of the villas are simple structures and even pre-fabricated. Some of the older buildings even on the freehold market are showing signs of age after just 5-7 years. This is a concern as in other, more mature markets, homes over 100 years of age are very common, but the climate here is harsh and life expectancy of buildings are reduced as a result,” she added.

For those new in Dubai, experts list areas with oldest buildings but rule out that they are unsafe.

“Areas such as Deira Souk, Sikkat Al Khail, Shindagha, Hor Al Anz, Al Shaab, Ghusais and Karama have some of the oldest remaining properties. However, Dubai Municipality regularly checks all buildings in Dubai and will require an owner to repair, reinstate or renovate their properties should there be elements that are assessed to be unsafe, from the structure and items stored in emergency stairwells all the way down to depth markings for swimming pools. If a larger, long-term commitment is being made, such as for a commercial or industrial property, then a company could be considered to provide a technical assessment of the building fabric and features prior to making a decision,” added Stevens.

For those who missed it last year, the key takouts remain just as relevant then as they do now….

Cityscape Global 2011 – “Creating Successful Communities”

Dubai International Convention and Exhibition Centre, 28^th September 2011

Facilitator –           Mr Alastair McCracken CEO PRDnationwide Middle East Real Estate

Speaker –              Mr Gary Bugden, Director, Integrated Strata Solutions & PRDnationwide Chairman

Panel -                    Don Bradley Chief Executive, Knight Frank Middle East
Patrick Smith, Senior Vice President – Asset Management, IFA Hotels & Resorts
Mr Gary Bugden, Director, Integrated Strata Solutions & PRDnationwide Chairman

The seminar outlining the steps and processes required to ensure regional mixed-use projects are correctly structured, assessed and costed for long term success.

The seminar was particularly well received by developers and industry professionals.

 Over 100 senior attendees packed the seminar room surprising the Cityscape organizers as the most highly attended seminar event of the entire conference schedule, highlighting the relevance and importance of the topic.

Key takeouts from Cityscape presentation and panel discussion …

COMMUNITIES HAVE A NUMBER OF ESSENTIAL INGREDIENTS –
Gary Bugden, a world leading authority on governance and structuring of complex mixed-use developments outlined and examined in his presentation the essential key ingredients for a successful “controlled environment” communities being –

1. Enabling laws and regulatory environment, in absence of these using contractual solutions
2. Strong master planning or architectural designs
3. Clear governance and management structuring supporting component users & stakeholder objectives
4. Attention to accurate survey plan preparation for clear title
5. Bespoke service charge calculations incorporating life cycle cost modelling
6. Quality legal documentation with input from managers and operators
7. Establishment of appropriate owners associations &/or contractual management groups for complex buildings
8. Experienced and quality management delivered through innovative technology platforms
9. Careful and planned transitions to owner control; and
10. Strategies to develop an ongoing sense of community.

REGIONAL MATURING OF DEVELOPER APPROACHES –
That developers in the Middle East are starting to incorporate these ingredients into their projects, and that those paying particular attention to structuring, cost and governance are benefiting with projects that people want to live in, work at and invest in.

GROWING EMPHASIS ON INVESTOR DUE-DILEGENCE –
That valuers, institutional investors, hotel operators and high net worth purchasers are placing a growing emphasis in the region on community documentation and management due diligence as a representation of value.

OPERATIONAL FM TO PLAY A KEY ROLE IN DRIVING TRANSITION TO SUSTAINABILITY –

That there is increasing recognition and need for operational Facilities Management assessments of the technical elements of project design at an early stage of the project, especially given the increasing importance placed on pragmatic sustainability approaches to drive down operational energy and water costs.

DUBAI BENEFITING FROM REGULATORY REFORM -
That the Dubai property market is benefiting from increased regulatory accountability and transparency, and that other maturing markets are looking to replicate similar laws.

