When a unit in a building or community is sold, service and usage charges for the common areas must be correctly apportioned between seller and buyer, using the RERA‑approved budget and the billing period applied by the owners’ association or JOP manager. This article explains the legal framework, common market practice for pro‑rata splits, and how the figures flow into your completion statement. EGSH, as a licensed government services centre in Dubai, helps clients complete these steps correctly as part of the transfer process.
The guide focuses on individual sellers and buyers of apartments and community homes, as well as on agents and conveyancers who need a clear, shared method for calculating adjustments. It covers: the legal basis for jointly owned property service charges; who is responsible before and after sale; step‑by‑step pro‑rata formulas with an example; and how these numbers link to NOCs, escrow payments, and the risk of RDC proceedings.
Service Charges in Dubai Jointly Owned Property – Legal Context
In Dubai, for jointly owned properties, the registered unit owner is legally responsible for paying service and usage charges for common areas. A tenant may be contractually required to pay these charges only if the lease expressly provides for this, but such arrangements do not relieve the owner of liability toward the owners’ association or the jointly owned property (JOP) management company. If a tenant fails to pay, the owner remains responsible for settling the charges.
Non-payment of service charges can lead to formal recovery procedures under the jointly owned property framework. Depending on the circumstances, this may involve legal claims and enforcement mechanisms, which, in serious cases, can ultimately result in judicial execution against the unit, including the sale to recover outstanding amounts, in accordance with due process.
Service charges are derived from the project’s annual operating budget, which is reviewed and approved by RERA following an audit. The approved budget sets the total amount owners must cover. This total is split among units, primarily based on unit area. Some items, such as chiller charges, sinking funds, or utilities, may use special allocation formulas rather than a flat rate per square foot.
For each unit, the owner’s share is calculated in accordance with the approved allocation methodology, using the unit area recorded on the title deed and any component-specific rules. This proportional allocation ensures that owners of larger units generally bear a higher share of common costs.
Approved budgets and indicative charge rates are published through tools such as the DLD Service Charge Index, the Mollak system, and the Dubai REST app. These resources provide reference information on approved figures, but invoice accuracy and enforcement are governed by JOP regulations and DLD procedures, rather than by the index itself.
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Who Pays Service Charges When a Property Is Sold?
Legally, the person recorded as the owner on the DLD title deed remains responsible to the owners’ association or JOP management company for all service and usage charges until the transfer is registered in the buyer's name. This remains true even if a tenant is contractually obliged to pay the charges under the lease; the owners’ association can still pursue the owner if the tenant defaults.
When a unit is sold, the owners’ association or JOP manager will usually issue a No Objection Certificate (NOC) for transfer only once service charges are settled up to an agreed date. Without this NOC, the Dubai Land Department Real Estate Services Trustee office cannot complete the transfer. For this reason, handling Dubai property sale service charges is typically part of the pre‑completion checklist for every transaction.
In practice, sale and purchase agreements in Dubai commonly provide that current‑period service charges are shared on a pro‑rata basis between seller and buyer, using the transfer date as the cut‑off. This contractual allocation is a matter of negotiation, but market convention is clear enough that most brokers and conveyancers follow the same pattern. The legal obligation toward the owners’ association remains with the seller until registration, but the buyer usually compensates the seller for their share of the already‑paid period.
Outstanding arrears from previous billing periods are generally treated as the seller’s responsibility and must be cleared in full before or at transfer, unless an explicit written agreement states otherwise. Owners who have entered into a Tayseer plan to pay overdue service fees by instalments must remember that the plan does not reduce the approved total; any unpaid instalments must also be allocated between seller and buyer by agreement and reflected in the financial settlement.
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How Pro‑Rata Service Charge Calculation Works
For most buildings and communities, the “billing period” used for pro‑rata calculations corresponds to the fiscal or calendar year applied in the RERA‑approved budget shown in the Service Charge Index. The methods below reflect common pro rata service charges in Dubai practice rather than statutory rules, so the sale and purchase agreement and completion statement always prevail.
Prepare Information and Confirm the Service Charge Period
Begin by identifying the current billing period for the unit’s service charges. Many projects bill annually in advance, while others issue semi‑annual or quarterly invoices; the invoice itself should show the period start and end dates. The number of days in this period will be used in all subsequent calculations.
Next, confirm the total service charge amount for that period for the specific unit. This usually comes from the invoice or statement issued by the owners’ association or JOP manager, which, in turn, is based on the RERA‑approved rate per square foot and the unit area shown on the title deed. If there is any doubt, the figures can be cross‑checked against the Service Charge Index and the project’s Mollak records.
