Dubai Property Handover Delays: Pay Up Anyway

Service Charge Payment Obligation in Dubai: Payment Required Even Without Property Possession

Dubai's real estate market is dynamic and often rapidly evolving, where regulations frequently strive to keep pace with new developments. A recurring contentious issue is the payment of service charges, especially when the owner has not officially taken possession of the property. The Dubai Rental Disputes Center has clarified this situation with a recent decision: the owner is obliged to pay the communal costs even if the property has not been officially handed over—particularly if the delay is due to the buyer's fault.

Why was the decision necessary?

In recent years, numerous disputes arose from developers not handing over properties on time due to buyer arrears. In these cases, it was unclear who should bear the costs related to the maintenance and operation of common areas, especially if the title had not yet been transferred. This uncertainty often led to financial losses, legal disputes, and negatively impacted the stability of the real estate market.

In the latest case, properties sold under installment plans were discussed, where buyers had paid all installments, yet the property was not officially transferred to their name. Concurrently, the developer withheld the handover citing outstanding fees, while the property was already fit for use. In such situations, neither the developer wanted to assume the service charges, nor did the buyers agree to pay them—creating a stalemate.

What does the new decision say?

The Dubai Rental Disputes Center turned to the General Authority for Unifying Principles to clarify the issue. According to their interpretation, the person (buyer) whose name appears in the preliminary register of the property is obligated to pay the service charges from the time the building is completed or from when they fail to meet financial obligations. This decision is irrespective of whether the property has been actually handed over or not.

The aim is to ensure that common building areas, such as elevators, reception, security service, parking, lighting, pool, and other shared services remain continuously and uninterruptedly maintained, and that these costs do not fall on the other regularly paying owners due to some buyers' unwillingness to pay.

Legal Background

The interpretation is grounded in the 2019 Law No. 6, which regulates the management of jointly owned properties and the allocation of costs associated with them. According to the law, the financing of the operation and maintenance of common areas falls to either the developer or the current owner—depending on whether the unit in question is sold or not. Service charges are collected by management companies, who ensure continuous operation and maintenance using these funds.

The current decision is significant because it creates a clear legal precedent for situations where the property is ready, but handover is delayed—especially due to buyer negligence.

What does this mean for owners in practice?

Under the new regulation, every buyer should pay increased attention to fulfilling their financial obligations on time, particularly if the handover has not yet occurred. Otherwise, service charges will accumulate and will be legally enforced later, potentially jeopardizing the handover. It is important to note that the obligation to pay the charges is independent of the actual use of the property, so one cannot claim "I haven't moved in yet" as a defense.

The decision also offers reassurance to developers and existing owner-occupiers, ensuring they are not required to bear the missed service charges due to delayed owners.

Statistics and Efficiency

During 2024, the Dubai Rental Disputes Center closed 49,817 enforcement cases related to joint ownership. Additionally, 443 settlement agreements were approved in the second quarter, amounting to a total of 190.7 million dirhams, with an average processing time of six days. These figures demonstrate the center's efficiency in addressing the challenges of the real estate market.

Summary

The newly announced legal interpretation is a significant milestone in Dubai's real estate market. It sends a clear and decisive message to all buyers: service charges are not solely tied to the moment of possession but are also influenced by financial obligations and the construction readiness of the building. This interpretation benefits not only developers and operators but also other owners, who are thus not required to assume part of the communal costs for non-payers.

The decision also aids real estate market stability and contributes to transparent, legally-secure operations in the long term, which serves the interests of both buyers and developers. With this, Dubai has taken another step towards a more predictable and sustainable real estate market environment.

(Based on a Dubai Rental Disputes Center release.)