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

A strong message sent to around 600 residents on December 11 by community management Novus said they could expect power cuts to recur if they don’t pay their service charges.

“We will continue to do all we can to avoid disconnection of any services to buildings. However, we should point out that the matter cannot be fully resolved until service charges are paid by all owners,” said Novus in an e-mail to residents.

Speaking to XPRESS, Susan Dinor, Board Member, Owners’ Association Board and Development Board for Golden Mile, said multiple issues have resulted in non-payment of service fees in the buildings.

“Some of these include methodology of service charge calculations that have changed a couple of times, causing confusion among residents.”

However, she added that these were not good enough reasons for owners to default. “Many residents think they are punishing developers by not paying service charges, but they are actually punishing themselves.”

No water, no lights

On December 10, the Dubai Electricity and Water Authority (Dewa) disconnected power and water at four buildings in Golden Mile over unpaid bills. The power was restored after five hours.

According to Novus, Dewa disconnected the distribution board ‘1c’ in Golden Mile 1. “This connects power to the fireman’s lift, some car park lighting in building 1 and the potable water supply to buildings 1, 2, 3 and 4. As a result of the Dewa disconnection, water could not be supplied to the units in Golden Mile 1.” Novus said although Dewa invoices for the buildings were paid through September, it claimed the buildings still owed them money.

Palm Utilities, a utility solutions provider, told XPRESS it will have to disconnect services if payments are not made.

A Palm Utilities spokesperson said: “Where the buildings have sub-meters, individuals are billed direct and if there is an overdue payment on this, they are individually disconnected.

“Where building owners have chosen not to have sub-meters and there is only one bulk meter, then the developer/owners associations are billed for the whole building. If this meter is not paid, they are disconnected for non-payment. This is a contractual matter between building owners and occupiers. We do not bill or collect service charges. We bill and collect for the supply of chilled water. Some end-users are billed direct. However, for others like developers or owner associations who own the building, we bill them directly and they add our charges to a raft of other charges and bundle it under the heading of ‘service charges.”

The spokesperson added that all rates are set out in contracts with all end-users. They were increased at the start of 2011 in line with Dewa rate increases.

Ludmila Yamalova, Managing Partner, HPL Yamalova & Plewka JLT, a Dubai-based lawyer said: “In some projects, developers collected Dewa and district cooling water deposit cheques during the handover. In some cases, such deposits amount to six months of monthly fees. Technically speaking, these deposit amounts should still be in the developer’s account. Therefore, in such cases, developers should have the funds available to them to cover any temporary shortfalls.”

Golden Mile is a project by Souq Residences — a joint venture between IFA Hotels and Resorts and Nakheel. Currently Dubai-based auditors Grant Phornton are auditing service fees for the buildings. XPRESS ran a story on disconnection threats by Dewa and PDC on Golden Mile 1 & 2 on December 8.

Published by: Gulf News
Written by: Anjana Kumar
Date Published: 15th December 2011

“An action against an 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, told ‘Emirates24|7‘.

Ludmila Yamalova, Managing Partner of HPL Yamalova & Plewka JLT, states that until IOAs are registered under the DED trade license, they are not legal entities.

“Until they become legal entities, they cannot bring action against either owners or even developers or any third parties.”

Brent Baldwin, Associate, Hadef & Partners, mentions there are a range of options available for collection of service charges, but this is still a challenging issue.

“As the law is further developed it should become easier. Having a good association manager or lawyer on side is the best suggestion.”

Graham Yeates, Head of Owners Association Management, Cluttons, adds that during the interim phase the Real Estate Regulatory Agency has been most helpful in recovering service charges.

“There are few legal guidelines and some doubt about the developer’s right to collect service charges and until we have case law to determine the status of arrears there will be no clarity of the legal position.”

NOC – an issue

On the issue of whether IOAs can issue no-objection certificates (NOCs), Yamalova says property owners are still required to obtain NOCs from developers to sell their properties off to third parties, even if the title deed is in the name of the owner.

“This contradicts the very idea of a title deed being an unnumbered, unrestricted, exclusive, evidence of freehold ownership.”

O’Brien too says the developer still must give the NOC until such time the bank account is in the name of the owners association and administered by the manager.

Yeates says the IOA often supplies a disclosure statement which provides an outline of the service charge position for the unit being purchased so that an accurate cut-off can be determined by the seller and buyer.

Published by: Emirates 24/7
Written by: Parag Deulgaonkar
Date Published: 13th December 2011

“IOAs are not legal entities until they become licensed under the Department of Economic Development (DED). Hence, no owners association (OA) will be allowed to open a bank account in its own name,” Ludmila Yamalova, Managing Partner of HPL Yamalova & Plewka JLT, told Emirates 24/7.

