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 are to be withheld in Escrow for the project for a period of one year after the units are registered in the name of the buyers and title deeds are issued in their names.
- Decennial Warranty:
The Jointly Owned Property Law provides that, with respect to the construction contract provisions in the civil transaction code, the builder, (not the developer) remains liable for a period of ten years from the date the completion certificate of the building is issued.
The builder and not the developer (unless they are the same person or organisation) is responsible for repairing and curing any defects in the structural elements of the Jointly Owned Property notified to the builder by the Owners Association or a unit owner.
The builder of a development, or that part of a development undertaken by the builder, remains liable for one year from the date of the completion certificate of the building to repair or replace defective installations (which could include mechanical and electrical works, sanitary and plumbing installations and the like) in the Jointly Owned Property.
- Obligation to form an Owners Association
The developer of the Jointly Owned Property is responsible for forming and registering the Owners Association with RERA.
In addition to registering the Owners Association, the developer must:
- Establish the books and records that the Owners Association is required to keep under its constitution;
- Effect in the name of the Owners Association the insurances that it is required by Law to maintain;
- Prepare all the documents required to be dealt with at the First Annual General Assembly of the Owners Association;
- Convene and hold the First Annual General Assembly within three months after the Owners Association is established;
- Administer the Owners Association and the common areas (including repair and maintenance) until the First Annual General Assembly; and
- Hand over to the Owners Association all manuals, utility service guarantees and warranties on installations, full plans of the building, a schedule of finishes of the building, statement of and inventory of removable assets, furniture, furnishings in the development.