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Author: Khaled Said Fathy
In a significant development for Dubai’s real estate sector, the Dubai Rental Disputes Center has issued a new legal principle that clarifies the responsibility for service charge payments in jointly owned properties. This clarification is expected to greatly reduce disputes and promote transparency between developers, property owners, and purchasers.
Background
Under Law No. (6) of 2019 on Jointly Owned Property, both developers and property owners are legally obligated to contribute to the costs of maintaining and operating common areas within a property. However, confusion has frequently arisen in practice—particularly in cases where a property unit has been sold but not yet formally handed over to the purchaser. This ambiguity has led to recurring disputes over who is responsible for paying service charges during the interim period.
New Legal Principle Introduced
The General Authority for the Unification of Principles at the Dubai Rental Disputes Center has now established a binding principle that provides much-needed clarity:
Purchasers registered in the initial property register are responsible for paying service charges upon completion of the unit, regardless of whether the formal handover has occurred. In cases of delayed payment, the liability remains with the registered purchaser, ensuring uninterrupted collection of service charges.
This legal position safeguards the financial continuity required for the ongoing maintenance and operation of common facilities—such as security, cleaning, landscaping, and utilities—thereby preserving the long-term quality and value of jointly owned developments.
Impact on the Real Estate Market
The introduction of this principle represents a pivotal step toward reinforcing investor confidence and financial discipline across Dubai’s property sector. Key implications include:- Increased financial sustainability for building operations through timely service charge collections.
- Reduced legal ambiguity, helping to preempt disputes between developers and owners.
- Enhanced protection for compliant owners, ensuring they are not unfairly burdened by others’ non-payment.
- A more predictable legal and regulatory environment, which supports continued growth in real estate investment and development.
The sheer scale of activity at the Rental Disputes Center underscores the importance of this move. In 2024 alone, the Center executed 49,817 enforcement files related to jointly owned property disputes—demonstrating both the size of the market and the urgent need for legal clarity in this area.
Key Takeaway
This landmark legal clarification marks a proactive stride by Dubai authorities to fortify governance in the real estate sector. By clearly defining service charge obligations from the point of unit completion—regardless of handover status—Dubai is creating a fairer, more transparent, and investor-friendly property landscape.
For developers, owners, and purchasers alike, this principle brings greater certainty and aligns with Dubai’s broader vision of a robust, well-regulated, and globally attractive real estate market.
At BDO, we regularly advise developers, property owners, and investors on regulatory compliance, ownership structuring, and dispute resolution under UAE property laws.
If you would like to understand how this recent clarification on service charge obligations may affect your rights or responsibilities, please reach out to our Real Estate and Dispute Resolution team for tailored legal advice.
Note: This Legal Update / Newsletter is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.