Graham Yeates, Head of Owners Association Management, Cluttons says that the IOA concept was created by Dubai’s Land Department to get owners involved in their building so that once the OA is registered, the owners can take over in confidence.

“Unfortunately the IOA has no legal standing and the developer is ultimately responsible for all happenings at the building.”

Click here to find out why property developers do not want owners to take control of their buildings

According to Brent Baldwin, Associate, Hadef & Partners, most OAs are utilising bank accounts held in the name of the developer or some other third party pursuant to a contractual arrangement, rather than having a bank account in their own name.

Some developers have offered IOAs to open specialised bank accounts in the name of the developer, but for the benefit of the IOA. This arrangement is extended to the IOAs at a fee.

“These bank account are still the developer’s bank account and not IOA’s,” says Yamalova.

In the UAE for a corporate entity to be able to open a bank account, it must have a trade licence. For OAs to have a trade licence, they must be licensed by the DED under the appropriate licence category. [Although] there is now a licence category called “owners’ association, no OA appears to be registered with the DED as of today.”

IOAs partially successful

Asked if IOAs had been successful in bringing down service charges, Yamalova acknowledges service charges have been reduced in some developments.

“It is not, however, due to the IOAs renegotiating the supply and service contracts. Rather, any reductions in services charges have been mandated by Rera, undoubtedly in response to public outcry regarding exorbitant fees.”

O’Brien also believes the level of service charges has definitely come down as a result of OA boards reviewing budgets.

But Yeates has a different take.

“I don’t think IOAs will be able to reduce service charges until they are run democratically by the owners, independent of the developer. The key to reducing service charges is to have transparency in calling for facility management (FM) tenders. This is the largest component of the budget.

“You would have to look at this on a case by case basis as some developers have handed over the role of calling for FM tenders to the IOA who are able to modify contracts to reflect owners’ wishes and needs. Overall, these developers are in the minority,” he says.

Published By: Emirates 24/7
Written By: Parag Deulgaonkar
Date Published: 12th December 2011

In Yacht Bay, a Dubai Marina complex where 85 of the 175 owners are up to date on their fees, the association is replacing only half of the broken light bulbs in the communal hallways. Painting, replacing broken ceiling tiles and exterior cleaning have been put on hold, and the association is delaying payments to many of its service providers.

But the board recently approved the installation of a back-up generator for the lifts, emergency lighting for exits and the repair of air conditioning.

“We may not have enough to pay the next Dewa [Dubai Electricity and Water Authority] bill because we authorised these payments,” said Michael Burke, a member of the board. “We approved these because they are critical items.”

The situation is reaching a crucial state in many buildings around Dubai, building managers say. Health and safety networks will be compromised if owners are unable to afford maintenance.

“More dangerous things will start to happen,” said Alastair McCracken, the chief executive of Novus Community Management. “The systems that keep people alive and comfortable in buildings will be affected.”

Most buildings in Dubai have only recently formed homeowner associations, under the guidelines of the strata law that went into effect last year. Hundreds have been registered with Dubai’s Real Estate Regulatory Authority (Rera) and are taking over day-to-day operations.

But developers are still responsible for the buildings.

“There is still a lot of confusion about how all this is going to work,” said Brent Baldwin, an attorney with Hadef & Partners.

While 90 per cent of owners in some buildings are paying their fees, in others 60 to 70 per cent are in default, management companies say. In some buildings almost all the owners are not paying their fees, said Graham Yeates, the head of owners association management for Cluttons, a property firm.

Many are absentee owners who bought the homes as investments and now live outside the country. In some cases they cannot afford to pay the service fees, with rental income far less than expected after declines in the market.

Other owners are not paying to protest against what they see as exorbitant fees charged by the developers, managers say.

“Many owners are not paying because they feel they are not given a say in the composition of the budget,” Mr Yeates said. “They are resigned to the developer running the building in the short term and they are resisting payment of service charges as long as they can.”

Newly-minted associations are taking a variety of actions to try to force payment, including listing defaulters’ names in buildings’ lobbies. But the so-called “shame” campaigns may be illegal under the UAE’s defamation laws.

Associations are attempting to restrict defaulting owners from using their pass cards to access communal pools, parking and other public areas. But this often hurts tenants more than the absentee landlords.

Ultimately, the associations will be able to place a lien on the property and force payment if the owner tries to sell the unit.

“That is happening,” Mr Baldwin said. “But they can wait a long time to sell a unit in this market.”

In Yacht Bay, the association is owed more than Dh1 million (US$272,227) in fees from owners. The board is hoping an education campaign will help convince people to pay.

“Many owners don’t realise the negative impact non-payment has,” Mr Burke said. “If we were in a position to collect two-thirds we could bring the building up to the high standards and sustain it for a long period of time.”

Published by: The National
Written by: Kevin Brass
Date Published: 30th November 2011