Tim Elliott
Welcome to LAWGICAL the UAE’s first and only regular legal podcast. I’m Tim Elliott I’m here with our expert managing partner of the Dubai -based legal firm HPL, Yamalova and Plewka here in Dubai, Ludmila Yamalova. Always good to talk to you, Ludmila.
Ludmila Yamalova
Tim, likewise, always pleasure to be speaking with you.
Tim Elliott
Seems like the only thing we’re talking about at the moment, and I’m very comfortable with this as an English person, is the weather. Last week’s storm led to the most rainfall in a day in this region since records began, which means possibly it’s the most severe storm the region has ever seen, almost a foot, an imperial foot in less than 24 hours. So it was an event. It of course led to flooding.
homes and cars being abandoned. Very very tough times for so many people. What I’d like to discuss with you in this podcast is property damage caused by the recent storm for homeowners, and start with homeowners rights and obligations. What are the options generally speaking?
Ludmila Yamalova
Yes, indeed, there has been difficult time for many and certainly for a lot of homeowners in the UAE who might have bought some of whom might have bought properties very recently and have had to deal with these calamities. So it’s been very unfortunate and difficult time for many. And in terms of what homeowners can do, their rights and the options do depend on a number of factors.
Tim Elliott
Yeah.
Ludmila Yamalova
They depend on the nature of the damage itself and which part of their home was damaged and also to what extent. Also the cause of the damage, what caused the damage? Is it the wind? Is it the water? Is it the pounding rain on the windows? Is it the flooding?
So the actual cause of the damage or is this the water coming from the ceiling from the neighboring unit? Yeah, so there’s so many different aspects of what the down could have caused the damage and trust me I’ve seen it even where we live in our community even days after people were panicking because the unit above was flooding and it was therefore flooding units below
So, yeah, so the nature of the damage and the cause of the damage as well as the age of the property or the time that you perhaps since when you took possession of the property. And perhaps most importantly, it depends on whether the homeowners had insurance or not. So,
There is such concept as a homeowner’s insurance. And so in many cases, what options and what rights homeowners may have really depend on whether they had insurance.
Tim Elliott
Let me pick you up on that because it’s important I think to run through the relevance of homeowners insurance, why it’s important and also what homeowners insurance is.
Ludmila Yamalova
Yes, well, so generally speaking, property damage during rains, for example, in the UAE would be covered by what’s called a homeowners insurance. And the homeowners insurance in general covers two things. One, it covers the structural aspects of the property itself, such as let’s say the damage to the roof, the floors, the windows, walls and balconies, terraces and other facilities that are attached to the property.
And then two, homeowners insurance in most cases also includes coverage for the damage content within the property, such as furniture, carpets, and any other assets inside the home. So contrary to, for example, content insurance for tenants, which only includes and covers their personal belongings, in most cases homeowners insurance includes both.
the personal belongings of the owner as well as the property itself. So you don’t necessarily as a homeowner, you don’t need to also take content insurance because your homeowner’s insurance also covers your content.
Tim Elliott
So it sounds like homeowners insurance should cover damage or the damage caused by the storm and the floods that followed that. But I’m guessing it’s probably not that easy.
Ludmila Yamalova
Indeed, and it’s a very interesting question and the answer is actually quite a bit nuanced in legal terms. And this is because many insurance policies, and this not just in the UAE, but also in other countries, perhaps where insurance industry is a lot more developed, and then many insurance policies actually exclude damage that results from a variety of events, including floods.
and drain backups, standing water, and a number of other sources of water. In fact, in many countries, for example, like the US, again, I speak from personal experience, in addition to homeowners insurance, there’s actually a specific and a separate insurance. It’s called the flood insurance. And so those homeowners who live in areas that are more prone to flood,
in addition to their homeowners insurance would also get flood insurance. Now that doesn’t exist everywhere because those places where floods are not usual, then those homeowners insurance would generally include flood -related damages. So just like there is an additional insurance for earthquakes, for example. So yes, in certain countries that’s kind of floods, generally speaking, can actually are often covered by additional
insurance. So in this case, those homeowners who do have insurance in the UAE, they should review their policies closely and understand whether floods might be excluded. And just in general, what is included and excluded in their policies. And that’s because the extent and the nature of the coverage very much depends on the specific policy.
