New rules for owners associations
Law 27 of 2017 provides a new legal framework for all owners associations, existing and new, effective from 1 March 2018. The law required detailed resolutions to support implementation. The first resolution, No 7 of 2018 regulating Owners Associations and Joint Properties, came into effect on 26 September 2018.
- A detailed Guide for Owners Associations.
- The new Articles of Association for all owners associations.
- A template for the Joint Property By-Laws.
Overview of the new procedures
The following key changes are introduced by the resolution:
- Existing owners associations operational before 26 September can call meetings and make decisions following the new resolution – See Paragraph 2 of the Guide.
- Existing joint properties where the owners association was not established before 26 September can also call meetings and operate as if established under the new resolution – see Paragraphs 2 and 3 of the Guide.
- All owners associations need the following key documents – see Paragraph 4 of the Guide:
- Articles of Association – these have been prepared by RERA [see the link above]. The Articles contain the functions and responsibilities of owners associations and various procedures for calling meetings, establishing a quorum, appointing proxies, voting, making decisions, appointing a board etc. The Articles on the website replace the Articles of Association for existing owners associations and automatically apply to new owners associations.
- Joint Property By-Laws – this document serves two purposes. It sets out a description of the project and the implementation steps during construction, including developer covenants and obligations on owners. Secondly it contains the owners association operating rules for the day to day management of the association. For new owners associations, this will be prepared by the developer. For existing owners associations, the developer has already left the development and the owners association will need to complete the operational rules
- Schedule of unit entitlements – the law requires each unit to have a percentage or ratio allocated. The resolution calls this the unit’s “entitlement”. It determines the share of common areas owned by the unit owner and share of service charges are paid by the unit owner. For new joint properties this will be prepared by the developer and set out in a table form in the Joint Property By-Law. For existing joint properties, this “entitlement” or “percentage” or “share” would have been allocated by the developer in the first sales contract and has been used by owners associations to apportion contributions to the associations’ costs. The owners association needs to present this information in the Joint Property By-Law.
- Plan defining the units and common areas – the next key instrument is the plan registered by SLRB defining the units and common areas. This illustrates the units, their areas and their position within the building. For existing owners associations, the plan will already be registered by SLRB. For future joint properties, the plan will be prepared by the developer.
- The procedures for creating new owners associations are set out in Paragraphs 5 and 7 of the Guide.
- The developer’s role in setting up new owners associations is clear – see Paragraphs 6 and 8 of the Guide. In addition to preparing the above documents and plans, the developer must initiate the first General Assembly of the owners association and undertake a detailed handover – see Paragraph 7 of the Guide.
- The developer’s obligations to make a detailed disclosure to buyers of units are also reflected in the resolution.
- The resolution clarifies the rights and obligations of unit owners, the role and responsibilities of the owners association and steps for appointing a Board. It also permits owners associations to appoint an Owners Association Manager – see Paragraphs 11-15 of the Guide.