5 Things You Need to Know About Homeowners Association Management

When you buy an apartment or a townhouse in a planned development or in a gated community, you become a part of the homeowners association and are required to pay an annual service fee for the maintenance of the common areas of the building or the community. Common areas include lobby, swimming pool, gymnasium or any other shared areas, which are not part of your apartment.

All owners within a Jointly Owned Property are called “Owners Association”; and are required to be a separate legal entity responsible for upkeep of all the common areas and facilities within Jointly Owned Property.

Association Management

An Owners Association Manager/Management Company is typically appointed at the first General Assembly. The appointed manager is required to be licensed and registered by Real Estate Regulatory Agency (RERA). The Association Manager’s statutory function is to perform the day-to-day running of the administrative, financial and secretarial aspects of the Owners Association, in addition to arranging the maintenance and upkeep of the common areas and facilities owned by the Owners Association.

Annual Fees 

The annual fees or the service charges for a community is calculated keeping in mind various aspects; a complete list is prepared with all the expenditures for the community, such as: Facility Management fees, OA Management Fees, cost for utilities (DEWA and chiller costs), Master Community levy, payments to any other service providers, reserve fund and additional amounts (variables) that may be required for contingencies, consumables and community improvements. Once the final amount is calculated, it is then divided by the total saleable area (sq. ft.) The prepared budget for the year is discussed and approved by the Board Members and is presented to RERA along will all supporting documents. Following RERA’s approval the service fee invoices are then sent to the owners, which is based on their unit area (sq. ft.).

At the end of the community’s financial year an audit is conducted on the service charge account to ascertain surplus/deficit. In case of surplus, credit note is issued to owners (based on their area) and if deficit is experienced, special levy may be invoiced for the amount in deficit. All decisions are made following discussion and feedback from the Board.

Rules and Regulations

Not many residents understand the rules and regulations before they buy or rent a property. It is important to be able to live with policies on pets, parking, collection, rental, noise and architectural guidelines. Every owner’s association has set guidelines to keep the community standards. Make sure you are aware of all the policies and guidelines related to the community.

Duties of Owners Association

Owners Association main purpose is to maintain the community standards. They are also responsible for property inspection, maintenance of common areas, development of policies and procedures, maintenance supervision and compliance with Government rules and regulations.

Environment Practices

The developer usually sets the rules for the community; these rules are then passed on to the community management for their reference and amendments based on approval from the owners. In case rules are not followed, penalties may be applicable.

Introduction to Owners Association, Strata Law and the Role of an Association Manager

There are many investors in Dubai who are not aware of Owner Association or Strata Laws but they play a vital role in how your building is managed and how the finances are used to manage the building. As a property owner, you do have a say in how your building is managed and KAIZEN firmly believes that all owners should be given the information in order to make informed decisions. This is a brief introduction to Owners Association, Strata Law and the role of an Association Manager.

A Home Owners Association (HOA) is an organization of homeowners of a particular subdivision, condominium or planned unit development. The purpose of a homeowners association is to provide a common basis for preserving maintaining and enhancing their homes and property. The associations provide services, regulate activities, levy assessments, and impose fines. Usually, each member of a homeowners association pays assessments also known as service fees. Those assessments or dues are used to pay for expenses that arise from having and maintaining common property.

The Strata Law’s core principle is the division of property into privately owned units and jointly owned common areas, which are managed by an Owners Association. This is similar to other strata laws around the world. Carefully considered and drafted Strata laws create a transparent structure for the management of the common areas and facilities and the administration generally of subdivided buildings or developments. This is primarily achieved through the use of an incorporated Owners Association to represent the owners’ collective interest.

The Association Manager of a community/building involves various dynamics and is required to take over its management. Management of a building is similar to that of managing a corporate organization. The management of a jointly owned property differs to that of a singular owner property in the way in which the Owners Association must react to situations, make decisions, issue instructions and appoint service providers. The role of the Association Manager requires a high degree of responsibility and experience, it is the Association Manager that must guide the Owners Association on matters concerning the Jointly Owned Property Law, supervision of the day to day operations and manage the finances of the Owners Association.

