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Dubai studies new property visa

The Dubai Government is studying the enforcement of a new residence visa system for property owners. Nima Khanpour, Managing Director of Stratum shares his views.

Setting up a home owners’ association

As of April 2011, as many as 161 OA’s had been registered with the Real Estate Regulatory Agency (RERA). Despite the fact that OA establishment allows more transparency and control, they still have not widely been put to practice. Gary Adamson, CEO, Stratum Owners’ Association Management, comments.

Face off

Q: Will single ownership buildings maintain a rental premium over strata title space? A: Maybe – this question is subject to a number of factors. However, all other things equal, when comparing the strength and quality of rental yields for real estate under different ownership structures, it would very much be dependent upon the perception and finances of the owner or majority of owners. Any building that Read more.

Being elected as a board member of a homeowners’ association involves a lot of time and effort. So, what is the board?

Nima Khanpour, Managing Director of Stratum offers an In-depth view into the role of the owners’ association board.

Prioritise service charge collection

An insight into keeping maintenance funds alive, and thereby retaining the long-term value of your property.

Realistic service charges can keep old buildings safe

An in-depth interview with Nima Khanpour, Managing Director of Stratum regarding the issues that surround setting realistic service charges, fee collection, challenges faced by OA’s, communication with developers and the future of the FM industry.

Focus on Jumeirah Lake Towers

Insight from James Mahony, of Stratum Owner’s association management, to unit owners and developers on how to set up for the regulations of Dubai’s jointly owned property law (Strata Law).    

FM meets a strata pro

Insight from James Mahony, Senior Association Manager at Stratum Owners Association Management, on what the new Dubai’s jointly owned property law (Strata Law) will mean to owners.

What is a Jointly Owned Property?

Jointly Owned Property (also known as Strata Title Property) refers to the sub-division of land and buildings into units and common property. Jointly Owned Property covers buildings such as high-rise apartments, retail developments, office towers, villa communities and industrial buildings. These developments often have shared facilities as well as common property.

What Laws and Regulations apply to Jointly Owned Properties?

The following documents clarify the laws and regulations relating to Jointly Owned Property: Law No. 27 Concerning Ownership of Jointly Owned Property. Direction for General Regulation. Direction for Jointly Owned Property Declaration. Direction Association Constitution. Directions for Surveyors.

What is a shared facility?

Examples of shared facilities include such items as hallways, entrance lobbies, swimming pools, tennis courts, golf courses, gymnasiums, elevators, vehicle parking and pathways. All owners within the development contribute to the maintenance and operation of these shared facilities and the common areas by paying money into a General and Reserve Fund that are jointly known as service charges.

What are common areas?

Common areas, which are shown on the site plan in the Jointly Owned Property Declaration are those parts of property designated for common use by unit owners and occupiers and are generally those areas that are not part of an individual unit. The areas may include, but are not limited to: hallways, lobbies, stairwells, lifts and lift wells, roof, driveways, common area car parks (as opposed to Read more.

What is an Owners Association?

All owners collectively within a Jointly Owned Property are referred to as the “Owners Association”. An Owners Association is a separate legal entity from the individual owners just as a company is a separate legal entity from its shareholders.

What is the primary purpose of an Owners Association?

The primary purpose of an Owners Association is to manage, operate and maintain the common property and facilities within the Jointly Owned Property.

How do Owners Associations operate?

An Owners Association operates in the same way as a business. The Owners Association can make rules regarding the use of common property and units that are binding for the Association, unit holders, tenants and visitors. Rules adopted by an Owners Association must not contravene the Jointly Owned Property Law.

What are service charges?

Owners Associations raise funds by levying contributions from all unit holders. These are known as “service charges”. The General Fund is an annual service fee that covers the cost of maintenance, repair and management of the common areas for the budgeted year and includes building insurance, utility services and administration costs. Unit holders must also pay a service charge to the Reserve Fund to provide funds for Read more.

What is unit entitlement and how is it allocated?

The amount that each unit holder contributes to the maintenance funds is calculated according to the ‘unit entitlement’. The unit entitlement is allocated on the basis of the proportionate floor area of a given unit to the total area of all units within the Jointly Owned Property development.

What are the legalities covering service charges?

All unit holders are effectively guarantors for their Owners Associations liabilities. Owners Associations debts are paid for by levying owners and once a levy is approved, by a majority vote of a general assembly, the levy becomes a legally recoverable debt. This debt is payable by the unit owner to the Owners Association and recovery of the debt is enforceable at law if it is not paid Read more.

