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The UAE’s property market has matured, and late as it might be, a law making the formation of a homeowners association (HOA) mandatory came into effect only a few years ago.
Although it was long overdue, stakeholders did not jump on the bandwagon as eagerly as expected. Both developers and homeowners themselves dragged their feet, missed deadlines and decried their lack of comprehension about the rights and responsibilities of parties concerned. But it is really not nuclear physics. There is a clear reason how it is formed and what it does.
An HOA is a legal entity consisting of the homeowners of a specific development and an elected board who represents them. Its duties consist of narrowing down on property maintenance companies and appointing the one that is in the best interest of the community both in terms of budget and services rendered.
The association collects monthly fees from homeowners and ensures the upkeep of common areas. From time to time, they can charge additional fees for additional work. They are also in a position to fine a homeowner for breach of terms, conditions and rules in the use of common areas contained in the pre-defined governing document. An HOA has a bank account through which it conducts its transactions.
To create an HOA, the developer of the property has to first register the organization with the real estate authority. Then an interim homeowners association is formed that is responsible for transitioning the maintenance and upkeep responsibilities of the development from the developer to the association. Subsequently, the actual HOA is formed and a board of governors is democratically elected. The developer, after an independent audit, transfers unused service and maintenance fees to the new association.
In a country where homeowners feel that they are charged service fees arbitrarily, the formation of an HOA went a long way in educating them about the actual costs associated with the maintenance of a property. They have also understood that the appropriate upkeep of common areas affects the value of their property.
• An HOA is a legally recognized entity responsible for the upkeep of a property
• It consists of homeowners of a specific development and an elected board
• It collects monthly dues to be used in the maintenance and repair of property
Source: Bushra Hameduddin, Special to Properties
The writer is a freelancer