ONGOING REGIONAL CHALLENGES –

We still have many regional challenges in the Middle East real estate market, particularly:

a)       the need to create investment grade real estate with little or rudimentary regulations

b)       the need to managing the expectations of owners with regards to operational costs by creating a causation link between service charges and growing property values; and

c)       minimalising developer exposure to ongoing operational costs of unsold stock.

Afridi & Angel provide a worthwhile contribution to the importance of doing your homework and pushing your agent for better information when leasing a property in Dubai.

Below is a checklist of what to look for when seeking an apartment to rent… undertake an ownership check, ensure service charges are up to date, determine penality clauses, pro-actively guard against deposit issues and ensure the landlord registers your lease with RERA .

PRDnationwide would expand on the issues regarding the Owners Association and service charges.

Owners Association – When looking to move into a building, do your homework as to whether or not the developer has established an Owners Association for the building, that the Owners Association is actively making decisions on behalf of Owners and that it has been registered with RERA. If the building’s budgeting decisions are being made by the Owners, it is more likely that any developer related disputes are being ironed out or have been resolved. If the developer has still not established and registered an Owners Association, proceed with caution.

Service Charges – Many times tenants are locked out by the developer or the Owners Association from using key community facilities such as gymnasiums, pools etc because the owner of the apartment has not paid his / her service charges. It is advisiable to ask for proof of payment of the service charges before signing a lease.

Expect more from your agent as they should be able to obtain answers to all of the above.

Anthony Bugden
PRDnationwide

The public debates surrounding issues of poor building design, lack of attention to water and energy efficiency, lower than required reserve funds and the corresponding negative impact on apartment real estate values from all these issues is now starting to get much needed media attention.

This article covers reporting of some recent comments by HE Marwan Bin Ghulaita, the CEO of RERA, made at the recent MEFMA Annual Conference 2012 .

To effectively deal with these difficult issues, the awareness and involvement of all stakeholders in a building are required … these include first and foremost the Owners Association Board, Owners, the Owners Association Manager, the FM contractor(s) and the developer (where relevant).

RERA is correct in highlighting the role of the FM industry in providing solutions. The more important role will in fact come from Association Managers in making owners aware of these issues and the corresponding impact on their property values for inaction. Interesting the comment has been made of purchasers seeking greater understanding of a building’s energy performance, design issues and strata related reserve fund information when ascertaining value. This would be normal procedure if you are buying a unit in London, New York or Sydney, and is a growing sign of buyer sophistication in Dubai.

Expect to hear more about these type of issues.

PRDnationwide offer Reserve Fund Life Cycle Cost Model Assessments that help OA’s determine these expected costs and ways they can be mitigated.

Anthony Bugden, PRDnationwide

The long-term maintenance and sustainability of Dubai’s building stock is the current pressing priority of the emirate’s real-estate sector, HE Marwan Bin Ghulaita, the CEO of RERA, said at the MEFMA Annual Conference 2012 at the World Trade Centre.

“The coming future of what we are going to be dealing with here is the operation of buildings. The development cycle is finished, or about to finish, because we have built great buildings for the last three to four years.

“Now we are completing whatever we started in 2005, so it is time to start operating those businesses and generate a lot of income and make sure that those buildings are maintained and are sustainable,” said Ghulaita.

He added that while previously attention had focused on contracts and delivery, “nowadays the story has changed; everybody is talking about defects, bad maintenance, the slow response from FM companies and wrong design decisions in buildings.

“That is why I want to emphasise that the FM industry is going to play a very important and significant role in Dubai’s real-estate sector,” said Ghulaita.

“I can say there are a lot of crazy buildings, and probably you are seeing them everyday. From outside, they look fantastic and amazing, but whenever you go inside, you do not know. It is a different story. This is what the engineers and investors have been telling me.”

Typical maintenance issues reported to RERA range from problems with chillers to finishes. “A lot of problems originate with the design itself,” said Ghulaita, “because when we started with the real-estate boom, nobody gave any consideration to involving FM from the beginning.”