Invoices often separate components, such as general service charges, reserve or sinking fund contributions, and, sometimes, common‑area chiller or district cooling charges. Each component is usually apportioned separately using the same date and day‑count logic, so that both seller and buyer can see exactly what they are paying for.
Finally, make sure the billing period you use for the pro‑rata split is the same period adopted in the RERA‑approved budget and invoice. Using mismatched periods is a common source of errors when people attempt a Dubai service charge pro rata calculation without checking the underlying dates.
Calculate the Daily Rate for the Billing Period
Once you know the total charge for the billing period, calculate a daily rate. This is a simple commercial tool to split the invoice fairly; it does not affect the approved annual or period amount.
If the invoice is annual and billed in advance, the daily rate is usually:
- Daily rate = Annual service charge amount ÷ 365 days
(or ÷ 366 days in a leap year)
If the invoice covers a shorter period, such as a quarter or half‑year, the daily rate is:
- Daily rate = Service charge amount for the period ÷ Number of days in that billing period
The same approach can be applied to each component on the invoice. For example, you may have one daily rate for the general service charge and another for the reserve fund contribution, even though both use the same dates. This helps when parties want to distinguish between operational expenses and long‑term capital reserves in their negotiations.
| Item | Example Value (AED) | Notes |
|---|---|---|
| Annual service charge amount | 12,000 | For one unit, full calendar year |
| Days in year | 365 | Non‑leap year |
| Daily rate | 32.88 | 12,000 ÷ 365 (rounded to two decimals) |
Split the Period Between Seller and Buyer
With the daily rate defined, the next step is to divide the billing period between seller and buyer based on the transfer date. Practitioners normally treat the transfer date itself as the last day of the seller’s responsibility for the current period.
Using the full period amount rather than the daily rate, the formulas are:
- Seller’s share = Period service charge amount ×
(Number of days from period start up to and including the transfer date ÷ Total days in the period) - Buyer’s share = Period service charge amount ×
(Number of days from the day after transfer to the period end date ÷ Total days in the period)
Common market conventions include: if the transfer date falls on the first day of the billing period, the buyer usually bears the full period’s service charge; if it falls on the last day, the seller usually bears the full amount, with no reimbursement from the buyer, unless the written agreement states otherwise. These rules of thumb keep calculations simple where the transfer is aligned exactly with a period boundary.
In practice, the seller often pays the full service charge invoice for the current period before completion. At transfer, the buyer reimburses the seller for the buyer’s pro-rata share, usually reflected as a line item in the completion statement prepared by the parties’ conveyancer or the Real Estate Registration Trustee. This statement functions as a contractual reconciliation record between buyer and seller, rather than as a DLD-administered settlement mechanism.
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Service Charge Settlement at Transfer – Documents, Payments and Risk
Service charge invoices for jointly owned properties must be paid into JOP escrow accounts approved and regulated by the Dubai Land Department. Paying into these regulated accounts helps ensure that JOP escrow service charges contributed by Dubai owners are used properly for maintenance, services, and reserves rather than being mixed with other funds.
Before transfer, the owners’ association or JOP management company usually issues an NOC confirming that all service charges have been settled up to a specified date and that any payment plans, such as Tayseer instalments, are in good standing. This NOC is a standard requirement for DLD and serves as proof that there are no outstanding claims that would prevent registration. Parties often refer informally to this as the NOC service charges for the Dubai property sale requirement.
The pro-rata service charge adjustment agreed by the seller and buyer appears in the financial completion statement prepared by the conveyancer or the Real Estate Registration Trustee. This statement typically lists the purchase price, service charge credits or debits, agency fees, and registration costs, enabling parties to settle contractual amounts at completion, usually by cash or bank transfer.
The DLD’s role is limited to registering ownership transfer once the required documents and fees are provided. EGSH consultants assist by coordinating with the owners’ association or JOP manager and transaction parties to verify figures and support accurate settlement, without DLD handling or calculating service charge payments.
If service charges remain unpaid or are incorrectly apportioned, the owners’ association may pursue financial claims at the Dubai Rental Disputes Centre. Persistent non‑payment can escalate to execution measures against the unit, potentially including sale to recover arrears and costs. Ensuring that service charges for property transfer transactions in Dubai are fully reconciled, documented, and backed by an NOC significantly reduces this risk for both the seller and the buyer.
Practical Checklist for Sellers and Buyers
- Confirm the latest RERA‑approved service charge rate and billing period for the property through the Service Charge Index on the DLD website, Mollak system or Dubai REST app.
- Obtain a detailed service charge statement from the owners’ association or JOP management company, showing current‑period invoices, any arrears, and whether a Tayseer plan for overdue service fees is in place.
