Navigating Fujairah Real Estate: The Ultimate Guide to Jointly-Owned Property Ownership

Real Estate & Construction and Hotels & Leisure

Navigating Fujairah Real Estate: The Ultimate Guide to Jointly-Owned Property Ownership

Mohammed Kawasmi
Partner,
Real Estate

Raneem Salha
Trainee Solicitor,
Construction & Infrastructure

Law No. 3 of 2023, Regulating the Ownership of Jointly Owned Properties in the Emirate of Fujairah (the “Law No. 3”) ushers in a new era for stakeholders of new developments. Law No. 3 provides a comprehensive framework that will ensure smooth and equitable operations within the real estate sector in Fujairah. Fostering transparency, accountability, and fair dealings among developers, management entities, owners' associations, and individual owners, thereby enhancing trust and confidence in the real estate market. Law No. 3’s effect on the stakeholders of new developments in Fujairah will be explained in the following guide. What Law No. 3 coversLaw No. 3 begins by providing clear definitions for terms crucial to understanding its provisions, such as "developer," "jointly-owned property," and "common facilities." These definitions ensure consistency in interpretation and application throughout the law, establishing a common understanding among stakeholders. Under Law No. 3 Jointly-owned property (“JOP”) encompasses the building, its components, and associated features designated for collective use. It also encompasses the land on which the building stands and any land allocated for individual ownership within the property. Examples of JOP include units sold in a multi-unit building or units sold in hotels. Registration The Competent Authority will create a register of JOP’s, containing details such as land plots, units for sole ownership, members of the owners' association, building management regulations, project plans, management entities, and more. Stakeholders can request certificates and documents related to the property based on this register, which is accessible to all concerned parties. Developers must submit relevant documents, plans, and regulations to the Competent Authority within a specified timeframe upon completing construction, with possible extensions granted for valid reasons. Failure to comply may lead to the Competent Authority requesting documents from other entities, with the developer bearing associated costs. Additionally, the Competent Authority issues and updates maps of common parts, special common parts, and common facilities, in line with the provisions of the law.Clear boundaries and balanced rightsLaw No. 3 provides clarity on what shall be considered as common parts and facilities, developer owned areas, and components of the unit. This ensures clarity on shared responsibilities and usage rights. It also allows developers to designate private, commercial, or investment areas within projects and requires approval from the Competent Authority to ensure alignment with owners' rights. The effect is a balance between developer interests and property owner rights.

Ownership and disposition Developers of unsold units and owners of units maintain an undivided interest in the common parts, calculated based on the unit area's ratio to the total property area. Owners can legally sell, dispose of, or mortgage their units to licensed financial institutions, while also leasing under certain conditions, such as remaining liable for service and usage charges. Subdivision of jointly-owned units, must comply with building standards and obtain necessary approvals from the Competent Authority. Co-owners will have the first opportunity to purchase shares of units before external sales, subject to specific conditions and timelines. Furthermore, Law No. 3 categorises properties into Major Projects, Hotel Projects, and other Real Property Projects, assigning specific management responsibilities to developers, management entities, or specialized companies, with provisions for owners' association in each category. These regulations aim to ensure equitable ownership, transparent transactions, and effective management practices within JOP’s while protecting the interests of all stakeholders involved.Management, Governance and FinancialLaw No. 3 has provided clarity on management through providing rules for management of common facilities, how to deal with building regulations, and issuing bylaws. It has emphasised accountability and transparency in financial matters through establishing protocols for the collection and allocation of service and usage charges. It outlines the role of master developers, management entities, and the formation of the owners’ association as well as its role in managing common parts, facilities, and finances. Law No. 3 further emphasises financial accountability and transparency by outlining procedures for budget approval, deposits, and disbursement of funds. Overall Impact We strongly recommend that all developers and stakeholders familiarise themselves with the requirements of Law No. 3 and ensure that their projects comply with the regulations. For example, appointing an appropriate managing entity and/or ensuring registration with the Competent Authority. Al Tamimi and Company are well-versed with similar laws that have been issued in other emirates and have worked on helping developers and other stakeholders integrate and comply with these regulations within their projects.

For further information,
please contact Mohammed Kawasmi and Raneem Salha.

^{Published in}^{June - July 2024}