Ghulaita said this approach had now changed with the successful establishment of the Middle East Facilities Management Association (MEFMA), which today boasted 500 members since its inauguration 18 months ago.

“We have started implementing new standards to tell the developer that, before you start your design and construction, involve the FM company from the beginning. This is the way forward from now on.”

Ghulaita added that, while affordability of FM services was also an issue, cost considerations must not override quality and efficiency.

This meant the FM industry had to engage in education and awareness-raising. “It [is incumbent] on all to make sure stakeholders are aware of what you are doing for them, that you are making their buildings sustainable and that the value of the building will be enhanced day-by-day in this process.”

Ghulaita said RERA had collated anecdotal evidence of many common defects and problems. “Buildings may have been completed, but it needs a great job to keep them going and to be there for at least 50 to 60 years.”

In addition, it was critical that all buildings have a sinking fund to provide for long-term maintenance requirements. “Nowadays buyers ask about the FM company, who is operating this building, and they ask about the sinking fund, because a building without this represents a bad investment. So our job is very important for the economy of Dubai.”

Ghulaita said that even small snags “mean a lot to the investor. If you go to a building and see all this, I do not think you will buy. That is why prices in Dubai differ. Investors are wise; it is not like before.

“Before the market was driven by speculators; now we have end users who come to Dubai to stay in Dubai, to maintain their investment for as long as they can, so they will look at small details and finishes.

“They will look at the load schedule for electricity; before they did not care about this. I will buy it for this much today; I will flip it in two. Now it is different.”

Ghulaita said RERA was striving to make the real-estate sector as transparent as possible. The association’s new website publishes a comprehensive listing of building names, together with the details of the developer, contractor, FM company and owners’ association board.

“So everything will be transparent for the investor. Before he buys property in Dubai, he will find this information on the website. Whatever the FM company does, it will affect the standing of the building itself in the local market.” Ghulaita referred to an instance where construction waste had been dumped in a building corridor post-handover.

Another major problem was inconsistent or inadequate entrance/exit and emergency signage. “Previously we had different authorities to regulate or give completion certificates for different parts of buildings in Dubai. All the authorities are now mandated to deliver buildings to one building code.

Other issues related to sub-standard design and maintenance included poor wiring installations for both low-voltage and life-safety systems, wiring not installed in accordance with regulations, fire stopping missing around service penetrations, and poor AC maintenance and/or installation, leading to health problems.

“This is the reality. This is what you see in most of the buildings. From the outside, it looks fantastic … this is what the real-estate advisors are now looking at. They involve lawyers and technical people to give them a checklist before they buy.”

Ghulaita called on the FM industry to help advance this agenda of responsibility and accountability. “You are the experts who will help this industry to move forward, because this is not the time to go back. This is the time to fix.

“We here in Dubai are very glad about the talent, expertise and the passionate people we have. It is a challenging role, but we have the expertise and technology at our disposal. With all the passion for real estate and the environment we have in Dubai, I am sure we can succeed and make Dubai an FM hub for the region.”

Ghulaita commended MEFMA for taking up the cudgel in this regard, and “helping to transfer knowledge to the region and giving it a good example of how we can maintain our buildings and make them sustainable.”

Author: Gerhard Hope

Published: Contruction Week Online

Publish Date: March12th, 2012

Anthony Bugden, PRDnationwide

In a move that can have far-reaching implications for Dubai’s real estate sector, residents of Shoreline Apartments on The Palm Jumeirah have decided to replace Nakheel as their beach club operator and invite tenders for the management of beach club facilities.

A decision to this effect was taken at a meeting of the Interim Owners’ Association (IOA) on February 2, XPRESS can reveal.

Property owners in Nakheel’s flagship project have been locked in a bitter row with the developer after it blocked their access to the beach club over unpaid building service charges and beach club fees. Residents were warned that they may be arrested if they tried to enter the pool and gym areas.