Careful consideration must be taken when seeking a company to take over the Owner Association Management for your building and in the long run, this decision could save a large amount of money that is better used to improve the building which ultimately will increase the value; both in terms of monetary value and improvement to the quality of living.

Success Story – KAIZEN Handover of Fortunato

Fortunato is a new, 326-unit development comprised of residential apartments and townhouses in Jumeirah Village Circle, Dubai. KAIZEN was appointed in 2015 to manage the administration and handover of the project from the developer to the owners.

The Process

The first step for KAIZEN was the implementation of the SOPs (Standard Operating Procedures) to facilitate successful and hassle-free handover to the owners. In the first stage, notices were sent to all the owners outlining the guidelines and requirements for the handover. KAIZEN’s goal was to ensure a quick and straightforward process for the owners in which all processes and documentation adhered to governmental rules and regulations whilst also meeting the developer’s requirements.

Kaizen requested that the documents required for handover were provided two weeks in advance. The handover appointments were scheduled to take place in the office in Bay Square, Business Bay. (This has ample parking and was convenient for all parties.)

A dedicated customer service number was created so that owners could contact KAIZEN directly with any questions or concerns throughout the handover process. KAIZEN also implemented a payment-notification system that was sent to the owners every two days with the list of receivables. This allowed owners to see the status of payments made to the developer.

The Challenge

One of the biggest challenges was contacting the owners as this could delay procedures. KAIZEN successfully implemented a system to find the owners using different social networking websites. They also approached the banks to obtain contact information for owners who had mortgages.

The Outcome

During a period of less than two months, 199 units were successfully handed over. KAIZEN’s ongoing communication, ease of access and provision of additional information proved to be very helpful to the community. Examples of this included: information packs allowing owners to see an itemized list of fees, complete move-in process details, obtaining DEWA connection, snag report, and making available point-of-contact detail for any follow-up needs. The call center number also provided an added layer of support and comfort for owners contributing to the overall success of the process.

Why KAIZEN?

As a UAE-based company, KAIZEN has years of experience working with local authorities and a strong understanding of the laws and regulations. In addition, KAIZEN has the expertise and experience to anticipate the needs and requirements of developers and owners to ensure smooth handover processes in the fastest possible time.

 

For more information on Owners Association Service Please Contact our Business Development Manager George Malakos at 00971 55 872 1069

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What is Volumetric Subdivision?

Volumetric Subdivision (VSD) is a hot topic in UAE for Owners Association Management companies. After the introduction of Dubai Strata Law or Jointly Owned Property Law in 2008, VSD has become important for property owners to fairly distribute the common elements of mixed use development and the related service charges.

Volumetric Subdivision is a division of building and the land where it is situated. The purpose of subdivision of a building is to define each element separately such as units and common areas. Units can be commercial offices, residential apartments or retails shops. Common areas include everything that is not part of the units, for example elevators, stairways, lobby, swimming pool, gymnasium, roof, garden, parking and any other commonly used elements.

Why Volumetric Subdivision is Needed?

The need for VSD arises when there are multiple owners of units within a mixed used developments and the cost of each common element like stairways, lobby, parking, facade, swimming pool or any other common area is shared amongst the owners under a contract called “ Building Management Statement “. VSD helps in segregating the costs associated with common areas because service fee or maintenance charges may be different for commercial, residential and retail units.  

It is no surprise that there are frequent disputes between Owners related to service charges.  For example, in a development comprised of commercial and residential units,  a concern may arise from a retail unit owner that feels he should not be required to pay for service charges related to swimming pool, gym, or an elevator which is used solely for residential owners. VSD is an ideal solution for this because it allows the share of common areas to be divided in a more accurate manner and the cost to be distributed more fairly.

What is a Building Management Statement?

