Marwan bin Ghalita, CEO of RERA. - Supplied photo
Dubai - The launch of the policy aims to establish special procedures and mechanisms to help regulate the transactions of all parties.
Dubai Land Department (DLD) through the Real Estate Regulatory Agency (RERA) launched a Conflict of Interest & Party Transactions policy for jointly owned properties.
This launch comes within the framework of regulating the real estate sector in Dubai and entrenching principles of transparency and accountability in all matters related to jointly owned properties in freehold areas across emirate.
The launch of the policy aims to establish special procedures and mechanisms to help regulate the transactions of all parties of jointly owned properties and promote their roles and responsibilities as well as identify and manage conflicts to avoid exploiting private interests in managing such properties.
Marwan bin Ghalita, CEO of RERA, said: "Based on the recent policy that we launched, an existent relationship among related parties must be disclosed or otherwise risk compromising the transactions of jointly owned property managers with other parties. Within the same framework, decisions regarding operations and decision-making must be taken free from the direct influence of related parties; and transactions should be carried out in accordance with the usual market terms and conditions, based on the principle of independent decision-making."
Bin Ghalita added: "The new policy is expected to contribute to organising businesses in a manner that does not conflict with personal interests between management companies, owners committees, and service providers. It will also help facilitate the competition required for the real estate market to provide the highest quality standards in its provided services, which ultimately leads to increased confidence and transparency in the real estate market and commercial transactions."
Mohammed Khalifa bin Hammad, Senior Director of RERA at DLD, confirmed the feasibility of having such a policy in light of the growing spread of freehold areas in the emirate and the growing number of freehold projects. In this regard, he said: "Managers of jointly owned properties are to put in place a Conflict of Interest and Related-Party Transaction policy that must be applied in order to ensure transparency, fairness, and equality.
The policy outlines all aspects regarding the appointing and signing of agreements with service providers, the duties of the managers and staff of jointly owned properties to avoid activities that could create conflicts of interest. The policy also requires reasonable steps to be undertaken to identify circumstances that might create a conflict of interest, and, therefore, a threat to compliance. These include the nature of the relevant interests and relationships between the parties involved as well as the activity and its implication for relevant parties among other aspects.
The policy's document requires that all related party transactions be disclosed in the annual report. Auditors will be inspecting the report, and any related party transactions shall be verified with due diligence. Failure to adhere to this policy may result in the termination of contracts and incurred fines on managers of jointly owned properties as well as other financial penalties.