<p><strong>INTRODUCTION</strong><br /><br />Law No. 27 of 2007 on Ownership of  Jointly-Owned Properties in the Emirate of Dubai (the &ldquo;JOP Law&rdquo;) came into force  on 1 April 2008. The Law laid the foundation for a regulated and transparent  regime concerning the management of strata developments and ownership of Units  in Dubai.<br /><br />In terms of Article 32 of the JOP Law, the Chairman of the Land  Department was entitled to implement regulations as required to ensure a  comprehensive strata title regime.<br /><br />In April 2010 these regulations (&ldquo;JOP  Regulations&rdquo;) were released as &ldquo;Guidelines&rdquo; by the Land Department.<br /><br />In  this article we briefly outline the purpose of each of the JOP Regulations. We  then list in simple terms the steps developers need to take to ensure they  comply with the JOP Regulations. We then review how these laws are being applied  and implemented to date in practical terms.<br /><br /><strong>I. IMPLEMENTING  REGULATIONS</strong><br /><br />The JOP Regulations comprise the following:</p>
<ol>
<li>The General Regulation - Concerning Jointly Owned Properties under the Law  on Jointly Owned Properties in the Emirate of Dubai (&ldquo;General Regulation&rdquo;);</li>
<li>The Regulation Concerning Jointly Owned Property Declaration under the Law  on Jointly Owned Properties in the Emirate of Dubai (&ldquo;JOPD Regulation&rdquo;);</li>
<li>The Regulation Concerning Preparation of Survey Plans in the Emirate of  Dubai (&ldquo;Survey Regulation&rdquo;) and Directions;</li>
<li>The Association Constitution (&ldquo;Constitution Regulation&rdquo;).</li>
</ol>
<p>Below we provide an Overview of the JOP Regulations by considering briefly  the purpose of each regulation. A more detailed analysis of the JOP Regulations  is completed under the section On-Going compliance below.<br /><br /><strong>II.  OVERVIEW</strong></p>
<ol>
<li>General Regulation<br />This regulation is the principal JOP Regulation. The  General Regulation covers such matters as:</li>
</ol>
<p>a) Consumer protection;<br />b) Developer disclosure;<br />c) Financial  disclosures;<br />d) Apportionment of costs as between developers and the Owners  Association; <br />e) Collection of service charges;<br />f) The requirements for  lodging of Jointly Owned Property Declarations and setting up of Owners  Associations;<br />g) The form and content of Building Management  Statements;<br />h) The form and content of Supply Agreements;<br />i) Community  Rules Enforcement Notices;<br />j) Appointments of Administrators; <br />k) Interim  measures.<br /><br /><strong>2.&nbsp; JOPD Regulation<br /><br /></strong>This Regulation  sets out in more detail what is required to set up on a jointly owned property  scheme and register an Owners Association. A default procedure is specified  allowing Unit Owners to establish a Jointly Owned Property scheme where the  developer fails to do this. A new procedure is also introduced allowing  developers to stage their developments as well as provisions allowing up to  three layers of Jointly Owned Property within any one Jointly Owned Property  development.<br /><br /><strong>3.&nbsp;&nbsp; Survey Regulation<br /><br /></strong>This  Regulation provides for the following:</p>
<p>a) The accreditation and registration of surveyors;<br />b) The duties of  registered surveyors;<br />c) Suspensions and cancellations of surveyors;<br />d)  Standards to be used and the ability for the Land Department to issue binding  Directions;<br />e) Transitional provisions relating to the preparation of plans  are also specified.<br /><br />Directions have also been put in place which describe  how areas must be calculated and survey requirements.<br /><br /><strong>4.&nbsp;  Constitution Regulation</strong></p>
<p>This Regulation specifies the form of constitution for each Owners  Association formed. If developers have specified their own form of constitution  in their sale contract they will need to be aware that such documents will now  not apply.<br /><br /><strong>III.&nbsp; ON-GOING COMPLIANCE WITH THE JOP  REGULATIONS<br /><br /></strong>In this section we briefly summarise the effect of  the JOP Regulations on an on-going basis. Each topic is discussed under the  heading of the JOP Regulation setting out the  obligations.<br /><br /><strong>General Regulation<br /><br />Article 4 &ndash; of the General  Regulation -&nbsp; Disclosure Statements</strong></p>
<ol>
<li>The most immediate concern of developers with&nbsp; new proposed or incomplete  developments or developments that are complete but for which no titles have  issued will be completing their Disclosure Statements.</li>
<li>A Disclosure Statement must be signed by a representative of the developer  and set out the following information:</li>
