A Review of Recent Developments in Bahrain relating to Owners Associations and Joint Properties

Resolution No. 7 of 2018 on Regulating Owners Associations and Joint Properties (Resolution or Resolution No. 7) came into force on 26 September 2018. This law has been eagerly anticipated following the new changes in the real estate sector resulting from the newly setup Real Estate Regulatory Authority (RERA) and the issuance of Law No. 27 of 2017 Concerning the Promulgation of the Real Estate Sector Regulation Law (the RERA Law) as it significantly details the operation of owners association and joint properties.

Obligation to Register

In accordance with Resolution No. 7 and RERA Resolution No. 2 of 2018 on Creating a Special Register for Joint Properties, joint properties are to be registered within the Joint Properties Register at the Survey and Land Registration Bureau (SLRB). The documents and information required for such registration are stipulated within both laws.

Prescribed and Template Documentation

The Resolution also includes details in relation to the contents of the articles of association and joint property by-laws. The Resolution requires that a prescribed form of articles of association be adopted but allows for additional bespoke provisions to be included in a form of property by-laws provided that they are approved by RERA. These property by-laws are particular relevant for more complex strata developments or those situated within master communities. A copy of the articles of association and template property by-laws are available on RERA’s website.

Establishment and Role of the Owners’ Associations

Previous RERA laws have imposed obligations and restrictions on developers, and this new Resolution follows a similar approach. After the establishment of the owners association, the developer must carry out certain duties in order to comply with the Resolution. These include, but are not limited to, sending notice of the first general assembly to owners within three months of the owners association’s establishment, creating the common seal of the owners association and preparing the first annual budget. The developer is also obliged to transfer certain documents and information to the owners association in the first general assembly meeting such as warranties. Moreover, the developer is tasked with pursuing any contractors or consultants for defects or breach of warranty relating to the joint property within a project.

The functions, powers and obligations of the owners association are also detailed within the Resolution. These entail the maintenance and repair of common areas, collecting annual subscriptions from owners and maintaining important records, amongst other responsibilities.

The Resolution also sets out certain conditions and obligations relating to the owners association board, such as that board members must be owners in relation to joint property and residents in Bahrain. In addition, the Resolution describes the role of the manager appointed by an owners association in great detail. These clearly evidence RERA’s aim to ensure that powers are delegated fairly and joint properties are managed efficiently.

Owners’ Obligations

Nonetheless, RERA has also imposed some obligations on owners, in which they would have to comply with the joint property by-laws and articles of association, as well as obtain the board’s approval for any works that may affect the structure of a unit, amongst other duties.

Conclusion

RERA is maintaining an environment of transparency within Bahrain’s real estate sector, as it clearly identifies the roles and obligations of all parties involved in a real estate development project in order to minimise the risks that arise from these projects and protect the parties’ positions.