What are the duties of an Owners Association?

The Owners Association is responsible for ensuring community rules are being followed by residents and ensuring harmony within their community. The Owners Association must appoint an Association manager to perform many of the management and supervisory tasks of the Owners Association.

What is an Owners Association constitution?

An Owners Association constitution defines the functions and powers of the Owners Association and determines how the financial and administrative affairs will be managed. The constitution also determines the processes required to protect the integrity of the common areas and the rights, responsibilities and obligations of owners and tenants. It aims to guarantee the fair and equitable management of the common areas for the peace and quiet Read more.

What are the key roles in an Owners Association?

The key roles involved in an Owners Association include: The Owners who have the right to vote in the meetings of the Owners Association. The Board of Directors (more often referred to as ”the Board”) who are owners elected on a democratic basis by a majority vote of owners on an annual basis at each Annual General Assembly. The role of the Board is clearly defined and Read more.

What is the role of the Board of Directors?

The Owners Association is made up of all the owners or their duly appointed representatives, and is managed by the owners of the building or community under the guidance and direction of the Owners Association Board of Directors (“the Board”). The Board comprises a minimum of five and a maximum of seven members and the developer may not be represented by more than one member on the Read more.

What is the role of the association manager?

The association manager is appointed by the General Assembly and may be an owner acting in a voluntary capacity (that is, the owner receives no remuneration for the role) or a specialist company licensed and registered by RERA. The association manager is an entity with a statutory function to perform the day-to-day running of the administrative, financial and secretarial aspects of the Owners Association, in addition to Read more.

What is the role of the developer?

The property developer constructs the building but has further responsibilities in a Jointly Owned Property development. Upon completion of construction and once all the necessary approvals for the authorities are obtained, the building is then handed over to the owners. The developer has the following responsibilities in relation to a Jointly Owned Property development:   Escrow: The Escrow Law provides that 5% of the property purchasers’ funds Read more.

Which management issues is the Owners Association responsible for?

The Owners Association must manage the following matters: Maintaining essential records: Jointly Owned Property Declaration, community rules, a minute book for recording all Board meetings, a minute book for recording all minutes of general assembly meetings, a file for official government correspondences, insurance policies, the last annual report of the Board, the last report of the Association manager, the last financial statement, a file for copies of Read more.

What is the decision-making process for an Owners Association?

Owners Associations have strict rules and regulations as how to conduct their affairs. The decision-making process is transparent and well-documented in the form of minutes of meetings, which shall detail the voting outcome for motions passed or not passed by the owners. The Agenda Owners discuss at the pre-schedule meeting, topics for discussion and agreement. Each agenda has a clear motion put forth regarding the topic for Read more.

What is involved in buying into a Jointly Owned Property?

Regardless if the property is under construction or it is a completed property, every potential purchaser has the right to know the following information about the Owners Association: The ongoing costs associated with purchasing the property, which includes how much money (service charges) that must be paid for the upkeep, maintenance and management of the common areas, including arrears. Assets and liabilities of the Owners Association. Details Read more.

What is a Reserve Fund?

A Reserve Fund is a fund set up by the Owners Association to cover the costs of known future capital expenses. Examples of the types of items for which Reserve Funds are set aside include matters such as painting and repairing the building structure and replacement of common property items such as lifts and electric motors. All Jointly Owned Properties are required by law to have a Read more.

Who develops the ten-year Reserve Fund plan?

While members of an Owners Association are not prevented from preparing a ten-year Reserve Fund plan themselves, for legal and litigation purposes it is strongly recommended that the Owners Association engage a suitably qualified expert that specialises in the preparation of Reserve Fund plans.

What is the best way to plan a ten-year Reserve Fund plan?

There is a series of steps repeated during each ten-year cycle following the development of the first ten-year plan. First year: The Owners Association appoints an expert to prepare the Reserve Fund plan. The plan must cover ten years from the date of the First Annual General Assembly. Second year: The finalised plan is presented to the owners and is the basis for determining Reserve Fund contributions Read more.

Why do Owners Associations need insurance?

The establishment of the Owners Association creates an unlimited liability for its members, and each member has joint and several liability to the Owners Association. For this reason, the Jointly Owned Property Law requires a certain minimum amount of insurance cover to protect the unit owners. Building insurance Is required to cover the full replacement and reinstatement cost to rebuild the building to its new condition in Read more.

Annual General Assembly (AGA)

A meeting of all owners (as documented on the Owners Roll Register) that must be convened once each year. In the AGA, specific matters pertaining to the Owners Association are discussed and resolved by the owners.