</ol>
<p>(a) The description of the building&nbsp; or project of which the proposed Unit  will be part;<br />(b) The intended land use within building project (for eg.  residential, serviced apartments or retail);<br />(c) Any features pertaining to  ecological sustainability;<br />(d) Any special use that applies to the proposed  Unit ( e.g. serviced apartment);<br />(e) Facilities on the Common Areas that will  be available for use by owners and occupiers as of right;<br />(f) Facilities  within the building or project that will be available for the use of owners or  occupiers on a commercial basis;<br />(g) Items of furniture and furnishings (if  any) for the proposed Units that the developer commits to make available without  additional charge;<br />(h) A draft plan for the proposed Units showing the areas  of the units required by the survey Directions to be shown on the plan for  registration purposes but showing no other areas;<br />(i) A schedule of materials  and finishes for both the proposed Common Areas and the proposed Unit;<br />(j)  Whether any Supply Agreements are to be entered into by the proposed Owners&rsquo;  Association and, if so which agreements;<br />(k) If available, an estimate of the  Service Charges payable in respect of the proposed Unit and, if not available, a  statement to that effect;<br />(l) Proposed arrangements for the supply of utility  services to the Jointly Owned Property and the Unit;<br />(m) Where any utility  service will be provided by non-Dubai government entity, other than the Owners&rsquo;  Association, a statement identifying the utility service and indicating how  charges will be paid for that utility service;<br />(n) Whether the Owners&rsquo;  Association will on-sell any utility service to Unit Owners and, if so, details  on the supply arrangements;<br />(o) Whether construction has commenced and if not  a reasonably estimated date for commencement of construction;<br />(p) A  reasonably estimated date on which the property will be handed over to the  purchaser;<br />(q) A statement directing the purchasers&rsquo; attention to the  development and purchasing obligation to register the contract in the Interim  Real Estate Register in accordance with Law No. 13 of 2008 and related laws  including the statement explaining the consequences of non-registration.<br />(r)  Any ecologically sustainable development ratings applying to the building  project including details of the rating authority will be included;<br />(s) A  copy of the proposed Jointly Owned Property Declaration will be  included;<br />(t)&nbsp; Copy of the proposed Building Management Statement will be  included;<br />(u) A budget prepared on a reasonable basis and including provision  for general fund and reserve fund and catering for the first two years of  operation will be included;<br />(v)&nbsp; An estimate (based on the budget) of the  Service Charges for the Unit will be provided;<br />(w)&nbsp; Details of utility  service providers will be disclosed including whether the entity is related to  the developer and a reasonable estimate of the annual cost except where the  utility service provider is a government entity.</p>
<ol>
<li>Failure by the developer to provide the Disclosure Statement will mean that  the contract is voidable by the purchaser.</li>
<li>The developer will also warrant that the information in the Disclosure  Statement is complete and accurate in all material respects. Where the  information is incomplete or inaccurate in a material way, the developer shall  be liable to the purchaser or any subsequent purchaser for a period of two years  from the date which the Unit is transferred from the developer.</li>
</ol>
<p><strong>Al Tamimi&rsquo;s Comments and Observations</strong></p>
<ol>
<li>Arguably Disclosure Statements are not required for developments that are  complete and where the Unit to be sold has its own title. We state that it is  &ldquo;arguable&rdquo; because the logic behind no disclosure being required where a Unit  has a title is that the Unit will be complete and the title documentation  (including the Jointly Owned Property Declaration and Building Management  Statement (if applicable) should be available for inspection. Arguably therefore  if no JOP Declaration is available disclosure should be made. If the development  is incomplete or complete but with no title then a Disclosure Statement will be  required.</li>
<li>The plan to be attached to the contract must be completed in accordance with  the Directions. The Directions are given pursuant to the Survey Regulation.</li>
