Several apartment buildings in Dubai are facing a shortage of maintenance cash because property owners have failed to pay service fees, reported The National on Sunday.

The full extent of the default rate, which has reached 75 per cent in some developments, is only coming to light now as developers hand over building management responsibilities to homeowner associations under the recently enacted strata law.

It means that the new homeowner groups could be saddled with debt as soon as they start taking over the management of their buildings, it reported.

For example, to replace a basic chiller in a tower building costs up to Dh3 million – and if there is no reserve fund in place because of service charge defaults, owners would have to foot the entire bill when the work was done.

“Service fee arrears is a big issue in many buildings,” said Gary Bugden, the executive chairman of PRDnationwide, a property services company. “A lot of people just aren’t paying.”
But homeowner associations, once they are set up, will have the power to recover service fee arrears.

Under the strata law, they will have the right to seek an order from the Dubai Court to sell the properties of those who have defaulted. Developers have until November to hand over complete control to the associations.

Emirates Business 24/7
July 11, 2010