Annual Service Charge

A service charge imposed on all unit owners by a majority vote at the AGA for the maintenance, operation, renewing and replacement of the common areas and assets of the Owners Association. See also General Fund and Reserve Fund.

Assets

All movable or immovable property, other than real property, that is managed and owned by the Owners Association.

Asset Register

A catalogue maintained by the Owners Association that records all the assets of the building, along with relevant information, including: The asset. Date of acquisition. Name of the supplier. Warranty expiry date. Emergency contact person. Contact number.

Association Manager

An individual who is engaged in a voluntary capacity, or a specialised company contractually appointed by the Owners Association, to manage the Jointly Owned Property in accordance with all legal requirements and other functions delegated by the Owners Association. The association manager must be registered and licensed by the appropriate licensing and regulatory authority and must not have any financial or conflict of interest in the management Read more.

Board of Directors

A committee made up of Owners, or their duly authorised representatives, elected at each Annual General Assembly of the Owners Association. The Board of Directors (more commonly referred to as “the Board”) is made up of not fewer than five and no more than seven members and up to three reserve members who are prepared to fill a Board vacancy in the event of a loss of Read more.

Board of Directors Membership

The Board members are elected at the Annual General Assembly of the Owners Association each year to act as the representatives of all the owners within the Owners Association. The Board member’s role and duties are clearly defined and governed by the Jointly Owned Property Law and the Owners Association Constitution, which includes overseeing the management, maintenance and the operations of the common areas and the affairs Read more.

Budget

An annual budget is an estimate of future expenditure that is required to be prepared by the Owners Association manager for the approval of the Board and, once approved by the Board, the budget is then presented for adoption at the Annual General Assembly of each Owners Association by a majority vote of the owners. This estimate of funds, once approved, is the basis of determining the Read more.

Building Management Committee/Group

Where there is more than one Owners Association and these associations are governed by a Building Management Statement, a duly elected group made up of nominees from each individual Owners Association is appointed to represent issues in relation to the facilities shared amongst all the Owners Associations involved.

Building Management Statement

A contract that governs a Building Management Committee/Group for its rules and regulations and breaks down the shared facilities costs per component use area. Each Owners Association within a development governed by a building management statement is required to contribute to the management, maintenance and operation of the common areas and shared facilities.

Certificate of Title

A Certificate of Title, which is also known as a Title Deed, is issued by the Land Department for each unit in the name of the unit owner to prove ownership of real property within the Jointly Owned Property. In addition to there being a Title Deed for each unit in the development, there is also an additional Title Deed issued for the Owners Associations delineating the Read more.

Cluster

A detached group of developments that share open space.

Common Areas

The area of land and part of a building in the site plan which do not form part of any individual unit; that is, corridors, lobbies, stairwells, lifts and lift wells, roof, driveways, common area car parks, structural support columns, service utilities and associated equipment, and also including electrical, telecommunications, computer and data service, utility infrastructure, security systems, plumbing, drainage systems, mail delivery systems and any other Read more.

Component

A term used when a Building Management Statement is formed based on a site plan to indicate separate areas, services and equipment within one building, such as residential, commercial, retail and so on.

Community Title

A term used to describe a development that combines a variety of dwelling styles and communal facilities where an overall style and theme must be followed.

Community Rules

Also known as By-Laws, these relate to the establishment of a standard of conduct of owners and occupiers within the development.

Constitution

Deals with the internal procedures of any Owners Association and describes the role of the Board and Association manager.

Conveyancing

Transferring ownership of a property from the seller to the buyer.

Entitlements

Each individual unit within a development is allocated a unit entitlement as shown on the Jointly Owned Property Declaration that represents the proportionate share of ownership in the Jointly Owned Property. The amount of the unit entitlement varies depending on the size of the unit and its calculation is based on the proportionate space of the unit compared to the overall floor space of the building. Unit Read more.

First Annual General Assembly (FAGA)

The First Annual General Assembly (FAGA) is the very first meeting of owners in a Jointly Owned Property.

General Fund

Monies used to cover all the day-to-day and regular expenses of the Owners Association, such as municipality charges, electricity, landscaping, cleaning, insurance premiums, routine repairs and maintenance of the common areas, Owners Association management fees and so on.

Harmony

Describes the level of owner satisfaction that exists within a Jointly Owned Property development. This relates to issues associated with disputes of varying types.