<li>Disclosure is a large task on the part of developers as the modelling will  need to be virtually complete for the entire building noting in particular that  a Jointly Owned Property Declaration including the service charge modelling,  Building Management Statement and necessary modelling and more comprehensive  budgets and estimates in relation to service charges will all be necessary. We  would suggest that developers will need to take great care pre-estimating.  Leaving a reasonably large margin of error may also be necessary.</li>
<li>Much of the content required for the Disclosure Statement is also regulated  within the JOP Regulations including the content of Jointly Owned Property  Declaration and Building Management Statements. Developers therefore need to  ensure all documentation is compliant. In terms of minimising risk developers  may also wish to seek the approval of the Land Department to any proposals that  may be the subject of any discretion on the part of the Land Department or  RERA.</li>
</ol>
<p><strong>Article 7 &ndash; of the General Regulation - Financial  Matters</strong></p>
<ol>
<li>Article 7 clarifies what is mostly standard practice by making it clear that  developers are responsible for all costs and expenses associated with plot until  the Owners Association comes into existence. Developers must also pay the cost  of all connection charges for the project. Connection charges for Units will  depend upon the contractual terms signed between the developer and  purchaser.</li>
<li>Fees and expenses paid in advance by the developer may be recovered from the  Owners Association where it is proper to do so.</li>
<li>Developers may not collect service charges from purchasers of the Units  unless these have been authorised by RERA. Any funds collected which are  unexpended must be handed over to the Owners Association within 21 days of it  being registered and licensed.</li>
<li>Where a developer has collected charges from purchasers, the developer must  within three months of the date upon which the Owners Association was registered  and licensed have a registered auditor undertake an audit of the monies received  and expended and within 21 days pay to the Owners Association the reconciled  balance of unexpended funds as certified by the auditors. The department may  also direct the developer to pay funds to the Owners Association.</li>
<li>Developers must transfer title to any goods or equipment purchased with  funds collected from purchasers to the Owners Association.</li>
</ol>
<p><strong>Articles 8, 9 and 10 &ndash; of the General Regulation - Building  Management Statements</strong></p>
<ol>
<li>It has become clear to legal and association management practitioners that  RERA will play a very significant role in ensuring the content of Jointly Owned  Property documentation is appropriate. The role of RERA in this regard is  particularly apparent when considering whether a Building Management Statement  can be used.</li>
<li>A Building Management Statement is a system that when used appropriately may  lead to simplification of complex mixed use schemes. Essentially a Building  Management Statement creates a parallel concept to that of Jointly Owned  Property but rather than having &ldquo;Common Areas&rdquo; the shared areas fall into the  ownership of one &ldquo;Component&rdquo; or another with easements created in favour of the  other users. Components can then be sub-divided into Units and a Jointly Owned  Property Declaration filed in relation to this&nbsp; Component only.</li>
<li>Practically speaking RERA will in most cases require an &ldquo;Owners Association&rdquo;  to be the legal entity in charge of Common Areas or any other shared parts of  the development. This has caused some people to state that there is no such  thing as Building Management Statements in Dubai Jointly Owned Property. This is  however only partially the case.</li>
<li>Building Management Statement can be created within a simple or layered  scheme and registered as a separate restriction over the title to each Unit.  Most areas that are shared will become &ldquo;Common Areas&rdquo; however the Building  Management Statement can be used to deal with management and cost issues thereby  effectively ensuring equitable outcomes are entrenched and cannot be over-ridden  for example by a majority interest.</li>
</ol>
<p><strong>Articles 14, 15, 16 and 17 of the General Regulation &ndash; Supply  Agreements</strong></p>
<ol>
<li>Supply Agreements are defined as agreements for a term of one year or more  for the supply of goods or services including utility services to an Owners  Association either directly or through a Building Management Statement.</li>
<li>Examples of Supply Agreements will be facilities management agreements,  agreements for the bulk supply of utilities such as district cooling agreements,  association manager agreements and insurance agreements.</li>
