Clyde & Co LLP senior associate real estate Stephen Kelly: Strata Law should be taken into consideration.
A Strata Law expert has warned hoteliers they can no longer bury their heads in the sand when it comes to the new strata title registration system, which is expected to be operational imminently.
Clyde & Co LLP senior associate real estate Stephen Kelly told Hotelier Middle East that owners and operators who were continuing to hammer out contracts in the same way as they always had in the UAE “may not be protected”.
“We are thinking there will be some form of restriction placed on how buildings with hotels in them are operated and it [Strata Law] won’t necessarily allow arrangements that have been put in place in the past that simply say the hotel owner or the developer will manage the building on behalf of everybody,” Kelly asserted.
“We don’t believe that those sorts of arrangements will be able to be put in place, because we are expecting that the individual unit owners will have control of their own domain and that at the mixed-use level there will be what they are calling a building management group with the various owners represented on the group. Component owners will collectively decide on how the development will be managed going forward, not the developer or the individual owner.”
| Advertisement |
Kelly said traditionally some hotel operators had been reluctant to come to the region because of the lack of a formal title registration system that stated who was responsible for what, with respect to the operation of hotels within mixed-use developments.
However, Kelly warned that Strata Law would not be a one size fits all solution.
“Strata Law has key principles and you must follow these, but there are different ways to do things for different types of buildings,” he explained.
While all the normal contract discussions need to take place, Kelly said Strata Law should be at the forefront of any negotiations.
He added that any operators and owners close to opening a property should “revisit” the contract to take Strata Law into consideration.
The law is still yet to be finalised, but it is thought it could be put into action within weeks.
“I think it is fair to say that regulations will answer 80% to 90% of the questions, but there will be another 10 % that will need further direction by the Dubai Land Department or RERA,” Kelly added.
Search our database of more than 2,700 industry companies