- Agree in writing in the sale and purchase agreement how current‑period charges, past arrears, and any remaining Tayseer instalments will be allocated between the seller and the buyer.
- Perform the pro‑rata calculation in advance, using the billing period dates on the invoice and applying the formulas consistently to all components such as general charges, reserve fund and common‑area chiller.
- Review the draft completion statement carefully, ensuring the service charge adjustments match your agreed figures and that payments into JOP escrow accounts are up to date to avoid delay in issuing the NOC.
- Keep copies of the NOC, invoices, Service Charge Index extracts, and the final completion statement, as these documents may be important if a disagreement arises or a claim is later filed at the Rental Disputes Centre. EGSH can help collate and verify these documents as part of your transfer file.
Correctly calculated and well‑documented pro‑rata service charge settlement protects both parties and allows the DLD transfer to proceed smoothly through EGSH without last‑minute disputes or NOC delays. The seller remains the legally responsible owner until registration, but contractual pro‑rata sharing ensures that each party effectively pays for the days during which they benefit from the property.
The methods described here reflect common market practice based on RERA‑approved budgets and DLD procedures, but each transaction depends on its own contracts, invoices and dates. This article provides general information only and does not constitute legal advice. Parties should seek professional legal and conveyancing advice and review their specific agreements and DLD documentation before relying on any service charge figures.
FAQ
How do you calculate pro rata service charges for an apartment sale in Dubai?
Identify the billing period on the latest service charge invoice, confirm the total amount for that period, and count the number of days in the period. Then allocate days between seller (from period start to transfer date inclusive) and buyer (from the day after transfer to period end), and multiply the total charge by each party’s day‑count fraction. For example, Seller’s share = Period charge × (Seller’s days ÷ Total days), and Buyer’s share = Period charge × (Buyer’s days ÷ Total days).
Who pays service charges when selling a property in Dubai, the seller or the buyer?
The registered owner is responsible to the owners’ association or JOP management company until the transfer is completed and recorded with DLD. Between seller and buyer, market practice is that the current‑period invoice is shared pro‑rata according to the transfer date, with the seller often paying the invoice in full and being reimbursed by the buyer for their share at completion. Any arrears from previous periods are typically paid by the seller unless the parties explicitly agree otherwise in writing.
How are service charges split between buyer and seller in Dubai completion statements?
The split is usually shown as one or more adjustment lines on the completion statement prepared by the DLD Real Estate Services Trustee or conveyancer. These lines reflect the agreed pro‑rata calculation for the current billing period, and may separately list general service charges, reserve fund contributions and other components. The figures are then netted against the purchase price and other costs so that, after all debits and credits, each party has paid its share of the service charges for its period of ownership or use.
How should I document the service charge settlement on the Dubai jointly owned property sale?
Ensure the sale and purchase agreement includes a clear clause on service charge allocation, including how current‑period invoices, arrears and any Tayseer instalments will be treated. Before completion, obtain an updated service charge statement and NOC from the owners’ association or JOP manager and verify that the pro‑rata figures appear on the completion statement. Keep copies of all these documents, along with proof of payments into the JOP escrow account, as a record of the agreed service charge settlement on the Dubai jointly owned property sale.
Can you provide an example of the pro-rata service charge calculation Dubai uses in practice?
Assume an annual service charge of AED 10,950 for 1 January–31 December (365 days) and a transfer date of 15 September. The seller’s period is 1 January–15 September (258 days), and the buyer’s is 16 September–31 December (107 days). The seller’s share is 10,950 × 258 ÷ 365 ≈ AED 7,740, and the buyer’s share is 10,950 × 107 ÷ 365 ≈ AED 3,210, with the buyer reimbursing the seller for AED 3,210 if the seller has already paid the full invoice. Different dates and amounts use the same structure.
What happens if service charges are unpaid at the Dubai property transfer, and we still complete?
If service charges are unpaid, the owners’ association or JOP manager may refuse to issue the NOC needed for DLD to register the transfer, effectively blocking completion until settlement or a satisfactory arrangement is reached. Even if a transfer proceeds while arrears remain, the owners’ association can bring a financial claim at the Dubai Rental Disputes Centre, which has the power to order payment and enforce against the property, potentially leading to a forced sale in severe cases. Clearing or clearly allocating arrears before transfer is therefore critical risk management for both parties.
Reviewed by
Muneer Juma Al Balushi
Real Estate Registration Trustee Consultant
Muneer Juma Al Balushi has six years of experience in the real estate registration system of the Dubai Land Department. He specialises in accurate, secure, and legally compliant property registration.
This article is intended to provide general information based on official UAE sources, and does not constitute personalised legal advice. Before acting, applicants should verify the current rules and fees directly with the relevant authority or an authorised service centre.
