x Abu Dhabi, UAE Thursday 20 July 2017

Experts split on Dubai's service fee disputes

Experts have come up with different answers over who controls access to facilities like pools, beaches and gyms, a question that has caused growing friction between residents and developers.

DUBAI // Apartment owners have been urged to check their sales agreements amid growing conflict over who controls access to pools, beaches and gyms.

One dispute came to a head this week when angry would-be sunbathers at the Palm Jumeirah Shoreline residences faced off against security guards charged with keeping the doors to the beach locked.

Nakheel, the developer of the resort community, had banned residents from the beach, pool and gym over unpaid service charges. And next week they plan to impose membership fees, even for those whose service charges are paid.

The standoff is one of many being played out between property owners and developers across Dubai over who controls the most prized spaces on their properties.

By law the control of "common areas" on freehold properties should eventually pass from developers to owners. These include lifts, corridors, lobbies and car parks, most experts agree.

But do they include gyms, beaches and pools? That is the million dollar question. If developers lose control of these assets, they forfeit years of potential revenue in the form of membership fees. If owners cannot claim them, they face paying large sums of money to use facilities that most assumed were part of their purchase.

Experts come up with different answers on how to define the term "common area". Some favour the developer, others the owner. "It may not be so clear because the documents may be fuzzy … and people may take different positions," said Shahram Safai, head of real estate and a partner at Afridi and Angell legal consultants.

As he understands it, common areas should be located on the same plot of land as the residential units - so a pool in an apartment building would qualify, but one on an adjacent plot of land would not.

The Palm Jumeirah Shoreline facilities and the 20 apartment blocks might be on separate plots, he said, though he cautioned that he had not studied the development specifically. Ten of the towers have pools, with the beach just outside their back door. There are gyms in connecting buildings.

If the pools, beach and gyms did not count as common areas, he said, then owners should check their contracts - or sale and purchase agreements (SPA) - for the terms of use that Nakheel had outlined. It may have allowed access free, for a fee, or as part of the service charge.

Ian Sparks, managing director of the surveying firm Aus-Surv Middle East, agreed that whatever was included in the SPA was what counted, even if it lay on a separate plot.

"This is where you've got to start," he said. "Then you've got to look at the fine print. Were the people given the usage of them, or were they told, this will be part of your title?"

Owners often point to sales material boasting exclusive beach access, pools and gyms, but the SPA was the ultimate decider, he said. However, the agreements often used unclear wording and might change from contract to contract, even for units in the same development. "They leave it nice and grey," Mr Sparks said.

Ludmila Yamalova, a property legal consultant who has dealt with similar cases, said SPAs were important but not exclusively so.

The promise of beaches, gyms and pools in sales material, and the assumption by buyers that these facilities would be included, also needed to be considered, she said. "You have to look at the entire universe of documents and representations that were made along with the transaction.

"Ask any one of the Shoreline owners: no one would have bought on the assumption that the pool and the facilities were not part of the development. The Shoreline properties cost a lot more because they came with the facilities. That's just how it was marketed and that is how it was sold."

chuang@thenational.ae