<li>Supply Agreements may not have a term exceeding three years.</li>
<li>The content of Supply Agreements is regulated as follows:(a) In the case of  goods supplied a description of these and the price paid for them must be  included. The price must be competitive with prices obtainable on the open  market.<br />(b) In the case of services detailed descriptions of these services  must be provided and the fee for these set out. The fee must be competitive with  fees obtainable on the open market for similar services. The provisions must  also have a means of monitoring and assessing the performance of the service  provider and the ability to terminate the agreement for non-performance or other  default. Provisions must also be included allowing the Owners Association to  vary the services or service levels whereupon adjustments of the fee will also  take place. Secret commissions are prohibited.<br />(c) In any case where the  Supply Agreements are noncompliant, an Owner may apply to the Court for relief  and the Court may either invalidate the Supply Agreement or make an order  varying the terms of the agreement.</li>
<li>In addition all companies supplying services in the nature of management of  Common Areas must be licensed with RERA and any agreements for such services  registered with RERA.&nbsp;</li>
</ol>
<p><strong>Al Tamimi&rsquo;s CoMments and Observations</strong></p>
<ol>
<li>The restrictions pertaining to Supply Agreements and agreements for  management services in relation to Common Areas are targeted at developers who  may seek to tie Owners Associations into lucrative long term contracts for goods  and services.</li>
<li>There are also restrictions in the Constitution Regulation on Board members  allowing the Owners Association to enter into contracts with any entity related  to a Board member. Developers can expect therefore that RERA will be vigilant in  protecting purchaser&rsquo;s rights with regard to these requirements.</li>
</ol>
<p><strong>Articles 23, 24, and 25 &ndash; of the General Regulation - Registration of  Owners Associations</strong></p>
<ol>
<li>The JOPD Regulation makes it clear that the developer is responsible for  registering the Owners Association.</li>
<li>The General Regulation contemplates that some developers may not apply for  the registration of the Owners Association whereupon the application may be made  by Unit owners (see Article 23 (1) (g) of the General Regulation and Article 11  (3) of the Jointly Owned Property Declaration Regulation).</li>
<li>The following documents must be lodged with the Land Department and found to  be in order on or before the Owners Association is constituted:(a) An  application for registration;<br />(b) The Common Areas Site Plan;<br />(c) The  Jointly Owned Property Declaration;<br />(d) The Title document for the plot, the  subject of the Site Plan or a statement from the Land Department stating that  the title document is under process;<br />(e) The audit report obtained under  sub-article 10 of Article 7 of the General Regulation or an undertaking to  provide this within three months;<br />(f) The transfer of the first Unit;<br />(g)  The Land Department&rsquo;s fees;<br />(h) Such other documents as the Land Department  may require.</li>
<li>In addition to the above the developer may be required to use an electronic  management accounting system approved by RERA and:(a) Establish the books and  records that the Owners Association is required to keep under its  Constitution;<br />(b) Effect in the name of the Owners Association the insurances  that it is required to effect;<br />(c) Prepare all the documents required to be  dealt with at the first annual general assembly of the Owners  Association;<br />(d) Convene and hold the first Annual General Assembly;<br />(e)  Administer the Owners Association and the Common Areas (including their repair  and maintenance) until the first Annual General Assembly;<br />(f) The Owners  Association will be responsible for the reasonable costs of those matters set  out above.</li>
</ol>
<p><strong>Survey Regulation<br /><br />Article 11 &ndash; Preparation of  Plans</strong></p>
<ol>
<li>The Land Department may allow architectural or engineering drawings to be  lodged instead of survey plans prepared in accordance with the Survey Directions  in relation to projects that have been constructed and occupied and other  projects under construction at the Land Department&rsquo;s discretion. These projects  have been defined as &lsquo;Existing Projects&rsquo; in the Survey Regulation.</li>
<li>In the case of communities that are Existing Projects the Owners Association  will be responsible for preparing the Common Areas Site Plan in accordance with  the Survey Directions and having these lodged within one year from the date the  Owners Association comes into existence.</li>
