Each of us dream to own a property on our own, however, some may be reluctant as it comes with a handful of responsibilities. One of the key responsibilities being maintenance of the surrounding common property. The Real Estate Regulatory Authority (RERA) has enforced Law 27 of 2017 (Law) to ease property owners’ burdens with such responsibilities. This Law regulates the real estate sector in the Kingdom of Bahrain and also prescribes the framework for creation and operation of an Owners Associations and Joint Properties under its resolution No. 7 of 2018 (Resolution).
Scope of Applicability
The provisions of this Resolution are imposed on all Joint Properties. Essentially, Joint Properties are defined to encompass all types of land, villas and building developments that contain common areas, where the owners partly own the common areas in accordance with their unit entitlements.
Owner’s Association – An Overview
As the common areas are intended to be owned jointly by all the owners, the owners form an “Owners Association”, which is a legal body responsible for maintaining and managing the common areas. It is noteworthy to mention that the scope of this Law has been expanded to include villa developments such as gated communities which encompass common areas such as access ways or recreational areas. An Owners Association is automatically formed by virtue of registering the first sale of a unit in a building development at the Survey and Land Registration Bureau (SLRB). Hence, the Owners Association comes into effect as a legal entity under the Law once the first title deed reflects the name of the purchaser. The Developer of the property bears the responsibility of drafting and preparing Joint Property by-laws for the development and submitting them to RERA. This process authorizes the SLRB to record the Joint Property by-laws on the title deeds.
Foundation of the Owner’s Association
It is worth highlighting that as a result of the applicability of this Law, the duties of a Developer have been enhanced immensely. As the Developer lays down the foundation of the formation of the Owners Association, it is mandatory for the Developer to be licensed by RERA and ensure the fulfilment of the responsibilities in relation to incorporation of the Owners Association as noted below:
a. The Developer is required to call the first general assembly within three months of the date of registration of the first transfer, once the title deeds are issued;
b. In the case of a villa joint property development, the Developer may delay the first general assembly until 10% of the villa units have been constructed; and
c. The Developer is also required to deliver important information and documents at the first general assembly, such as; (i) a list of the Owners Association’s assets, (ii) a full accounting report for paid service charges, (iii) warranties, (iv) service records for equipment, (v) building plans, (vi) bank accounts, (vii) service contracts, and (viii) a full list of owners and their contact details.
Incorporation of the Owner’s Association
The Developer of the property shall deem the Owners Association operational by calling an initial meeting attended by the owners of each joint unit. To make an Owner’s Association operational, steps that shall be undertaken by the Developer and the owners shall be as follows:
a. The Owner’s Association must choose the board members of the association in the annual general assembly meeting. The board should be comprised of at least three and a maximum of nine members which include the Chairman, Treasurer and Secretary. The general assembly may further assign three supplementary members to fill any vacancies in the board. The board members have a delegated responsibility to make decisions and to represent the Owner’s Association.
b. To approve the Joint Property By-Laws/ Articles of Association in pursuance of it being registered by RERA in the Special Register of Joint Properties. The Resolution requires an Owners Association to have Joint Property By-Laws. This contains the operating rules for the Owners Association such as rules relating to security and access, parking, the use of common areas and safety etc. The Association must therefore also set out a list of all units and their unit entitlements.
c. Further, upon submitting evidence of conducting a general assembly meeting, and appointing board members, RERA will issue a certificate setting out the names of the board members. This shall be considered sufficient evidence of the existence and creation of the Owners Association and of the power of Board members to represent the owners.
Successful Formation
On the successful formation of the Owners Association, a certificate shall be issued by RERA which shall be legally recognized and may be accepted by banks, utilities, and government agencies such as the Electricity and Water Authority (EWA). The Central Informatics Office (CIO) and the Labour Market Regulatory Authority (LMRA), as a proof that the Owners Association has been created and is operational.