Dubai Ruling: Buyers Must Pay Service Fees Before Taking Possession

Dubai, UAE – October 2, 2025: The Dubai Rental Disputes Centre has introduced a new legal principle concerning real estate service fees, resolving recurring disputes between property developers and unit owners over responsibility for covering the cost of operating and maintaining shared facilities.

New legal principle on service charges

Under the ruling, buyers are required to pay service charges even if they have not formally taken possession of their units, particularly in cases where delays in handover are due to reasons attributed to the buyer. The interpretation is rooted in Law No. (6) of 2019 on Jointly Owned Properties, which mandates that service charges be collected to cover the costs of managing, operating, and maintaining shared spaces.

The law also stipulates that either the developer or the owner must bear these charges for unsold units, with payments directed to management companies to ensure uninterrupted services and efficient building upkeep.

Addressing legislative ambiguity

While the legislation has generally been clear, a recurring situation created uncertainty: units sold on installment plans that were fully constructed but not yet registered under the buyer’s name. In some cases, developers withheld delivery due to unpaid dues, raising the question of whether the developer or the buyer should bear the service fees.

To address this gap, the case was referred to the General Authority for Unifying Principles within the Centre. Following a thorough review of relevant legal provisions, the Authority determined that the buyer listed in the preliminary register of the residential unit is liable for service charges from the date of project completion or from the moment of default on payments—even if final ownership has not yet been transferred.

This ensures continuous operation of facilities and protects developers and compliant owners from unfair financial burdens.

Strengthening confidence in Dubai’s property laws

Judge Abdulqader Mousa Mohammed, President of the Rental Disputes Centre, said: “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. By doing so, we have established a clear judicial precedent that eliminates confusion, strengthens practical approach, and reaffirms our commitment to justice and fair dispute resolution.”

The ruling reinforces confidence in Dubai’s regulatory framework, ensuring the continuity of essential services, safeguarding compliant owners, and closing loopholes that could otherwise weaken community stability. It also highlights the Rental Disputes Centre’s pivotal role in clarifying legislative interpretations through judicial mechanisms that adapt to evolving real estate practices.

Efficiency gains in joint ownership management

In line with its mission to strengthen legal foundations for jointly owned properties, the Centre also reported the closure of 49,817 execution files related to joint ownership in 2024. This milestone coincided with the launch of the self-execution service for service fee claims, a streamlined mechanism enabling property management companies to submit claims more efficiently, ensuring service consistency and enhancing building management.

By setting this precedent, Dubai continues to reinforce its standing as a premier global real estate investment destination with clear, investor-friendly legal frameworks that support sustainable growth.