When there are multiple uses within the same building, it is useful to create a Building Management Statement. The best practice is to annex the Building Management Statement to JOPD (Jointly Owned Property Declaration).  Building Management Statement is a contract between commercial and residential units defining common elements in the building. There is usually a contract in place for each unit of the subdivided building relating to its management and use (building management statement). There will be two sub-owner associations, one for commercial and one for residential that comes under one main owners association that has board members from each of the sub-owners association . Each of the owner association works independently under the development JOPD and Building Management statement. The complete process is known as VSD.

Dubai Land Department has defined directions for JOPD, which lists all the legal procedures to follow for jointly owned properties.

KAIZEN Offers Volumetric Subdivision as Part of OA Management Service

VSD is one of the unique services that we offer as part of our owners association management to resolve common disputes arising due to service charges.

For more information on Owners Association Service Please Contact our Business Development Manager George Malakos at 00971 55 872 1069

 

 

 

 

 

Source: https://www.dubailand.gov.ae/English/rules/jointlyownedproperty#/2

Is Owners Association Management Right for your Property?

Property development and management can be challenging in the United Arab Emirates and Dubai in specific. Over the last several decades, the UAE and, more specifically, Dubai have experienced explosive growth across a variety of sectors including the real estate sector. As such the government in the UAE has undertaken changes to help manage this explosive growth and the consequences therein. This has lead to an ever evolving sea of regulatory changes. In addition to these changes, the every changing demands of the real estate market place have placed a strain on developers who manage their own properties. This is especially true when navigating the challenges relating to Owners Association Management.

Regulatory Framework

Since 2007, the real estate market in the UAE underwent some changes across the board, to help provide stability and reliability for developers to successfully develop, promote and manage their properties in accordance to the laws and established practices in the UAE. This included the creation of the RERA, the Real Estate Regulatory Agency. The RERA has provided the necessary framework for regulating companies, brokers and Owner Associations. Under the RERA and the existing Strata Law, the burden on developers to comply with the regulations, in addition to managing their non-residential properties, has increased. While this regulatory framework has increased the confidence and stability of the overall real estate market, for those who consistently deal with the various agencies, associations, and any contractual parties, this has created a challenge to keep all manner of compliance up to date.

Owners Associations

Beyond the regulatory environment, Owner associations add a layer of contact and control to the property. They provide an essential service to the tenants and clients within the regulatory boundaries and framework of the Strata Law and subsequent regulations provided by the RERA. As such, this layer becomes a management opportunity to engage all stakeholders to the betterment of the property and thus producing a higher return on the investment. However, this creates a setting where more resources are employed to contend directly with said layer and therefore removes those resources from other investment opportunities or practices.

Important Owners Association Management

By engaging the Owner Association layer with a corresponding layer of Owner Association Management, diverted resource allotment, a demanding regulatory framework and the trials and tribulations of dealing with Owner Associations can be mitigated to the point of ensuring high returns while improving satisfaction among the participants. The advantages of utilizing Owner Association Management, via a firm experienced in said management are:

  • Centralized Office Management
  • Insurance Practices and Compliance Regimes
  • Meeting HOA Participation Requirements
  • Direct and Effective Property Management
  • All Regulatory Compliance Updates
  • Efficient Monies Management of Credit/Debt Systems
  • And More

It is important to recognize that any property with existing or future Owner Association requirements can benefit by applying a well layered, Owners Association Management. By taking advantage of said layer, issues, concerns and participation elements are satisfied to the betterment of all concerned.

All of the aforementioned concerns and resolutions are applicable to the real estate and property environment in the UAE and Dubai, in specific. Given the unique nature of this environment and the unparalleled opportunities for property owners and property investors, it seems only logical to take the added step of including Owners Association Management. While there are Owners Association Management companies, few have the experience and the full service capability as Kaizen. Their approach to providing targeted and strategic services, tailored to the client, has allowed this company the opportunity to navigate the pitfalls and successes of the real estate market and respond with stellar results. As the real estate climate in the UAE continues to return to excellent growth patterns, Kaizen can help any developer, or property owner or property investor get the best return and the best long term results.