No rent contracts until service charges are paid

Property owners in Dubai who have delayed paying their 2020 service charges will not be allowed to register – or renew – the rental contract on their property. This is as per the legal notice that property management companies are sending out to homeowners to clear their dues.

In most cases, those receiving legal notice will have until end of this month or early October to make the payments.

Denial of lease renewal will be particularly hard on owners, given that most of them have their units in the rental market. Property management companies have started issuing notices since the beginning of the week, with the clear instruction that all dues should be paid within 30 days of receiving it.

In the event that homeowners still delay making the payments, the legal process will kick in – first, they will not be allowed to register or renew the lease. Then the matter will be brought before a judge who can order further measures against homeowners.

And in the third stage, the judge “may” force the sale of the unit via a public auction.

Quite a Gap

Non-payment of service charge fees have piled up in the year-to-date, with some communities reporting shortfalls of up to 60 per cent in their property maintenance funds for 2020. According to property management companies, if this situation was allowed to continue, it would lead to a general deterioration of individual properties as well as the wider communities they are a part of.

What Owners Say

As for homeowners, they want the regulator to look into how the annual service fees are being set, and what management companies are going about spending it. In short, they want more direct control on the funds and their utilization.

But for now, the writing on the wall is clear – homeowners have until October to make sure they are up to date on this year’s payments. The legal notice also makes it clear that they will not get a second reminder before action is initiated.

“This notice shall be enforced when an owner fails to make any payment,” it states. “The owner shall be liable for all expenses.

“An owner or developer may not refrain from paying service fees approved by the Authority (Real Estate Regulatory Authority).”

Wait for the next round

Homeowners that ‘Gulf News’ spoke to say they will continue to make their case with RERA for better control of setting service charges and their use. But they also realise that they cannot make any further delays on their 2020 dues.

“We are sure that RERA and its audit committees (which set the maintenance fund budget for each year) will scrutinize all costs for the 2021 cycle and come up with recommendations,” said one property investor. “Until now, everything was dictated by property management companies acting as proxies for developers.

“That must stop – Dubai’s real estate laws clearly state that developers need to maintain that distance once properties are handed over.”