Steps to forming an independent homeowners association outlined by expert industry insiders.
Homeowners given Strata Law tips
DUBAI // With the introduction of the so-called Strata Law, allowing independent homeowners associations, there are a few things that anyone interested in forming one should know, industry experts say. First and foremost is identifying who is responsible for getting the registration process started. Before owners can begin coming together to elect officials and take control of their service charges, developers are required to take the initiative. They must register the nascent association with Dubai's Real Estate Regulatory Authority (Rera) through documents that detail such things as the layout of common areas and the equipment in them, such as pools and lifts.
Essentially, it is that information which determines who owns what. Once the developer submitted the necessary documents to Rera, the authority would register the association, making it a legal entity, said Peter Crogan, the chief executive of BCS Strata Management, which is based in Dubai. On receiving Rera's approval for an association's creation, the developer has three months to organise the first general meeting of homeowners, during which a board of officials to represent the community is elected. The developer must also pay for organising the meeting and its related costs. The bill goes to the association for future gatherings.
Moreover, said Mr Crogan, within three months of registering the association with Rera, the developer was also required to hire an independent consultant to audit the service and maintenance fees it had collected. "It must give back any of the remaining cash it has collected 21 days after the creation of the owners association, except for legitimate expenses," he said. "Once associations are registered, and thereby considered a legal entity, they can then establish their own bank account."
Then comes the first general assembly meeting, at which owners can review the fees they are being charged and determine whether to retain the company hired by the developer to oversee community maintenance. The board they elect would then deal with the business of the association. "That board would handle the day-to-day issues of the association and be the contact point between [the property management company chosen on behalf of the association] and the owners."
The newly elected board members are required to take a five-day instructional course held by Rera to learn how to run an association. The cost, Dh3,000 (US$815) per board member, should be paid for collectively by the association as part of its fee structure. The deadline for submission is September 13. Rera posted three sets of documents on its website this week explaining the legal rights of owners and developers in forming the associations.
However, understanding the nearly 50 pages of jargon requires the patience and attention to detail of a legal scholar, creating the potential for confusion and disputes. Determining who is responsible for maintaining facilities and the upkeep of common areas is harder than it looks, particularly when it concerns large properties, such as the Jumeirah Beach Residence (JBR), that are a jumbled patchwork of retail, commercial and residential space.
"When representatives of the three component owners [retail, commercial and residential] sit down at an owners' meeting, if their property is not delineated properly in the early stages you'll have huge disputes" over who is responsible for what, said Kent O'Brien, the managing director of Strata Global, a property planning and consulting firm. Sorting out responsibilities at an early stage is "extremely important", he said, and might require an independent consultant to advise the developer. "An owner has the right to ensure that the association gets off the ground as soon as possible," Mr O'Brien said. "However, it is far more cost efficient for the planning and documentation to be completed in collaboration with the developer."
In some communities, such as the JBR, owners are still not sure if their developer intends to create a homeowners association. "We approached them several times and they didn't answer," Hamid Hamri, an owner in the JBR, said of the community's developer, Dubai Properties. "We knew the law was coming a month ago, but they haven't given an answer. "There is nobody here who can tell you that they're sure about what's going to happen."
The implication of the Strata Law is an effective release from the virtual stranglehold placed on owners by developers, which previously controlled the price of maintenance fees and which companies delivered the maintenance. Owners have long decried the situation as virtual taxation. @Email:firstname.lastname@example.org