Matters came to a head in December last year when Nakheel locked the back doors to the seven apartment buildings that open onto the pool and beach. Angry residents called police on January 21, saying Nakheel had no business controlling the common areas.

Major victory

But last week residents scored a major victory when property watchdog Real Estate Regulatory Authority (Rera) formally registered five Shoreline IOAs, giving residents full control of common areas. A formal certificate of registration was issued to IOA board members on February 2. It empowers IOAs to represent building owners and take charge of common area management from Nakheel. The remaining buildings are likely to be registered in the coming weeks.

Nader Alizadeh, IOA chairman for Shoreline Buildings 1 and 2, said: “We can now break open the back doors locked by Nakheel and give residents direct access to the beach club. We are planning to invite bids for running the beach club. Now we can call our own general assembly meetings, review and approve budgets for service charges, appoint a Rera-approved Owners’ Association (OA) manager and hire an independent auditor.”

IOA board members are working with Rera to define the scope of the OA manager. “He will play a critical role in the management of buildings. He will invite tenders for beach club management because by the estimate of Nakheel’s own auditors, Baker Tilly Meralis, the fee from 2008 to 2010 is six times higher than the actual cost of running the clubhouse,” said Alizadeh.

Nakheel has maintained a stoic silence on the developments despite several e-mails seeking their comment.

It has not opened the back doors either, much to the chagrin of residents, many of whom feel the locked doors have put them at increased risk in case of an emergency evacuation.

James Hartt, Chair, Al Habool Owners Association, who represents Shoreline Owners Associations on Palm Jumeirah, blamed Nakheel for not resolving the issue. “Nakheel is refusing to engage with the OAs in a positive and open manner to resolve these issues. Guest passes are still being charged for on a daily basis against the wishes of a clear and vast majority of tenants and owners. The owners have no visibility as to where the money paid for guest passes goes,” he said in an e-mail statement.

Property owners contend their sales and purchase agreements (SPAs) give them exclusive right over the beach. Understandably so, they are miffed that it has been thrown open to outsiders. “The beach is part of the Palm Jumeirah master community and is owned by all Palm Jumeirah owners, regulated by Trakhees,” said Alizadeh.

All about shoreline

The Shoreline development comprises 20 buildings in Palm Jumeirah. Buildings 1 to 10 sit on the right side of the Palm facing the beach, while buildings 11 to 20 sit on the left. Buildings 7, 8,10 and 18 have been bought by individuals or companies as a complete unit and are looked after by different building management companies. The remaining 16 buildings are owned by Nakheel who sold individual apartments to property owners.

There are 13 interim owners associations (IOAs) that manage these 16 buildings in Shoreline. There are around 2,460 apartments.

Author – Anjana Kumar, XPRESS

Nader Alizadeh, IOA chairman for Shoreline Buildings 1 and 2, said: “We can now break open the back doors locked by Nakheel and give residents direct access to the beach club. We are planning to invite bids for running the beach club. Now we can call our own general assembly meetings, review and approve budgets for service charges, appoint a Rera-approved Owners’ Association (OA) manager and hire an independent auditor.”

IOA board members are working with Rera to define the scope of the OA manager. “He will play a critical role in the management of buildings. He will invite tenders for beach club management because by the estimate of Nakheel’s own auditors, Baker Tilly Meralis, the fee from 2008 to 2010 is six times higher than the actual cost of running the clubhouse,” said Alizadeh.

Nakheel has maintained a stoic silence on the developments despite several e-mails seeking their comment.

It has not opened the back doors either, much to the chagrin of residents, many of whom feel the locked doors have put them at increased risk in case of an emergency evacuation.

