New Ruling on Service Charges by the Dubai Rental Disputes Center
The Dubai Rental Disputes Center (RDC) has recently made headlines with its new ruling that places the financial responsibility for service charges squarely upon unit holders, even if these buyers have not formally taken possession of their properties. This legal development seeks to address persistent disagreements between property developers and owners regarding the costs associated with maintaining and operating shared facilities in residential buildings.
Background of the Ruling
This ruling was prompted by a unique situation where properties sold on an installment basis were completed but not yet registered in the names of buyers. The developers often held back handover due to unpaid dues, leading to ambiguity about whether the financial burden of service charges should fall on the buyer or the developer in these scenarios.
Given the rise in such cases, the question loomed large—who is responsible for the service fees in instances where unit buyers are not officially recognized as owners? This ambiguity not only creates administrative confusion but also hinders the continuous maintenance of shared facilities essential for residents.
Legal Framework and Interpretation
To clarify this legal uncertainty, the RDC referred the matter to the General Authority for Unifying Principles. Through their assessment, they determined that once a project’s completion is reached, the buyer listed in the preliminary register of a residential unit becomes liable for service charges. This obligation exists even if the final transfer of ownership has not yet occurred. The ruling effectively means that once the construction is completed, financial responsibilities kick in, safeguarding developers and existing property owners from bearing the operational costs of common amenities.
This interpretation is backed by Law No. (6) of 2019 on Jointly Owned Properties. The law requires that service fees be allocated for the management, operation, and upkeep of building facilities. Moreover, it stipulates that costs related to unsold units must be managed responsibly, directing funds to management companies for uninterrupted service provision.
Official Commentary
Judge Abdulqader Mousa Mohammed, the President of the Rental Disputes Center, emphasized the ruling’s significance. He stated that this clarification addresses a legislative gap and aligns with the law’s foundational aims of maintaining the stability of jointly owned properties. By holding buyers accountable for service charges, the RDC aims to ensure that vital building services remain uninterrupted.
He remarked, “Holding defaulting buyers accountable for service charges aligns with the spirit of the legislation. By doing so, we have formed a clear judicial precedent that eliminates confusion and reaffirms our commitment to justice in dispute resolution.”
Statistics on Disputes
The RDC also shared noteworthy statistics highlighting its efficiency and responsiveness to cases concerning jointly owned properties. In 2024 alone, the Center successfully closed 49,817 execution files. During the second quarter, the RDC finalized 443 reconciliation agreements, amounting to Dhs 190.7 million, with an impressive average settlement period of just six days per case.
This proactive approach not only addresses disputes effectively but also fosters a sense of trust and accountability within the property market in Dubai.
Conclusion
As the Dubai Rental Disputes Center continues to implement new rulings and improve dispute resolution mechanisms, this latest decision promises to simplify the complex landscape of property ownership. Buyers can now navigate their responsibilities more clearly, while developers can better manage operational costs, ensuring that all parties are informed, engaged, and compliant with legal obligations.
In this evolving landscape, it remains crucial for buyers and developers alike to stay updated with the latest legal developments, as these changes can significantly impact ownership experiences and responsibilities in the competitive Dubai real estate market.
