Owners' associations for Joint Properties in Bahrain
Resolution 7 of 2018 (the Resolution) has been in force for over 12 months and was introduced to govern the management of areas used in common by unit owners such as the entranceways, car park, lifts and stairs of buildings known as ‘Joint Property’. The Resolution creates the automatic establishment of an owner's association (OA) which is responsible for the, amongst other things, the supervising and managing of the common parts, assets and services of a Joint Property.
By law an OA is established upon the sale and registration of the first unit of the Joint Property at the Survey and Land Registration Bureau and will have its own legal personality with a wide range of powers which include amongst others the ability to enter into contracts and undertake litigation against both third parties and/or owners who are not paying their service charge.
An OA’s articles of association must use the template provided by Real Estate Regulatory Authority (RERA) and any variation from this requires RERA’s consent. RERA has also provided a template set of Joint Property- By-Laws which may be altered to reflect Joint Property individual requirements.
An OA must elect a board of at least three and a maximum of nine members. Where a Joint Property has less than nine units all the owners will automatically constitute the OA's board. The Resolution specifies the board’s obligations and length of tenure. The OA and the details of its board are required to be registered with RERA.
The Resolution also places obligations on developers to call a general assembly of the OA within three months of its establishment, to create a common seal of the OA and prepare the annual budgets of the OA’s operational and reserve accounts.
The developer must present all relevant documents at the first general assembly including (but not limited to) built drawings, list of assets and copies of all construction contracts. A developer may also collect up to two years of service charges upon the sale of a unit.
Existing Joint Property developments had 6 months to comply with the provisions of the Resolution (25 March 2019). It is estimated that only a small fraction of Joint Properties have registered OAs and so the majority of OAs are still not in compliance with the Resolution.
The Resolution deals with standalone buildings and RERA intend to issue further resolutions which govern special management schemes in due course.