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Introduction to joint properties Creating an owners association April 2019

Introduction to joint properties Creating an owners association April 2019. OVERVIEW. Introduction to joint properties and owners associations Changes introduced by Law 27 Key Joint Property documents Setting up the Owners Association Focus on Developers’ obligations

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Introduction to joint properties Creating an owners association April 2019

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  1. Introduction to joint properties Creating an owners association April 2019

  2. OVERVIEW Introduction to joint properties and owners associations Changes introduced by Law 27 Key Joint Property documents Setting up the Owners Association Focus on Developers’ obligations Focus on owners’ obligations Information available from RERA

  3. Introduction to joint properties and owners associations

  4. CONTEXT OF OWNERS ASSOCIATIONS • Single use small residential building • Small villa developments • Mixed use building – commercial, residential etc • Multiple Owners Associations in a single building. Or owners association over part of a building • Layered schemes – Main and Central Associations

  5. SIMPLE JOINT PROPERTY DEVELOPMENTS VILLAS [There may be common areas such as access ways, landscaped and recreation areas, pool etc] • SINGLE BUILDING • [common areas can include stairs, pool, gym land outside building etc in original land plot]

  6. CO-OWNERSHIP OF BUILDING • The buyer owns the apartment • All buyers co-own the common areas • Owners association, made up of all apartment owners, responsible to maintain the common areas. Membership is compulsory! • Common areas include structure of building and equipment: foyers, stairs, lifts, cooling plant, pool, sauna, etc • Parking may be owned or may be common area

  7. Multiple management levels for complex developments Central Association Large developments with many buildings may require two or three management levels Main Association 1 Main Association 2 Owners Association Owners Association Owners Association Owners Association Owners Association Owners Association Owners Association Owners Association

  8. WHAT ARE THE KEY FEATURES OF A JOINT PROPERTY? (Review) • There is common area owned jointly by all owners… • A plan defines units and common areas. The common area will be clearly identified and will belong to the owners of apartments • Owners are members of an owners association • There will be a point where the developer hands over ownership and control to the owners association • Owners meet at least yearly in General Assembly to make decisions, set budget, determine how money is spent • Owners pay service charges determined by a pre-defined ratio based on floor area and use • Association rules may be varied by the association Any part that is not a “unit” is “common area”

  9. 2. Changes introduced by Law 27

  10. 2. CHANGES INTRODUCED BY RERA LAW AND RESOLUTIONS Remove need for deed of incorporation and notarisation Owners association automatically created on registration of first sale Buyers are automatically members of the owners association Entitlements [percentage] for units – percentage determines share of common area, contributions to service charges and value of vote Articles of Association are prescribed by RERA – standard meeting process for all owners associations Need common area plan to define common area – to remove confusion SLRB to establish a Special Register of Joint Properties

  11. 2. CHANGES INTRODUCED BY RERA LAW AND RESOLUTIONS • Parking can be: • exclusive use of common area • owned by the unit owner • Accessory units that may be transferred between apartment owners only • Layered schemes • Two tiers – Main and several subsidiary Owners Associations • Three tiers – Central, Main and several subsidiaries • Joint Property over part of a building – use of Building Management Statement

  12. 3. Key Joint Property documents

  13. 3. KEY OWNERS ASSOCIATION DOCUMENTS • Articles of Association • functions of the owners association • Meetings of the owners association – notices, agenda, quorum, how to participate, how to vote, making decisions, approving budgets and setting service charges • Already prepared by RERA for all owners associations • Joint Property By-Laws • Rules for managing the common areas • To be prepared by developer for new buildings. For existing buildings, prepared by owners association

  14. BY-LAWS IMPACT THE USE OF UNITS AND COMMON AREAS • Inside the unit – the following may be relevant • Use of the unit restricted[commercial, residential etc] • Prohibition on overnight renting/ short-term letting • Noise • Pets • Display of laundry from balcony • Changes to structural walls etc • Dangerous goods – gas • Hours of operation of commercial lots • On the common areas • Dress code for pool area • Behaviour in gym sauna and other recreational areas • Blocking fire stairs • Transporting household good in the lifts • Parking/ driving rules • Children in common areas • Rubbish • Safety and security • Recreational areas – bookings, noise, hours, cleaning up, music • Financial • Admin charges on overdue payments • Fees for clearance certificates • Court action

  15. IMPORTANCE OF BY-LAWS • Legal status of by-laws • Required by the law • Forms part of the title • A required disclosure document in sales by the developer • Part of an application for a development license • Complex developments – the by-laws summarise • Relationship between residential and commercial • The relationship with other owners associations such as the main Association

  16. IMPORTANCE OF BY-LAWS • Unit entitlement set out in by-laws - a percentage allocated to each unit and determining: • The share of common areas • The share of service charges [payable by the unit owner] • The value of the owner’s vote

