Recent Real Estate Dispute Resolution Committee's Decision - Service fees must be based on a clear and agreed-upon framework

Real Estate / UAE

Recent Real Estate Dispute Resolution Committee's Decision- Service fees must be based on a clear and agreed-upon framework

Ammar Haykal
Partner,
Dispute Resolution

Nasser Yahia
Senior Counsel,
Dispute Resolution

IntroductionThe Real Estate Dispute Resolution Committee's Decision 79 of 2023 dated 16 May 2024 addresses a significant and recent dispute between a real estate financier (Claimant) and a developer (the Defendant). The decision revolves around the imposition of service fees on properties owned by the real estate financier. This article analyses the committee's decision and considers the key legal principles set out in this decision.Background of the CaseThe Claimant filed a complaint against the Defendant concerning service fees levied on 44 plots of land. The claimant argued that the defendant had imposed these fees without any prior agreement or mention in the sales contracts. The complaint was reviewed by the Real Estate Dispute Resolution Committee, which found the complaint valid and subsequently canceled the service fee notifications. Service fees or usage charges must be based on a clear and agreed-upon frameworkThe Committee decision is primarily based on the provisions of Law No. 6 of 2019 concerning the ownership of jointly owned properties in the Emirate of Dubai (Jointly Owned Property Law). The Committee noted that there was no signed agreement between the Claimant and the Defendant regarding the service fees. The absence of such an agreement was a critical factor in the committee's decision to cancel the service fee notifications. The decision emphasized that service fees must be explicitly mentioned in the sales contracts or agreed upon separately. The Committee also considered the applicability of the Jointly Owned Property Law. The decision reiterated that the properties in question are subject to the provisions of the Jointly Owned Property Law. This law mandates that any service fees or usage charges must be based on a clear and agreed-upon framework between the property owner and the developer. In this case, the lack of such an agreement invalidated the service fee claims made by the developer.The Committee's DecisionThe Real Estate Dispute Resolution Committee concluded that the Claimant’s complaint was valid. The committee decided to cancel the service fee notifications issued by the developer.

The absence of such an agreement was a critical factor in the committee's decision to cancel the service fee notifications.

Implications of the DecisionThis decision sets a significant precedent in the realm of real estate disputes in Dubai. It underscores the importance of having clear, written agreements regarding service fees and other charges related to jointly owned properties. The decision also highlights the legal recourse available to property owners under Law No. 6 of 2019, reinforcing their rights to contest unjustified claims. ConclusionThe absence of a signed agreement regarding service fees was pivotal in the Real Estate Dispute Resolution Committee's decision to cancel the service fee notifications issued to the Claimant. This case reinforces the necessity for clear, documented agreements between developers and property owners concerning any fees or charges, ensuring that such obligations are legally enforceable.

For further information,
please contact Nasser Yahia and Ammar Haykal.

^{Published in}^{December 2024}