James Hartt, Chair, Al Habool Owners Association, who represents Shoreline Owners Associations on Palm Jumeirah, blamed Nakheel for not resolving the issue. “Nakheel is refusing to engage with the OAs in a positive and open manner to resolve these issues. Guest passes are still being charged for on a daily basis against the wishes of a clear and vast majority of tenants and owners. The owners have no visibility as to where the money paid for guest passes goes,” he said in an e-mail statement.

Property owners contend their sales and purchase agreements (SPAs) give them exclusive right over the beach. Understandably so, they are miffed that it has been thrown open to outsiders. “The beach is part of the Palm Jumeirah master community and is owned by all Palm Jumeirah owners, regulated by Trakhees,” said Alizadeh.

All about shoreline

The Shoreline development comprises 20 buildings in Palm Jumeirah. Buildings 1 to 10 sit on the right side of the Palm facing the beach, while buildings 11 to 20 sit on the left. Buildings 7, 8,10 and 18 have been bought by individuals or companies as a complete unit and are looked after by different building management companies. The remaining 16 buildings are owned by Nakheel who sold individual apartments to property owners.

There are 13 interim owners associations (IOAs) that manage these 16 buildings in Shoreline. There are around 2,460 apartments.

In what could be seen as a move that the registration of Owners Associations as Legal Entitlies in Dubai is getting closer, RERA have publically reiterated their position that all Interim OA Board members must go through a police check and be issued with a ‘good conduct certificate’ in order to sit as an elective representative.

Anthony Bugden, PRDnationwide

Property Owners Association (OA) members in Dubai will have to get a ‘good conduct certificate’ from police before they take charge, a senior government official told XPRESS.

The Real Estate Regulatory Agency (Rera) said they have started contacting existing associations and new members to submit the certificate as early as possible.

Speaking to XPRESS, Mohammad Khalifa Bin Hammad, Head of Real Estate Relations Management, Rera, said: “Many OAs are asking for the right to control the finances of managing their buildings and communities. This means they will be doing transactions on the account themselves and for this we have made it mandatory for them to get a clearance from Dubai Police,” he said.

Bin Hammad said the agency was ready to register OAs as legal bodies. “This will give them legal rights to manage their buildings and communities.”

Observers said the move will regulate the market and bring solace to property owners. Currently, all 271 OAs in Dubai are Interim Owners Associations with no legal right to sue or be sued. Once OAs become legal entities, they will function independently and wrest control of finances from developers to manage buildings and communities

“They have to submit a common area site-plan, a jointly-owned property declaration, good conduct police certificate and minutes of the annual general meeting (AGM),” said Bin Hammad. Once the papers are in order, Dubai Land Department (DLD) will issue a letter to the interim OA to open an account in one of their approved list of banks. Each OA will have a separate bank account.

Bin Hammad said they are in the process of signing Memorandums of Understanding (MOUs) with a number of UAE banks.

Welcome step

Various stakeholders of the realty sector have welcomed the move. Dr Hamid Mirlohi, Chairman, Interim Owners Association (IOA), Al Shera Tower, said: We have been waiting for the formalisation of IOAs as legal bodies. It is an extremely important step towards regulating the property sector. This will resolve many disputes between associations and developers.”

Ludmila Yamalova, Managing Partner of HPL Yamalova & Plewka JLT, a Dubai-based law firm, said: “Empowering the IOAs to become legal entities will mean they will have the power to sue and be sued in Dubai’s court of law. They will be able to open bank accounts and enter into contracts. They have all rights to govern and manage their buildings and communities. And, generally, they will have all the powers and rights that a corporation would have.”

Published by – XPRESS
Author – Anjana Kumar
Date published – January 19, 2012

Nakheel, one of Dubai’s largest property developers, has no right to deny residents of Dubai’s Palm Jumeirah access to communal facilities by turning them into exclusive clubs, according to Real Estate Regulatory Authority (Rera), the emirate’s property regulator.