So if your policy doesn’t mention anything, does not have a specific exclusion for flood, then it’s safe to assume that floods will be covered. But if it excludes floods, then it will be, then they will go back to what we discussed earlier. It would, much the coverage would much, very much depends on what caused the damage. Because remember, it wasn’t that we had a tsunami, we had rain that then caused a flood.
So if it can be shown that the damage in the property was a result of the rain, for example, a leaky roof, then that should be covered even if, let’s say, your specific insurance policy excludes events such as flooding.
Tim Elliott
So you’re saying to me as a person who doesn’t read the instructions with flat pack furniture and just thinks I can put that together, read the fine print before you go any further. I’ve got it. How do you classify the latest event, Ludmilla? Was it damaged caused by a storm? Was it damaged caused by a flood? Where does it fall? Hmm.
Ludmila Yamalova
million dollar question. But at a high level, for example, if a home’s roof is damaged during a storm or rainwater leaks into the house, it is usually considered as water and not flood damage. So the key difference is the event that caused the damage, in this case, is a storm. But let’s, for example, let’s say the floors were damaged because
because the surrounding around the property got flooded and the water came through from under the doors, which we’ve seen in many cases because of the floods outside, then that could be classified as the flood, although the flood was caused by the rain. So that’s why I said it’s a million dollar question. We haven’t really seen claims like this yet. At least I haven’t seen them.
And I imagine that not many people have, because as you rightfully said, this is the first event that happened in at least that kind of rainfall in the last 75 years. So there would not be that many court precedents to kind of refer back to, I guess with some kind of degree of certainty, to estimate what the courts will decide in this particular case.
But certainly, I guess the easier case is that if your property was damaged because of the rain, such as the roof collapsed or water came through the windows and ruined walls. So that’s rain related. But anything that has to do with actually standing water and floods, that’s where the million dollar question lies. And certainly, we will continue to monitor the space and we’ll see.
first of all, how the insurance companies deal with this. And in those cases where insurance companies perhaps do not cooperate or agree, if once those cases move to court, as we learn how the local courts will deem this event in legal terms, whether it’s the damages caused by rain or flood, we will certainly do another follow up podcast on this.
Tim Elliott
What about owners who believe that their properties sustained severe damage because they just weren’t built very well?
Ludmila Yamalova
Yes, and there are many of those owners and many of those incidents and we have even already seen a number of specific cases where clients have come to us since then asking these very questions and properties that are rather not just new, they could be like brand new within even a year of construction, properties that are deemed to be luxury properties, also properties that are
They’re located in buildings and communities which otherwise seem kind of impenetrable. And yet when the rain came, very, you know, to a lot of these owners, very sort of simple things kind of gave way. So where water was leaking just through the windows, through the walls and…
And as a result, and in response to that kind of sort of maybe water damage, parts of the units and houses were coming down, in terms terms of walls coming down and ceilings. And we have seen all these cases already, as I said. So then in many cases, owners perhaps reasonably so want to blame the builder or the developer for the properties of the properties because in their minds, if a property, especially if it’s a luxury property that was just
built a few months ago or at least a few years ago should not have experienced this kind of damage. So in those cases, owners of properties in the UAE do have a legal right against the developers for any kind of construction defects to their properties. And so in these cases, then they may be able to file a case where first of all, request for a developer to come and remedy the defect.
or certainly file a case against the developers to request them to conduct the repairs.
Tim Elliott
What’s a construction defect? How would you define that?
Ludmila Yamalova
Certainly. So generally speaking, a construction defect refers to a flaw in the structure of a building that leads to a failure in performance of the building or decreased value or potential harm to the occupants. And some specific examples of, let’s say, structural issues could include water intrusion, which we’ve seen the case here.
faulty electrical wiring, inadequate insulation, which by the way is also supposedly one of the major issue that so many homeowners here have with their newly constructed homes, and improper drainage is another example.
Tim Elliott
How does the UAE treat construction defects claims? How does the law treat claims? Are they covered?
