The Dubai Rental Disputes Centre (RDC) has recently issued a significant clarification on a recurring area of dispute in the real estate market—when property buyers become liable to pay service charges in jointly owned properties.
Background of the Dispute on Service Fee Obligations for Property Buyers
For years, developers and buyers have disagreed over who should bear service charges once a project is completed before the official handover of units. Developers frequently withheld delivery due to unpaid dues, while buyers argued that liability should only begin after transfer of final ownership. This left building management companies in a difficult position, with gaps in funding essential operations and maintenance.
A particular source of dispute arose for units sold via instalments that were completed but not yet registered under the buyer’s name. In these cases, it was unclear whether the buyer or the developer was responsible for service charges during the completion-to-handover period.
The Ruling
The RDC referred the matter to the General Authority for Unifying Principles, which has now issued a binding interpretation:
- Buyers listed in the preliminary property register are liable for service charges from the date of project completion particularly when the delay in handover is due to reasons attributed to the buyer.
- Liability also arises from the date of default on any payment obligations, even if formal handover or registration of ownership has not yet occurred.
- This ruling ensures continuous operation, management, and upkeep of common areas in accordance with Law No. (6) of 2019 on Jointly Owned Properties.
- Under the law, either the developer or the owner must cover charges for unsold units, ensuring that management companies can maintain uninterrupted services.
“The General Authority has addressed this legislative gap by interpreting the law’s underlying intent to secure the stability of jointly owned properties and guarantee the uninterrupted provision of essential services. Holding defaulting buyers accountable for service charges aligns with the spirit of the legislation,” said Judge Abdulqader Mousa Mohammed, President of the Rental Disputes Centre.
Legal and Practical Implications
- Closes a Legal Gap: Resolves disputes and removes uncertainty between developers and buyers.
- Protects Communities: Ensures uninterrupted building services, safeguarding compliant owners.
- Reinforces Market Confidence: Demonstrates Dubai’s commitment to transparent and stable property regulation.
- Sets Judicial Precedent: Provides a clear legal framework for future disputes regarding service fee liabilities.
- Operational Efficiency: In 2024, the Centre closed 49,817 execution files related to joint ownership disputes and introduced a self-execution service, streamlining claims and ensuring continuity of services.
Practical Implication for Buyers
Property purchasers should now be aware that liability for service charges arises as soon as the project is completed or upon default of any payment, not only after handover. Meeting payment obligations promptly is essential to avoid disputes, additional liabilities, or delays in possession.
How Motei & Associates Can Help
At Motei & Associates, we provide expert guidance on jointly owned properties and service fee obligations:
- Reviewing contracts to clearly define service fee responsibilities.
- Advising on buyer obligations and payment timing.
- Representing clients in disputes before the Rental Disputes Centre.
- Ensuring compliance with Law No. (6) of 2019 and related regulations.
- Offering proactive strategies to prevent disputes and protect investments.
If you have any questions or require legal assistance, please do not hesitate to get in touch. You may reach us at admin@motei.com, +971 55 353 6953 or book a complimentary 30-minute online consultation by visiting E-lawyer services. Our team will be pleased to assist you with clarity, professionalism, and discretion.
Eligible free zone companies holding a Dubai Unified Licence (DUL) can apply digitally. The process is entirely online, offering efficiency and accessibility for SMEs, start-ups, and international firms seeking mainland access without the administrative and cost burden of establishing a separate mainland entity.
Licensing Options under the Resolution
The Resolution introduces three distinct mechanisms through which free zone establishments can conduct activities within Dubai’s mainland:
- Mainland Branch Licence – allowing the free zone company to set up a branch under DET supervision within Dubai.
- Free Zone-Based Branch Licence – enabling an existing free zone branch to carry out authorised activities in the mainland.
- Temporary Permit – a six-month authorisation ideal for short-term projects, market testing, or limited operations.
Each option requires prior approval from the relevant Free Zone Licensing Authority, and where necessary, from government regulators overseeing the specific business activity. Licences are valid for one year, renewable under the same conditions, while temporary permits maintain a six-month validity.
In its first phase, the permit covers non-regulated activities such as technology, consultancy, design, professional services, and trading. There are plans to expand the framework to regulated sectors in the future, further broadening the scope for cross-jurisdictional business.
The Resolution further mandates that companies maintain separate financial records for mainland and free zone operations, ensuring transparency, accountability, and compliance with UAE Corporate Tax Law, under which only mainland-derived income is taxed at 9%.
What this means for Free Zone Companies
The permit framework removes one of the biggest limitations on free zone businesses — the inability to trade directly with mainland clients. Companies can now:
- Engage in mainland trading without setting up a separate entity.
- Compete for government tenders and contracts, traditionally reserved for mainland licenses.
- Integrate into local supply chains and reach new customer segments.
- Deploy existing staff for mainland activities, avoiding additional visa or sponsorship costs.
For many SMEs and professional service providers, this reform represents a practical bridge between the free zone and mainland markets — enabling gradual expansion with minimal cost and regulatory friction.
Policy context and broader implications
This development marks a strategic shift from Dubai’s earlier fragmented framework, which required free zone companies to operate through local agents or distributors. The new system provides a unified, transparent mechanism that harmonises the relationship between mainland and Free Zone jurisdictions. It promotes fair competition, simplifies compliance, and fosters a level playing field for all investors.
Beyond its procedural advantages, the reform reflects Dubai’s maturing economic vision — one that values integration, innovation, and inclusivity. By enabling businesses to operate seamlessly across jurisdictions, Dubai strengthens its reputation as a globally adaptive and investment-friendly economy, where regulatory clarity supports long-term growth and sustainable diversification.
How Motei & Associates Can Help
If you have any questions or require legal assistance, please do not hesitate to get in touch. You may reach us at admin@motei.com, +971 55 353 6953 or book a complimentary 30-minute online consultation by visiting E-lawyer services. Our team will be pleased to assist you with clarity, professionalism, and discretion.