Earlier this month, Nakheel banned more than 1,300 residents on its Palm-shaped island project from using the beaches, pools and gyms in the first stage of a controversial plan to charge for the use of facilities.

The developer was seeking residents to pay up an additional Dh5,000 dirhams a year per residential unit for access to these parts of the man- made island, leaflets distributed by the property major showed.

“By law, no one can stop an owner or a registered tenant from using the communal areas once they have paid service fees,” Marwan bin Ghalita, chief executive officer of Dubai’s Rera, told newswire Bloomberg in an interview. “If you bought something based on an agreement with a developer, he can’t change it,” he said.

“I cannot make everybody happy,” is what the Nakheel Chairman had to say last month when Emirates 24|7 asked him about the beach access fee to be imposed on residents of Nakheel’s Shoreline apartments on the Palm Jumeirah.

“Read your contracts. We checked legally … went to Rera. We abide by the law and respect the law,” Nakheel Chairman Ali Lootah told this website.

Nakheel had warned ‘defaulting’ owners or tenants living in Shoreline Apartments at Palm Jumeirah that their access to communal facilities would be taken away, and even threatened them with arrest if they failed to comply with its direction.

With a number of people staying in each of those apartments, the actual number of residents affected by Nakheel’s plan was around 3,000.

According to a resident-owner of a Shoreline apartment, from December 1 onwards, all residents have to produce a “new” photo access card to use the Shoreline facilities, while the guests will be charged on a “per day basis”. This includes beach access from the apartments.

Some residents have claimed that Nakheel plans to open up membership for these facilities to non-tenants at Dh12,000 per year.

Published in : emirates24/7.com
Written By: Staff
Published  Date: Wednesday, December 28, 2011

DUBAI //Residents in a Jumeirah Lakes Towers building had their air conditioning turned off this week after apartment owners failed to pay an unusually high bill.

The provider, Palm Utilities, began requiring in October that building owners pay a routine “capacity charge” at the start of each quarter, rather than the end of each month.

This forced building owner associations with no financial buffer to rush to collect money from fellow owners. Adding to the stress, some buildings said they did not receive notice about the new billing cycle until after it had taken effect.

The Concorde Tower owners association, like many in Dubai, had already experienced trouble in collecting the fees owed by owners.

“There’s obviously not that kind of money to make that kind of advance payment, hence we’ve been disconnected,” said a member of the association board, who asked not to be identified.

Notices urging owners to pay are being posted in the lobby and sent by email. In future, occupants of flats with overdue fees might lose access to common areas such as the car park and gym, she said.

“Now there’s an aggressive campaign to collect monies but it’s going to be an ongoing battle,” she said.

All of Concorde Tower was cut off because, like many other buildings in Jumeirah Lakes Towers (JLT), it shares a single meter for district cooling, rather than individual meters for each apartment.

As a result, even owners who had paid their individual charges and tenants who owed nothing lost air conditioning in their flats.

The disconnection, which occurred on Tuesday, will continue until more than Dh800,000 in overdue fees are paid, said a notice issued yesterday by Novus Community Management, an association management company that helps the Concorde owners association and others operate.

“Unfortunately there are insufficient funds in the owners association’s account to settle this debt and until a sum of Dh811,000 is available, Palm District Cooling will not reconnect the supply to the building,” it said.

Palm Utilities had sent several warnings that were shared with owners.

“They’ve been told on a continual basis by us that we’ve received these disconnection notices,” said Alan Rowlands, the general manager of Novus.

The company first received word about a possible disconnection in mid-November, Mr Rowlands said.

Another building in JLT received a notice about the new billing cycle dated October 3 – two days after it took effect. A third building found out about it by looking at the October bill.

“We were not given a notice,” said Sanjay Thawani of SNS Property Management Solutions, which manages Al Shera Tower in JLT. “We just identified that they have taken three months of capacity charges in advance in the bill.”

Owners associations had a grace period until about the middle of this month.

