Home Owners/Strata Association (HOA)

Home Owners Association (HOA) is a non-profit establishment and a separate entity, where all the unit owners of a jointly owned property are members . The HOA is responsible for managing, monitoring and maintaining common areas within the jointly owned property; The individual owners in a building or community automatically become members of the HOA when their name is registered as buyers of the property.

All the members are liable to pay the “annual service charge”, which is meant to collect for the maintenance and regular upkeep of the common areas of the building or the community.

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    HOAs manage, control and administer the common areas on behalf of all property owners, including matters like enforcement of statutory regulations, community or building rules, maintenance and upkeep, and security. HOA also play an active role in facility and property management and strategic fiscal management required to discharge their role responsibly.

    A management committee /board usually governs the HOA, the representatives of unit owners, the Association manager, and the regulators. It is headed by an HOA manager, a specialist company licensed and registered to conduct such operations in the country. It is approved by respective statutory governing bodies that oversee jointly owned properties in UAE, such as RERA in Dubai.

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    A homeowner’s association (HOA) audit is a statutory audit of the association’s finances and ensures the association’s continued compliance with respecting laws, regulations, and procedures in the operating territory. A registered auditor usually performs the Audit in the country. The auditor is the person who the authorities or regulators of the HOA approve.

    HOA audits are crucial for the owners of units Jointly Owned as HOA audits give an insight that the association budgets were prepared correctly and spend accordingly and in compliance with the Law.

    HLB HAMT is a registered audit firm and approved auditor for all the respective regulators and authorities, including RERA, for the Audit and advisory services with Home Owners Associations (HOA) in the UAE. We are also acting as auditors for DIFC related to Strata associations (Body Corporates) which DIFC regulates.


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    Frequently Asked Questions

    1. What types of housing communities are run by homeowners’ associations?

      There are five homeowner’s associations: HOA community, Condo Association, Master Association, Housing Cooperative, or “Co-Op”, and Civic Association.

    2. What are the responsibilities of the Association Manager?

      The responsibility of the Owners Association is for three key areas, i.e., management, monitoring and maintenance of the common areas of the property on behalf of the owners.

    3. How Often Should an HOA Be Audited?

      HOA needs to conduct statutory Audits on their books of accounts and present the audited financial statements yearly to the authorities. Generally, the calendar year is the financial year for reporting purposes.

    4. What are the Audit related obligations of the property associations?

      The appointment of an auditor and the acceptance of annual financial statements are the responsibilities of the HOA and Maintaining the supporting evidence of transactions as stipulated by the Law.

    5. Audit of accounts of the Apartment Association in UAE is mandatory?

      The statutory Audit of the books of accounts of JOP registered under RERA and Body corporate under DIFC is mandatory.

    6. How long should the association maintain documents?

      Clause 81 of Part 10 of the Direction for Association Constitution issued by the Dubai Land Department indicates that all the records except minutes, registered and copies of registered documents should be kept for at least 7 years. The minutes, registered, and copies of registered documents should be kept indefinitely.

    7. What is an HOA?

      A homeowner association (HOA) is an association in a subdivision, planned community, or condominium building that makes and enforces rules for the properties and residents. Those who buy property within the jurisdiction of an HOA become members and are required to service charges, known as an HOA fee. Some associations may be very restrictive regarding what members can do with their properties, while others may give residents more freedom.

    8. What does an HOA Do?

      The activities of HOA are maintaining the common areas in the Jointly Owned property by disposing the tasks of collecting annual maintenance fees, preparing the budgets administering the financial accounts, paying or faciliatiting the utility bill payments, and ensuring the safety of tenants and guests, by properly maintaining the property.

    9. How much does the service charge Cost?

      HOA fees vary depending on the property or community and the facilities available to the unit holders. The service charges for a year are decided based the on the budget prepared at the beginning of the year.

    10. What is a strata association

      Start a association is another name for Home Owners Association.

    11. What is a body corporate under DIFC?

      The Home Owners s associations in the DIFC Jurisdiction are having registration with DIFC authorities. Once the HOA Of jointly owned property in DIFC is registered, it is known as Body Corporate.

    12. What is Mollak?

      An integrated online system to regulate, and monitor accounts related to service charges and provide support services for all parties involved in Jointly owned properties registered under RERA, Dubai.

    13. What is the frequency of meetings of the owners committee?

      An Owners Committee will be regularly convened every three (3) months, i.e. four (4) times a year, and its first meeting will be convened within thirty (30) days from the date of its constitution. Meetings of the Owners Committee will be valid if attended by the majority of its members, provided that its chairman or vice chairman is in attendance.

    14. How is the service charge calculated?

      Service charge is calculated based on the forecasted budget based on tendering procedures. An Owner will pay the Management Entity his share of the annual Service based on the ratio of the area of the Owner’s Unit to the total area of the Jointly Owned Real Property.

    15. What is a reserve fund?

      The reserve fund is used for capital expenses such as major common area asset replacements. A reserve fund is created as a financial tool to help the JOP estimate and provide for future significant repairs and replacement of “common area” components over the long term.

    16. What is a reserve fund study?

      A reserve fund study is conducted to assess the physical condition of a property and its fixed assets. The reserve fund study projects the costs of maintenance and replacement of any capital assets that might occur over the remaining lifetime of the building. It also recommends what funding levels are required for its smooth operations.

    17. Do Abu Dhabi Freehold properties have HOA?

      Yes, the Jointly Owned Properties(JOP) need to be registered with the Department of Municipal Affairs.

    18. Does the budget of the HOA need to be audited?

      The budget needs to be reviewed by an Independent Auditor approved by RERA.

    19. How is the allocation of expenses being done on different components?

      Allocation of expenses is done based on the resource allocation study, which comprises determining the costs directly associated with the maintenance of the component’s shared assets and liabilities and determining the cost of each budget line item to be shared with each component.

    20. Do the HOA have a legal registration in UAE?

      No, the JOP don’t have legal registration since it’s not a legal entity registered under DED.

    21. Can the HOA open Bank A/C?

      Yes, HOA can open the designated Escrow a/c.

    22. What is the accounting standard applicable to HOA?

      The accounting standard applied for preparing financial statements is generally IFRS for SMEs, but some associations also follow full IFRS.

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