Separate Bank Accounts for Owners Association is close to approval
The recent announcement by the Real Estate Regulatory Authority (RERA) that interim Owners Associations will soon be able to open their own bank accounts has been well received by interim owners associations who have commenced the journey toward full registration and self management.
This action will also be a significant step in assisting interim owners associations board members to gain the experience in self management of their owners association outside the unwanted control of the developer.
One of the main issues with the current service charge payments being made into a bank account operated exclusively by the developer is the total lack of control able to be exerted by the owners over the use of their own funds which in itself is perceived to be the primary cause of owners withholding service charges.
In turn the withholding of service charges by some owners (more often than not, overseas investors) for extended periods of time has created a number of situations in recent times in Dubai where buildings have had basic services such as water and electricity or garbage collection services terminated or other non essential services such as pool maintenance and gym equipment repairs deferred pending receipt of outstanding service fees by the developer.
This in turn creates an unnecessary burden on voluntary interim board members attempting to gain experience in the self management of their building who are, through no fault of their own, placed in the unwarranted position of determining what services will be terminated or deferred pending collection of the outstanding service fees which in itself is detrimental to other owners and tenants in the building and can result very quickly in a fall in the value of properties as repairs are deferred and the general state of the building deteriorates.
The current action of withholding service fees as a result of disputes with the developer has only resulted in residents and tenants rather than the developer being punished.
The proposed introduction by RERA of a separate bank account operated by the owners elected interim Board representatives pending full registration will give owners certainty that the service charges are being used for the purpose they were intended rather than the current perceived situation of lining the pockets of developers.
This will also address the very real possibility of a developer being placed into receivership and the owners not being able to access their funds as the bank account would be frozen as it can only be operated by the developer.
The operation of the bank accounts by the Owners Association Board will also facilitate the expenditure of service levy contributions on matters important to the owners which may not have had the same priority to the developer and will invariably have a the effect of enhancing the overall value of units in the development.