Rera Developers will have to setup an IOA before claiming fees for services after the 1st year
A new circular published on March 10 by RERA, the regulatory arm of Dubai Land Department (DLD) states that Developers in Dubai will not be allowed to manage their project if complaints of negligence or mismanagement are received against them in the first year of management. In such a case, the developer’s power to manage the project will be withdrawn and an interim owners association (IOA) will have to be formed.
A number of developers, in fact, have been managing their projects for a number of years, having not registered the IOAs despite handing over their projects to unit owners.
Experts say managing their projects allows them to get a recurring income from these towers, mostly in form of management fees.
Mandatory to set up IOA
The circular further states that it will be mandatory for developers to setup an IOA before claiming any fees for services after the end of the first year of operation in accordance with the procedures of RERA. Based on Law No. 27 of 2007 which focuses on jointly owned property in Dubai, developers will have to submit a financial report to RERA on all the expenses of service fees of previous years mentions the circular.
The land department has registered 385 IOAs to date. However, they are not sure when the legal status will be accorded to these IOAs. RERA has already linked a memorandum of understanding with Emirates NBD for opening Escrow accounts for home owners’ associations but more procedures are to be completed before granting of legal status to IOAs. In majority of the cases, service charges are still being collected in bank accounts managed by developers, but a few developers have got board members of IOAs as co-signatories.