Dubai's Rental Disputes Center Establishes New Legal Principle For Service Fees

In a significant development for Dubai's real estate sector, the Rental Disputes Center has unveiled a new legal principle to address the ongoing debate between property developers and owners regarding the payment of service fees for shared facilities.

This move comes as a resolution to the frequent disputes over who is responsible for covering the costs associated with the operation and maintenance of communal building amenities.

This ruling mandates that property owners must settle service charges even without officially taking possession of their units, especially when the handover delay is the buyer's fault. This decision draws from Law No. (6) of 2019, governing Jointly Owned Properties, which dictates the allocation of these fees for the management, operation, and upkeep of buildings.

The law specifies that for unsold units, the financial responsibility falls on either the developer or the owner, with the collected funds aimed at ensuring continuous service provision and the efficient maintenance of the property.

The enactment of this principle stems from the need to clarify a previously ambiguous situation concerning units sold on installment plans but not yet registered in the buyers' names. Developments were often hesitant to hand over these units due to unpaid dues, leading to confusion over who should bear the service fees. The General Authority for Unifying Principles within the Center took on the task of resolving this uncertainty.

After a thorough examination of related legal texts, the Authority concluded that the buyer listed in the unit's preliminary register should cover the service charges from the project's completion date or from when they fall behind on payments, regardless of whether the final ownership has been transferred. This decision ensures the uninterrupted operation of facilities and protects both developers and compliant owners from undue financial strain.

Judge Abdulqader Mousa Mohammed, president of the rental disputes center, stated, "The General Authority has addressed this legislative gap by interpreting the law's underlying intent to secure the stability of jointly owned properties and guarantee the uninterrupted provision of essential services.

"Holding defaulting buyers accountable for service charges aligns with the spirit of the legislation. By doing so, we have established a clear judicial precedent that eliminates confusion, strengthens practical approach, and reaffirms our commitment to justice and fair dispute resolution."

This legal principle not only aims to clarify financial responsibilities among property stakeholders but also strengthens the regulatory framework within Dubai's property sector. It ensures the continued provision of crucial services in buildings, safeguards the interests of law-abiding owners, and closes loopholes that could potentially harm the community.

Moreover, it highlights the Rental Disputes Center's vital role in offering clear legislative interpretations and adapting judicial processes to align with the evolving needs of the real estate market, thereby enhancing Dubai's appeal as a top global investment hub.

In a related effort to bolster the sustainability of jointly owned properties, the center has effectively closed 49,817 execution files concerning joint ownership in 2024. Coinciding with this achievement, the introduction of the self-execution service for service fee claims represents a significant advancement.

This innovative service allows property management companies to submit claims with greater ease, promoting consistent service delivery and improving the overall effectiveness of building management.

By establishing a clear judicial precedent and offering streamlined processes for claim submissions, the Dubai Rental Disputes Center underscores its dedication to ensuring justice and efficient dispute resolution in the real estate sector.

This approach not only reinforces confidence in the city's property market but also supports the ongoing provision of essential services, contributing to the well-being of the community as a whole.