The Owners Associations (OA) is the heart of a jointly owned property; its function is to manage, operate and maintain the common areas of the property. The primary means to accomplish this is through the collection of service charges from Unit Owners. Here in Dubai, this is no easy task. Some Unit Owners don’t understand the necessity of paying the charges, and some are simply short on money. So, what are Owners Associations (or Developers, if no OA has been registered) to do with these Unit Owners who are not making payments?

Owners Associations may file a lawsuit against the Unit Owner for the unpaid amount, and also impose a penalty of 12% per annum calculated on a daily basis, until the outstanding amount is paid in full.

But what is more commonly seen in Dubai are actions that should not be taken. For example, the posting of the “Name and Shame” list, with the Unit Owners’ names or unit numbers, in the lobby, the lifts and other common areas. This is a violation of UAE privacy laws.

Also, utilities, especially air conditioning, may not be disconnected for units that have unpaid service charges. This is illegal. A police report may be filed, and if the occupant of the unit is a Tenant, he may file a claim in Dubai Land Department’s Rental Dispute Settlement Center against both the Landlord and Owners Association.

Unfortunately, we are still seeing OA’s/Developers cutting off the AC for outstanding service charges, even as recently as March of this year. Many of those affected are Unit Owners who have just purchased the unit. They have been told that the AC has been disconnected due to outstanding service charges that have not been paid by the previous owner.

Current owners are confused as to why they are liable for unpaid amounts owed by someone else. This is due to the fact that unpaid service charges create a lien that goes against the property itself, and not against the Unit Owner. Prior to transfer of the property to the Buyer, a No Objection Certificate (NOC) must be obtained from the Developer, stating that there are no outstanding amounts owed by the Seller.

However, there are times where unpaid amounts have been missed. If this is the case, the current Unit Owner will be liable to pay those amounts. Therefore, it is extremely important for Buyers (and their brokers) to do their due diligence and confirm that there are no outstanding service charges prior to transfer.

Disclaimer: This blog is intended for informational purposes only, and should not be considered legal advice, nor does it reflect the opinions of any government agency. Majdel Musa will not be held liable for the use, non-use or misapplication of this information, any lost profits, personal or business interruptions, or any other loss.