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.
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.
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.
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.