Jointly Owned Property (JOP)

Ownership of real estate where the whole or part of a building or land or both has been divided into units (for private ownership) and common areas (to be owned in common by all the unit owners in the development) and is intended for separate ownership.

Jointly Owned Property Declaration

The terms and conditions governing the development and operation of Jointly Owned Property. The declaration is prepared by the developer of a building or project and filed at the Land Department. This document must disclose a great deal of detail about the Jointly Owned Property, including site plans, entitlements, community rules and to a potential purchaser, including, meetings, voting, records, payment of service charges and so on.

Master Community Declaration

The terms and conditions governing the development and operation of Jointly Owned Property.

Occupant Register

A catalogue maintained by the Owners Association manager that records all current occupants residing in the building. This is prepared to ensure safety in the event of an emergency, in case the building may need to be evacuated.

The Owner

The person who is registered as an owner of a unit in the register, including persons with a long-term lease or usufruct right for limited period and also the master developer or the sub-developer in regards to unsold units.

Owners Association

A separate legal entity consisting of all the owners of the units in a Jointly Owned Property Development. The Owners Association is established when title to the first unit is transferred from the developer to a party other than the developer and when the Jointly Owned Property Declaration is registered with the Land Department. The Owners Association is charged with managing the development and in particular the Read more.

Owner Association Constitution

Contains the rules and regulations that govern the Owners Association and is issued in accordance with Law No. 27 of 2007.

Owners Roll Register

A catalogue maintained by the Owners Association that records all the owners of the building. This roll is updated when properties are sold or when owners notify a change of their contact details. It is the responsibility of each unit owner to ensure they notify the Owners Association of the change of ownership and is also one of the records that determine whether a registered owner is Read more.

RERA

Real Estate and Regulatory Authority.

Reserve Fund

Monies used to cover capital improvements and major repair or replacement. The Reserve Fund is raised to meet the anticipated cost of expenditures of a capital nature required on the part of the Owners Association that may arise other than annually such as, replacement of lift equipment, common area painting, structural defect rectification, and unexpected emergencies.

Service Charges

Financial contributions, made by all owners of the Owners Association to cover regular expenditure and future major works. The amount paid by each unit owner is regulated by and in proportion to the unit entitlement assigned to the respective units and is distributed to both the General Fund and the Reserve Fund in accordance with the budget approved by the owners at a general assembly. These monies Read more.

Shared Facilities

A term used when a Building Management Statement is formed based on a site plan to indicate common areas used by two or more Owners Associations.

Site Plan

Also known as the subdivision plan or survey plan. This is the actual survey taken of the Jointly Owned Property Development and registered with the Land Department, showing the building on the land, the units making up the plan and the common areas; that is, a plan registered in the register showing the units and its common areas

Strata Scheme

A term commonly used in other legal jurisdictions such as Australia and Singapore to describe Jointly Owned Property in the UAE.

Stratum Subdivision

Also known as Volumetric Subdivision. Used to create units that separately define different component use areas within a building. Each component will be a unit within the Jointly Owned Property and there will usually be a contract in place between each unit of the subdivided building relating to aspects of its management and use (Building Management Statement). This type of subdivision is more commonly used for the Read more.

Supply Agreement

Any agreement for goods or services, with the Owners Association, that has a term of one year or more.

Survey

A survey is a document that provides confirmation of the property boundaries and improvements.

Units

Any part of a Jointly Owned Property development sold; that is, apartments, offices, retail and plots of land.

Utility Service

Any of the following services: Water reticulation or supply. Gas reticulation or supply. Electricity supply. Air conditioning. Telephone service. Computer data or television service. Sewerage. Drainage. A system for the removal or disposal of garbage or waste. System for the delivery of mail, parcels, or goods. Any other system or service designed to enhance the utilities of units or common areas.

Valuation

A valuation is an estimate of the property value that is made by a qualified, valuation practitioner.

Service charges are a cat-and-mouse game

Excerpts from an interview with Gary Adamson, CEO of Stratum on why owners and local investors are increasingly withholding Service Charge payments.

Owners spared of training course

Rera’s earlier mandate for all Owners Association board members to complete a training course, is no longer a prerequisite. Nima Khanpour, Managing Director of Stratum provides his insights.

Tackling the strata regulations

The guidelines to the Jointly Owned Property Law will transform the Dubai real estate market. Find out what they mean for you.

Many people living in jointly owned properties (JOP) are not fully aware of what’s actually involved in proper Association Management

Nima Khanpour, Managing Director of Stratum, outlines some of the factors owners should look for when selecting an Owners Association Management (OAM) for their development.  

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