But even that could be a challenge to cash flow, said Edward Sanders, the chief executive of another owners association management company, Place Community Managers.

At least 60 per cent of a building’s budget goes to utilities, including cooling, but getting even an 80 per cent collection rate among owners can be difficult, Mr Sanders said.

“It would help if the period of billing took more cognisance of the market conditions,” he said.

Capacity charge funds go towards repaying the initial outlay for the Palm Utilities district cooling system, which includes the plants and the pipes that carry the chilled water used for air conditioning in every building in JLT.

Owners have disputed whether they should be obliged to pay the fee at all, but many relented after having air conditioning disconnected or being threatened with it.

Palm Utilities said it could not respond immediately to the issue.

Published By: The National
Written By: Carol Huang
Date Published: 22 December 2011

This Sunday, Nakheel banned residents of more than 1,300 units at Shoreline Apartments in Palm Jumeirah from using the facilities, including beaches, pools and gyms, because their owners had failed to pay the master developer’s service fee.

However, since most apartments have been rented out, it’s the tenants who are at the receiving end of service disruption, and not the defaulting owners. Tenants at the Shoreline Apatrtments are being told they will get access only when the owners pay up the outstanding service charges.

Brian, a British expatriate, who chose to give first name only, said: “My landlord hasn’t paid the service charge and for his mistake I was stopped from using the facilities. I called him and he assured me that he would pay his outstanding soon.

“I have never asked an agent or the property owner to give me some sort of proof that he has been paying his service charges. Next time, I will certainly ask the owner/agent to show me service charge payment receipts,” he added.

Brian isn’t alone. There are scores of tenants in Discovery Gardens, Dubai Marina and elsewhere who have faced the potential threat of service disruption because their, or their neighbours’, landlords failed to cough up the developer’s or the facility manager’s fees.

Click here to vote on ‘Who should ensure fee payment before a unit is leased out?’

Emirates 24|7 took the initiative on behalf of our readers and asked Dubai’s real estate agents on who should be responsible for ensuring that the tenants, who have to furnish post-dated cheques for the full amount of the annual rent before they are handed over the keys to a unit, do have access to the facilities promised along with the subject of the tenancy?

Agents do admit that they never ask property owners on whether they are service charges defaulters or not before listing their units, Emirates 24|7 can reveal.

A number of property agents, who didn’t wish to be named, did acknowledge that neither they nor the tenant has ever asked them if the property owner is a service charge defaulter.

“We don’t check with the property owner on whether they have paid their service charges… we just lease the property and that’s all,” a real estate agent from a top Dubai-based real estate consultancy, said on conditions of anonymity.

Many of them said they are not responsible if the tenant is barred from using any of the facilities in a building such as gym, swimming pools, etc., by the interim owners’ association or the property developer if their landlord turn out to be a service charge defaulter.

“We feel sorry for them, but we can’t help. Tenants can complain only if we are managing the building or the apartment, otherwise they need to take up the issue with the owner,” added another agent.

“We generally ask the property owner to give us a copy of the title deed or the sale and purchase agreement. Questions such as – are they are paying their mortgage or service charges on time – are too personal for us to ask. For certain, they will move to another agent/agencies if we ask them such questions.”

A rulebook on ethics of real estate agent has been issued by the real estate regulators in Dubai, but it does not specify that agents need to check the property owners’ status with the developer or the bank, said another property broker.

This website reported earlier this month that even interim owners’ associations are looking at taking legal action against service charge defaulters, but their move is hindered since they are not legal entities.

“An action against defaulting owners can be commenced with support of the owners association group. Legal action is being supported by owners’ groups as it relates to long-term defaulters and it is only a matter of time before we see this tested in the absence of formal registration,” Kent A O’Brien, Chief Executive Officer, SG Community Management Services, had said.

Published By: Emirates 24/7
Written By: Parag Deulgaonkar
Date Published: 21 December 2011