The grey area within JOP law

Bruce Moult

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I have, for some time, been skeptical of the effectiveness and usefulness of the Jointly Owned Property (JOP) law, given that the majority of apartments and villas are owned by absent landlords whose interest only lies in ensuring he/she receives sufficient rent to cover his/her investment, service charges (however much they may be) plus a profit; nothing wrong with that.

And, if the rent becomes too high (whether due to service charges or not) the tenant simply moves on. Again, nothing wrong with that.

So in most cases, neither landlord nor tenant have much of an interest in the area or building they are living in - it’s simply an investment for one and a temporary home for another. JOP law then, is meaningless to many. Certainly in its current form.

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Recently however, I have had the pleasure of meeting and dealing with some wonderful Owners Associations who have a refreshing and real interest in their property. They’ve registered with RERA and are keen to appoint an Owners Association Management (OAM) company and FM provider that meets their service aspirations.

This is where the JOP law really comes into its own - although two of the OAs I have dealt with have been waiting for nearly two years to get RERA final approval. That aside though, they have taken over some degree of control and have solicited bids for facilities services and are genuinely in a position to appoint.

But they are equally confused by RERA, OAM companies, the actions of other Community Managers and the FM industry itself as to exactly what type of contract they can award. This, is generally true of all the OA’, and is something my industry counterparts and I
often get asked.

The first question is whether the FM service provider chosen by the OA needs to be registered with RERA. Technically, the answer is yes. RERA likes to see the FM costs as part of the service charge approval process, but it’s the OA’s building and the OA’s money. Subject to board approval, the OA can appoint whoever it likes as long as the company has a trade license.

This brings us on to trade licenses and the sort of trade license the FM service provider should have. The answer to this is dependent on the service, of course.

Assuming its full FM, obviously the trade license would be “FM”. But that’s not good enough. The DED and RERA - assuming the FM company has registered - requires the service provider to register each trade. We all know total FM encompasses a huge range and therefore can be very expensive. As a result, not many OAs do opt for it.

My advice to them would be, providing the trade license includes FM and one (perhaps two) other trades such as Electrical or Mechanical maintenance, that it is fine and a sensible approach!

The OA often hears service providers are not allowed to sub-contract. This area of uncertainty is where, I believe, some Community Managers either don’t understand the JOP, or, have deliberately misinterpreted it to their advantage, allowing them greater control and a need for their management services.

The actual intent is to eliminate sub-contracting of FM in its entirety to remove any possible duplication in management (and costs). But of course, the FM provider can and will need to sub-contract for specialist areas and services, which is normal practice and is understood.

Long term contracts are another grey area. Certain parties within the industry have confused this - not deliberately - but to ensure that they, as defacto managers, don’t get stuck with a long term contract that they can’t get out of should the OA appoint another Community Manager. But yes, the OA can enter into a longer term contract and can make savings by doing so. The OA can always terminate the contract if the service provider fails to perform.

So having addressed the OA’s questions and presented a winning bid thee OA would love to appoint the FM service provider. Now the issue is RERA approval. Watch this space…

Bio
Bruce Moult is an independent FM consultant with over twenty years experience in FM and PFI/PPP contracts