Owners Associations and Service Charges in Dubai

In Dubai, the owners association's job is now split in two. Under Law No. 6 of 2019, a management entity, which is the developer or a RERA-recognised management company, runs the building, its utility services and its service charges, and an owners committee of resident owners checks its work. Shared utility services are paid for through the service charge.

Most owners ignore this until a bill arrives that they disagree with. This guide explains who does what, what the law counts as utility services, how service charges are set, how to challenge one, and what happens if you do not pay.

What is an owners association in Dubai today?

Owners associations were set up under Law No. 27 of 2007. Law No. 6 of 2019 on jointly owned real property repealed that law (Article 51) and transferred the associations' rights and obligations to management entities (Article 49). People still say "owners association" or "OA", and many statements still use the term, but the roles today are:

What are utility services in a jointly owned building?

The law defines utility services widely: water, gas, electricity, air conditioning, telephone, computer, television and telecommunication cables, sewerage, rainwater drainage, garbage and waste removal, mail and parcel delivery, and horticulture, plus any systems that improve the common facilities or common parts.

Utility services that serve the common parts or other units are not part of your unit (Article 9). They belong to the building and are run by the management entity, and their running costs come out of the service charge. Your own unit's consumption is different: electricity and water are billed to the occupant, and cooling is usually billed separately too, though some buildings include it in the service charge, so check.

What does the management company do?

• Manages, operates, maintains and repairs the common parts, such as lifts, lobbies, pools, gyms and car parks.
• Collects service charges and deposits them, within 7 working days, into a dedicated service charge account for the building at a bank recognised by RERA (Article 30).
• Keeps a cash reserve for emergencies and equipment replacement in a separate account, which cannot be spent without RERA approval except in critical emergencies.
• Enforces the building management regulation, the rules every owner and tenant must follow, including any rules on short-term letting.

Until RERA appoints a management company, the developer manages the building and must keep owners' service charges in the building's account. Service charge accounts are monitored through the DLD's Mollak system; see Mollak explained.

What does the owners committee do?

An owners committee is formed once at least 10% of the units are registered in their owners' names. It has up to 9 members appointed by RERA, who must be owners living in the building and up to date with their service charges, and it meets every three months (Articles 22 and 23). Its duties (Article 24) include:

• reviewing the annual maintenance budgets and asking for the building's financial reports;
• checking that the management entity maintains the common parts properly;
• receiving owners' and tenants' complaints and passing them to the management entity, then to RERA if they are not dealt with within 14 days; and
• for buildings that are not major or hotel projects, asking RERA to replace the management company.

The committee advises and escalates. It does not set the service charge itself.

How are service charges calculated and approved?

Each owner pays a share of the annual service charge based on their unit's area, as recorded in the Real Property Register, compared with the total area of the building (Article 25). The developer pays the share for unsold units. No charge can be collected without RERA approval, and RERA approves a budget only after a certified audit firm has approved it (Article 27).

The approved rates per square foot for each project are published in the DLD's Service Charge Index. See our guide to the Service Charge Index.

How do you read a service charge statement?

A building with a small reserve fund is not necessarily cheaper. If the reserve cannot cover an emergency, the DLD can, with RERA's approval, ask owners to pay for it directly (Article 30).

How can you challenge a service charge?

1. Ask the management company for the RERA-approved budget and the breakdown.
2. Compare the rate per square foot with the Service Charge Index and with similar buildings nearby.
3. Raise it with the owners committee, which reviews the budgets.
4. If the management entity does not deal with the complaint within 14 days, the committee can take it to RERA.
5. If RERA or the DLD makes a decision against you, you can file a written grievance with the DLD Director General within 30 days (Article 46).

What happens if you do not pay service charges?

You cannot refuse to pay RERA-approved charges, or give up your share of the common parts to avoid them (Article 28). The management entity has a lien on the unit, and the unit cannot be sold until the charges are paid (Article 32), so the developer will not issue the No Objection Certificate needed for a sale. See the NOC explained and what happens on transfer day.

The management entity must first send a written notice giving 30 days to pay. After that, the claim can be enforced by the execution judge at the Rental Disputes Settlement Centre, who can order the unit sold at public auction. The management entity cannot, though, stop you using your unit or the common facilities to force payment outside these procedures (Article 29).

If you let the unit, the service charge stays your responsibility unless the lease says otherwise, and you remain liable if your tenant does not pay it (Article 16).

What should you check before you buy in a building?

Ask for the current rate per square foot and check it against the Service Charge Index, ask whether a reserve fund exists and how much it holds, whether any special levy is planned, and whether an owners committee has been formed. Our guide to service charges sets out the normal ranges, and how to check service charges before you buy walks through the checks.

Ask us for the service charge history on a specific building before you commit.