<li>In the case of buildings that are Existing Projects there is no obligation  to have a Common Areas Site Plan prepared in accordance with the Survery  Directions.</li>
<li>Owners in Existing Projects will be responsible for preparing their own unit  plans and may be prevented from transferring their unit at the Land Department  until this is done.</li>
<li>For projects that are not Existing Projects developers shall be responsible  for completing unit plans and Common Areas Site Plans in accordance with the  Directions.</li>
</ol>
<p><strong>JOPD Regulation</strong></p>
<ol>
<li>The JOPD Regulation specifies when a Jointly Owned Property Declaration is  required in relation to a building, project or component within the building.  The JOPD Regulation also specifies what is required to complete the application.  The principle requirements are as follows:<br />(a) A Common Areas Site  Plan;<br />(b) A schedule setting out the Entitlement for each Unit;<br />(c) The  criteria used for allocating the Entitlements amongst units (i.e. <br />based on  &lsquo;area&rsquo; or the &lsquo;fair and equitable&rsquo; approach);<br />(d) Details about the staging  of the project;<br />(e) Arrangements for the delivery and use of utility  services;<br />(f) Any easements or covenants that burden or benefit the Common  Areas;<br />(g) The Community Rules;<br />(h) A statement indicating if the Jointly  Owned Property Declaration is over the freehold or leasehold interest in the  land.</li>
<li>Jointly Owned Property Declarations may contain following matters:<br />(a)  Restrictions on how particular Units can be used;<br />(b) Architectural and  landscaping codes;<br />(c) Restrictions on use of specified parts of the Common  Areas;<br />(d) Allocations to specific Units of rights of exclusive use over  specified parts of Common Areas including conditions attaching those  rights;<br />(e) Special management arrangements to which the Owners Association  will be party for example multiple layers of Jointly Owned Property and projects  the subject of Building Management Statements;<br />(f) Such other things as the  Land Department may allow;</li>
<li>Jointly Owned Property Declarations will be subject to the approval of RERA  and cannot conflict with the Jointly Owned Property Laws and JOP  Regulations.</li>
<li>Article 11 of the JOPD Regulation required any Jointly Owned Property  Declaration to be lodged by the developer in respect of a project, whether  complete or not, by 13th April 2010. Master Developers must also complete in due  course documentation appropriate for Master Communities.</li>
<li>The JOPD Regulation will also enable developers to complete projects in  stages. In such cases developers will be able to submit amended or new Jointly  Owned Property Declarations provided the updates relate solely to the staging  for the project. In all other cases amendments must be by Special Resolution of  the Owners Association.</li>
<li>The principal benefit to the developer in staging a project will be that  they may limit their exposure by completing part of the project only and then  establishing this as its own Jointly Owned Property whilst reserving the ability  to incorporate this initial stage into a larger development at a later  date.</li>
<li>The JOPD regulation also allows layers of Jointly Owned Property that is to  say a Unit within a Jointly Owned Property may be able to be itself subject of a  separate Jointly Owned Property Declaration. No more than three layers of  Jointly Owned Property will be allowed.</li>
</ol>
<p><strong>Al Tamimi&rsquo;s Comments and Observations</strong></p>
<ol>
<li>The Jointly Owned Property Declaration will be the principal &lsquo;title&rsquo; and  &lsquo;disclosure&rsquo; document relating to any project. It will enable all purchasers and  other stakeholders to understand the structure of the development and each  party&rsquo;s rights and obligations. It should be noted that the Jointly Owned  Property Declaration is required for &lsquo;Disclosure&rsquo; purposes as well as required  to be filed in order for the Owners Association to come into existence.</li>
<li>Due to the importance of the Jointly Owned Property Declaration appropriate  legal and other consulting advice should be taken when preparing the same and  structuring a development.</li>
</ol>
<p><strong>IV.&nbsp; PROGRESS WITH THE IMPLEMENTATION OF THE JOP  REGULATIONS</strong></p>
<ol>
<li>Having been involved in assisting with the documentation and legal issues  pertaining to the JOP Regulations, Al Tamimi and Company are well placed to  comment on their implementation.</li>
