Nakheel mulls legal action to recoup unpaid service charges

Monday, 20 February 2012 10:41 AM

Nakheel is considering taking legal action against residents who have not paid their service charges in a bid to recoup some of the $35m outstanding.

Dubai government-owned developer is considering taking legal action against residents who have not paid their service charges in a bid to recoup some of the $35m outstanding, the company’s acting CEO told reporters.

The developer banned residents with outstanding service fees from using the beach, pools and gyms at its Shoreline development on the Palm Jumeirah by rolling out a temporary security card system.

With around half of the AED72m ($19.6m) in outstanding services charges at the Shoreline is still unpaid, Nakheel’s acting CEO Sanjay Manchanda told reporters on Wednesday. AS a result, the developer said it is considering pursuing legal action if it is granted permission to do so by the regulatory authority.

“We will work with RERA (Real Estate Regulatory Authority) on this one… If that is the only way the owners want me to take,” Manchanda said. “The legal resort is available. I don’t want to go there in all honesty. It is not the [route] we would want to take.”

Manchanda said the Shoreline was not the only Nakheel development where owners have failed to keep up with service charge payments.

“I would say it is close to 60 to 75 percent of people that have not paid,” he estimated. “How come that nobody wants to pay and yet claim that they want the service? If you pay then the services will be accorded to you. It cannot be that your neighbour pays and you do not pay for the same service.”

Despite the outstanding balance, Manchanda said Nakheel plans to continue reducing its charges, in a bid to maintain the lowest service charges in Dubai.

“We will be reducing services charges for 2012 by another 15 to 20 percent,” he said. He plans to do this be tendering contracts out for renewal and striving for economies of scale and better prices from suppliers.

Yesterday, Marwan Bin Ghalaita, CEO of RERA, said the ongoing dispute between Shoreline residents and Nakheel over plans to introduce annual membership fees for its beach clubs has been resolved.

Dubai’s real estate watchdog has approved five homeowners associations on the luxury development, allowing them to appoint their own manager for the communal areas, residents said.

“It’s already solved; this is what they have told me. The owners' association itself, they are dealing with Nakheel now,” Bin Ghalaita said.

Residents said they expect all homeowners associations to be RERA-approved in the next two weeks.

“We’re hoping that we’ll actually have all 13 registered by the end of the month,” one resident said.

“It’s a totally different ball game now because we are now individual legal entities….We don’t need the authority from Nakheel [to appoint a beach club manager]; we are legally entitled to now appoint our own association manager,” he added.

RERA's comments mark the end of a long-running battle between Shoreline residents and state-backed Nakheel. The developer in December distributed leaflets to the Palm Jumeirah residents warning it planned to charge residents up to AED5,000 ($1,360) to access the beach, pools and gyms.

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Posted by: J Lewis Sunday, 26 February 2012 6:23 PM[UAE] - Mexico

Has anyone checked on the Shoreline Apartments wasteful practices? Light are left on blazing with no motion sensors. Water for the gardens spill and leak everywhere. Too many guards doing NOTHING. That's what the service fees are for? Send inspectors and if the government wants to cut down on water usage and electricity usage then please actually do something about it. The apartment buildings are huge areas where we can cut usage. less light bulbs and proper irrigation.Keep main building doors closed so A/C is not used to cool the streets as well. All hallway lights can be reduced to at least half the bulbs. In the end all this waste is paid for by residents in our DEWA and PDC bills!! Yes, check your bills everyone. There are TOO many guards hanging around and all they do is sit around looking bored or chat up the maids!! One in reception and one to patrol the basement parking and outside areas randomly is more than enough and they can take turns so they don't get tired. So much waste

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Posted by: jenkins Tuesday, 21 February 2012 3:29 PM[UAE] - UAE

Does anyone know how many Nakheel property owners have skipped the country and dumped their negative equity investments? Nakheel are not helping the situation with their hostile attitude.

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Posted by: Red Snappa Monday, 20 February 2012 4:49 PM[UAE] - Ireland

Well is repossession an option clearly not, as there's no chance of selling them these days after the highly public collision between Nakheel and its under-esteemed clients. It's not just the Palm, the ill will is being generated from a number of different developments over service and district cooling charges.

If there is a dispute between a customer and a developer over service charges then it should be registered at RERA, i.e if remedial work is outstanding or faulty. Then those that have no bona fide reason for not paying, should not be allowed to rent out their property, as all leases now have to be registered with RERA

New tenants can then ask to see certification that the owner has paid the service charges or there is a genuine dispute.

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Posted by: Leo Chevallier Monday, 20 February 2012 3:16 PM[UAE] - UAE

Mr.Manchanda, what about the thousands of properties foer which Nakheel has collected advanc payments anddelivered nothing in return?

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Posted by: JHP Monday, 20 February 2012 3:15 PM[UAE] - Dubai

Their service charges and cooling charges are the highest and increasing randomly each year, their service has always been very poor even when they had plenty of money in the boom years, and their customer service is totally arrogant and frustrating.

I do not know how anyone in Nakheel can possibly complain like this about unpaid service charges of Dh 35m when they owe contractors hundreds of times this much and simply do not pay. Many people have lost their companies and their life savings because of Nakheel not paying their companies.

If Nakheel does not like managing these developments like the Palm Shoreline Apartments, there is a very simple solution which all the residents would celebrate tremendously - just pull out and leave it to non-profit owners associations as RERA has told you to do.

Posted by: JDS Wednesday, 29 February 2012 2:35 PM[UAE] - Dubai

You should compare apple to apple. Unfinished properties by Nakheel has nothing to do about service charges. I'm not taking their side, but everyone should pay their share of the maintenance.

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