Joint Property Management Companies in Dubai – Procedures for Replacement

In accordance with Law No. (4) of 2019 Concerning the Real Estate Regulatory Agency (RERA) and Law No. (6) of 2019 Concerning Joint Property Ownership in the Emirate of Dubai, RERA issues the following guidelines regarding the procedures for requesting the replacement of third-class joint property management companies:

1. Filing Complaints

1. Unit owners must submit any complaints regarding the management of facilities and common areas in joint properties to the Owners Committee registered with RERA.

2. Addressing Complaints

1. The Owners Committee will address the management company and inform them of the details of the complaint or observations. The management company must:
   • Respond to the complaint, observations, or any inquiries from the Owners Committee in accordance with the regulations and procedures in force at RERA.
   • If requested by the Owners Committee, rectify the situation within 14 days of notification. The management company must inform the Owners Committee of the rectification procedures.

3. Action by the Owners Committee

1. If the management company fails to rectify the situation within 14 days of notification by the Owners Committee, the Owners Committee will take the following actions:
   • Determine the required actions to rectify the situation, including:
     • Technical inspection
     • Financial audit
     • Both technical inspection and financial audit
   • If the Committee chooses a technical inspection, they will select a property inspection company licensed by RERA to conduct the inspection and issue a technical report.
   • If the Committee chooses a financial audit, they will select an auditor accredited by RERA to conduct the audit and issue a financial audit report.
   • The Owners Committee will select the inspection company or auditor (or both), agree on the costs and expenses, and define the scope of work and all terms and obligations in the agreement.

4. Management Company’s Obligations

1. The management company must sign the agreements with the property inspection company and/or auditor selected by the Owners Committee within 5 business days of being notified by the Committee.

5. Costs and Expenses

1. If the Owners Committee requests the appointment of a property inspection company and/or auditor, the associated costs and expenses will be deducted from the service fee or usage fee account.

6. Obligations of the Property Inspection Company

1. Comply with the applicable regulations and procedures.
2. Ensure no conflict of interest exists between the inspection company, the management company, and the Owners Committee, and act professionally and impartially.
3. Review the contracts and agreements concluded between the management company and service providers for the joint property.
4. Issue a technical report detailing the following:
   • Any defects in the common or structural parts of the joint property and the extent of their risk.
   • The efficiency of the management company in managing the common parts and shared facilities in the joint property.
   • The efficiency of the management company in managing and monitoring the performance of service providers for the joint property.
   • Identifying the party responsible for causing the damages identified in the technical report.
   • Defining the repair and maintenance work for the defects identified in the technical report.
   • Determining the costs and expenses associated with the repair work.
   • Determining the proposed timeframe for carrying out all repairs in the joint property.
   • Identifying the errors and negative practices followed by the management company in managing, operating, maintaining, and repairing the common parts with regard to administrative and technical matters.
   • If the management company is found to be inefficient, ineffective, or incapable of managing and maintaining the common parts, a bank guarantee covering the identified costs must be determined, and the management company must submit the bank guarantee to RERA in accordance with the applicable procedures.
   • Submit a copy of the technical report in Arabic to RERA and the Owners Committee. The English language version is optional at the request of the Committee.

7. Obligations of the Auditor

1. Comply with the applicable regulations and procedures.
2. Ensure no conflict of interest exists between the auditor, the management company, and the Owners Committee, and act professionally and impartially.
3. Follow the International Accounting Standards and the standards for the tasks specified by the Owners Committee.
4. Review the contracts and agreements concluded between the management company and service providers for the joint property.
5. Issue a financial audit report that includes, but is not limited to, the following information:
   • The financial observations identified in the report and the extent of their risk.
   • The efficiency of the management company in financial matters.
   • Verifying the management company’s compliance with maintaining financial records in accordance with applicable procedures.
   • The efficiency of the management company in applying risk management policies and procedures.
   • The efficiency of the management company in applying the conflict of interest policy and tender procedures.
   • Identifying the observations and recommendations that the management company must rectify and include in the financial report.
   • Determining the proposed timeframe for making the corrections contained in the financial report.
   • Identifying the errors and negative practices followed by the management company in managing, operating, maintaining, and repairing the common parts with regard to administrative and financial matters.
   • A statement of the extent of the management company’s compliance with the service fee and usage fee budget or any other fees approved by RERA.
   • Submit a copy of the financial audit report in Arabic to RERA and the Owners Committee. The English language version is optional at the request of the Committee.

8. Impartiality of Reports

1. The property inspection company and/or the accredited auditor must be neutral in their work as a third party and not issue any draft reports for review by the Owners Committee or the management company. The final reports must be submitted directly to RERA, who will then provide a copy to the Owners Committee and the management company.

9. Review of Reports

1. The Owners Committee will review the final reports issued by the property inspection companies and/or the accredited auditors.

10. Management Company’s Failure

1. If the management company is found to be negligent or inefficient based on the final reports, the Owners Committee will notify the management company to rectify the situation, provided that the Committee adheres to the following:
   • If there are financial costs within the approved budgets or additional costs for maintenance work:
     • Approve the financial costs for the required maintenance work if not previously included in the budget.
     • Use the reserve fund, subject to RERA’s approval.
   • If the management company is found to be at fault, the management company will bear the costs within the guarantee amount deposited by the management company. The warning period for rectifying the situation will be based on the timeframe specified in the report.

11. Failure to Rectify

1. If the management company fails to rectify the situation, the Owners Committee will submit a request to RERA to issue a written warning to the management company to carry out the repair and maintenance work, along with the received reports supporting this request, specifying the start and end times for the work in accordance with the timeframe specified in the attached reports.

12. RERA’s Review

1. RERA will review the request submitted by the Owners Committee and verify the attached final reports issued by techincal and financial auditor