<li>To the well informed it was clear that implementation was going to present  some challenges. Firstly much of the development that has occurred in Dubai took  place prior to the JOP Regulations being issued. This meant that not all  purchasers received the benefit of clear disclosure. RERA and the Land  Department have therefore had to mediate in relation to disputes in relation to  areas that developers may have retained and the owners dispute as Common  Areas.</li>
<li>A further challenge has been the volume of schemes that had to be brought  within the new regulatory regime within a relatively short period. RERA has  understood this challenge and have been flexible with developers whilst also  keeping pressure on them to ensure compliance. This flexible approach has also  enabled the supporting industries such as the surveying industry and association  management industry to bulk up to meet the demand. RERA and the Dubai Real  Estate Institute (DREI) have also spearheaded important educational initiatives  which have assisted greatly developers, owners and association managers  understand their new obligations.</li>
<li>The documentation for many schemes has now been submitted to RERA and the  final form of plans approved by the Survey section of the Land Department. There  is now a good understanding in the support industries as to what is required in  terms of plans and documentation.</li>
<li>Recently RERA have also required developers to call a General Assembly for  the purpose of the election of a Board and association manager. This process has  also required a lawyer to assist the Interim Board and ensure that a transparent  tender process was used to elect the association manager. This process in  particular has inspired some confidence in RERA ensuring that owners interests  are protected and developers comply with their obligations. In addition RERA  have actively regulated service charges and made it clear to the public that  developers cannot collect service charges without RERA approval. Developers who  have not handed over control of their developments to the Owners Association may  now find themselves in a position where they cannot levy service charges unless  the Owners Association Board has approved the same.&nbsp;</li>
<li>To the best of the writers knowledge however Owners Associations are not  being issued with licenses. This aspect creates legal challenges for Owners  Associations in terms of enforcing their rights. In particular it means an  Owners Association has questionable legal capacity in terms of pursuing  defaulting owners for non payment of service charges, arranging contracts for  goods or services, opening a bank account or pursuing developers or others for  breaches of their obligations.&nbsp;</li>
<li>The fact that Owners Associations are not being issued with licenses also  creates problems for some developers. Many developers would prefer to hand over  their obligations to an Owners Association but are prevented from doing so due  to the reluctance of the Owners Association board members to sign the necessary  contracts on behalf of the Owners Association without clear legal recognition of  the legal status of the Owners Association. In some instances owners also blame  developers for problem missing and refuse to pay service charges which leads to  the developer having to subsidise the owners or expend resources in trying to  cause owners to comply.&nbsp;</li>
</ol>
<p><strong>CONCLUSIONS<br /><br /></strong>The JOP Regulations round out a  comprehensive ownership system that goes beyond the mere management of buildings  through the inclusion within the scheme of provisions relating to the  subdivision of land, including Master Communities.<br /><br />The comprehensive  disclosure regime will place additional obligations on developers but should not  prejudice significantly quality developers who complete extensive planning or  their projects and will therefore hold the relevant data at the time they are  ready to go to market.<br />The establishment of Owners Associations and the  consumer protection provisions in the JOP Regulations should see a knock on  effect with regard to service charges and the accompanying transparency should  improve confidence in the sector.<br /><br />The implementation process has as  predicted lead to some challenges however there is now a strong and committed  Jointly Owned Property community and a good understanding of the respective  rights and obligations of the stakeholders.<br /><br />It is anticipated that  licenses for Owners Association will issue in due course and the transition will  be complete. The fully implemented JOP Regulations should once again emphasise  why the Dubai real estate market is the logical choice for investment in the  region.</p>