Understanding Developer Liability for Maintenance and Defect Costs After Property Handover

Introduction:

When investing in off-plan properties, especially in jointly owned properties in Dubai, understanding a developer's responsibility for maintenance and defect rectification post-handover is crucial. Dubai Law No. 6/2019 on the Ownership of Jointly Owned Properties provides clear guidelines for property developers and owners, outlining their rights and obligations after a property has been handed over. Here’s a breakdown of the developer’s liability and how long it lasts.

Key Provisions Under Dubai Law No. 6/2019

Structural Defects

According to Article 40(a) of Dubai Law No. 6/2019, developers are liable for any defects in the structural parts of a jointly owned property for a period of 10 years. This period begins from the date the developer obtains the completion certificate for the project. Structural parts include essential elements such as the foundation, walls, and columns, which are critical for the safety and stability of the building. Should any defects in these areas be discovered within the 10-year period, the developer is obligated to rectify or repair them at no additional cost to the property owner. This ensures that owners are protected from bearing the financial burden of significant structural issues that may arise after taking possession of their unit.

Mechanical, Electrical, and Other Installations:

In addition to structural defects, developers are responsible for repairing or replacing defective installations within the property for a period of one year from the date of handing over the unit to the owner. These installations include critical systems such as mechanical, electrical, plumbing, and sewerage installations.

If the owner refuses to take possession of the property for any reason, this one-year liability period starts from the date the completion certificate is issued. Therefore, owners must be aware that this one-year warranty will commence from the project's official completion, regardless of the handover date.

Breach of Contract and Buyer Protections Under UAE Civil Code

The rights of buyers are further supported by Federal Law No. 5/1985 (UAE Civil Code). Specifically, Article 569 mandates that developers must deliver properties exactly as agreed upon in the Sale and Purchase Agreement (SPA). If the unit delivered does not match the agreed-upon size or specifications, the buyer has the legal right to demand rectification or even cancel the SPA.

Moreover, Articles 572 and 574 of the Civil Code protect buyers from developers delivering smaller or substandard units. Buyers can take legal action to either modify the agreement or cancel the sale if the developer fails to correct these issues within a reasonable timeframe.

Maintenance and Repair Responsibilities

• Common Areas and Facilities: While the developer is responsible for initial construction and defect rectification, the ongoing maintenance and repair of common areas and facilities in jointly owned properties are typically managed by a Management Entity. Article 35 of Dubai Law No. 6/2019 grants the Institute of Control and Joint Ownership the authority to issue notices to the Management Entity to carry out necessary maintenance works. If the Management Entity fails to fulfil these responsibilities, the Institute can appoint a third party to handle the repairs and deduct the costs from service fees.
• Insurance and Bank Guarantees: To ensure that damages caused by negligence in managing common areas and facilities are repaired, the Management Entity is required to submit a bank guarantee to the Department, as outlined in Article 36. This guarantee serves as a form of security, ensuring that the necessary funds are available to cover repairs and maintenance if the Management Entity fails to uphold its obligations.

Consequences for Developers and Management Entities

If a developer or Management Entity fails to meet their legal obligations, the law provides clear recourse. For example, if a developer does not submit the required documents to the Department as specified in Article 6 of Dubai Law No. 6/2019, the Department can appoint another party to submit these documents at the developer's expense. Similarly, if a Management Entity neglects its maintenance duties, the Institute can intervene to ensure that the property remains well-maintained and serviceable.

Conclusion:

Dubai Law No. 6/2019 and the UAE Civil Code provide robust protections for property owners against defects and maintenance issues after taking possession of their units. As a property owner or investor in Dubai, being aware of these provisions is essential to ensure that your rights are protected and that you can take timely action in the event of defects or maintenance issues.

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Dr. Hassan Elhais is a legal consultant in Dubai, specializing in the drafting of all statements of claim, memos and consultation on litigation of all manner.