  17. 4. Setting up the Owners Association

  18. HOW TO CONDUCT FIRST GENERAL ASSEMBLY 1. Assemble list of owners and addresses 2. Prepare documents Before 3. Post notices and accompanying information 4. Register on arrival 5. Appoint meeting Chairman During 6. Review proxies 7. Conduct meeting 8. Prepare Minutes After

  19. HOW TO APPLY TO RERA FOR A BOARD CERTIFICATE • CALL A MEETING The meeting will have already been conducted. RERA will need proof of the meeting process • PREPARE A RECORD OF MEETING • APPOINT BOARD MEMBERS • PREPARE MINUTES OF MEETING • COMPLETE AN APPLICATION FORM CERTIFICATE After the meeting, prepare application and supporting evidence using RERA templates • LODGE APPLICATION IN RERA RERA requires evidence of a resolution appointing the Board members

  20. APPLYING TO REGISTER JOINT PROPERTY BY-LAWS • CALL A MEETING The meeting will have already been conducted. RERA will need proof of the meeting process 2. PREPARE A RECORD OF MEETING • COLLECT UNIT RATIOS/ ENTITLEMENTS • APPROVE OPERATING RULES or DELEGATE TO BOARD • DRAFT THE JOINT PROPERTY BY-LAW FORM After the meeting, prepare application and supporting evidence using RERA templates • COMPLETE AN APPLICATION FORM • LODGE APPLICATION IN RERA

  21. 5. Focus on Developers’ Obligations Additional responsibilities to keep in mind in planning a development

  22. DEVELOPER’S OBLIGATIONS • For off-plan and non off-plan developments, the developer • Drafts the Joint Property By-laws • Prepares draft budget for review by General Assembly • Send Notices of Meeting – up-to-date owners contact list • Conducts first General Assembly – owners appoint meeting chairman • Hand over to Owners Association – key documents and plans, finances and reports, owners contact list • Potentially undertake initial management role for two years

  23. INFORMATION TO HAND OVER • As built drawings • List of owners and full contact details including postal and email address • Compliance certificates • Instruction manuals, keys, codes for security • All bank accounts, financial statements and records and documents to transfer • List of assets, warranties, service records [e.g. for lifts, pumps etc] • Ongoing service charges • Common seal

  24. 6. Focus on Owners’ Obligations If the developer exited the development without setting up the owners association …..

  25. OWNERS OBLIGATIONS for existing building, if developer has exited • Call the first general assembly. Key topics • Decide whether to appoint an owners association manager OR self-manage • Appoint a Board and delegate powers • Prepare and approve budget • Prepare and approve by-laws if not prepared by the developer • Update insurance policies [against risk of damage to building or injury to person etc] • Open bank accounts • Collect service charges • Obtain a Board Certificate from RERA – this gives the Board authority to represent the owners association • Conduct Board meetings • Lodge approved by-laws with RERA • Open bank accounts • Send invoices

  26. 7. Information Available from RERA RERA’s website includes useful information, forms and an explanatory guide to help developers and owners to establish the owners association

  27. 6. INFORMATION AVAILABLE FROM RERA • Law 27 of 2017 regulating the real estate activities • RERA Resolution 7 of 2018 regulating owners associations and joint properties • Help desk on RERA website www.rera.gov.bh • General enquiry email for owners associations issues – oa@rera.gov.bh • Articles of Association for all owners associations– RERA website • Guide to owners associations – explanatory booklet containing all forms and templates • Application forms, templates and flowcharts – in the Guide

  28. RESOURCES ON WEBSITE – Law and Guide with forms, templates

  29. FORMS AVAILABLE FROM RERA to help establish owners association Form 12 – Request by Interested Person for details of owners association board Form 13 – Template for Joint Property By-Law - simple Form 14 – Explanatory notes for simple joint property by-laws Form 15 – Template of Joint Property By-laws - complex Form 16 – Explanatory notes for complex joint property by-laws Form 17 – Minutes of Meeting Form 1 - Notice of General Assembly Form 2 – Agenda for meeting Form 3 - Proxy Form Form 4 - Voting Paper Form 5 - Notice to owner that service charges are payable Form 6 - Statement of service charges issued to buyer Form 7 - Clearance Certificate Form 8 - Notice that an administrative fee of is payable by late-payers Form 9 - Order under Article 68B to pay Form 10 - Application to register or update Joint Property documents Form 10B – Registration of Board of Owners Association with RERA Form 11 – Owners Association General Assembly Reporting Form

  30. TEMPLATES AND FORMS

  31. TEMPLATES AND FORMS

  32. TEMPLATES AND FORMS

  33. Coming soon – EXPLANATORY BULLETIN FOR OWNERS

  34. Coming soon - EXPLANATORY BULLETIN FOR DEVELOPERS

  35. THANK YOU Email enquiries to oa@rera.gov.bh

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