Ludmila Yamalova
In fact, they are. So the UAE laws do have a very specific provision for construction defects, and it’s covered by the UAE Civil Transactions Law, which is law number five of 1985, and it’s the federal law, which means that it applies to all of the UAE, all of the Emirates equally. And so, and there’s a specific article, which is article 880.3, that specifically covers construction defects.
and owners right against developers or contractors that were responsible for building and handing over the property for any kind of construction defects. So yes, legally wise, legislation wise, yes, there’s a specific provision in the UAE law that provides for construction defects.
Tim Elliott
And can you bring a case against a developer at any point?
Ludmila Yamalova
So it’s similar to how construction defects claimed are, I guess, argued and drafted in other jurisdictions. There is a statute limitation. So the statute limitation is 10 years, which means that if your building is older than 10 years, then you will no longer be able to bring a case against the developer for construction defect.
And that’s because the building is older than 10 years. And that has to be 10 years from the handover of the property. So for example, it doesn’t, by the way, it doesn’t matter that you bought that property from someone other than the developer. So you could be a fourth owner, for example, from the time the property was handed over.
So your claim is not against the previous owner, but against the developer who built. So as long as it has not been more than 10 years from the time that the developer handed over the property on the market, you do have a claim against the developer for construction defect. So that’s one, what’s called statute limitation, 10 years. There’s another statute limitation, however, and that one is a shorter one, and that’s three years. And that’s a three -year statute limitation.
for claim for compensation after this so it could not be more than three years after you’ve discovered the defect so for example Let’s say let’s say you knew that you have a leaky window right or a leaky roof and you and there is evidence of that because you might have written complaints to the Developer and asking them to repair or you might have had other kind of evidence that show that you knew that you had a leaky roof
And your property is still well within the 10 -year statute of limitations, but with regards to the defect in the roof, it’s already been three years that you’ve known about it, but you haven’t done anything. You had not pursued the developer. In that case, actually, the statute of limitations would run after three years. And the idea here is that since you already knew about the defect, you should have already taken
measures against it and this is why you have the generalist speaking structure defect such limitation is 10 years because in many cases you don’t know so there’s a blatant defects and then there’s kind of hidden defects so structural in the building you may not know that the building is structural and defective until X number of years go by and this is why there is this 10 -year such limitation
because a lot of the structural defects kind of manifest themselves later on as the building or property ages. But if you already knew about it, then the obligation is on you to repair and fix it within that period of time. And the idea behind statute of limitations is because for developers, you want to also give them some sort of finality, right? Because if you can come up to the developer in 20, 30 years so the developers cannot move on,
in terms of their own business plans and their own peace of mind, if you will. So that’s the idea why you have such limitation because it kind of gives, it imposes a very clear period during which the developer remains responsible and obligated. But after that, the developers can now with certainty build their business on the basis that they’re no longer responsible for these assets.
Tim Elliott
I’m guessing that at the moment this is a particularly interesting point because we’re going to see, I’m thinking we’re going to see claims for construction defects multiply after this storm. How would you make such a claim?
Ludmila Yamalova
Well, always the first thing you should do is you should A) document that this was a construction defect. So, you reach out to the developer and request for them to come and repair your property. And you could be just matter of fact, especially for those homeowners whose properties are very new. And we had clients recently, just in the last week, whose properties were just handed over six, eight months ago. So,
you can take a stance, just a matter of fact stance. Well, obviously the property suffered this kind of damage because of the construction defect. So you just simply make a very simple kind of almost informal request to the developer while stating that the property sustained damage due to what you deem to be construction defect. And therefore you request for them to come and remedy the defect.
There could also be a management company that you would reach out to because for a lot of the freehold properties in the UAE, there’s always a management company that sort of overlooks the property. And often, their management company has very close relationships with the developer because that’s also one of the questions we’ve already seen is that clients ask, well, we don’t know who the developer is, especially in those cases where they bought it from someone else, from a reseller.
So, they don’t have necessarily contact with the developer. But that’s not a serious issue. So in those cases, you just reach out to the management company and you request for them to either communicate to the developer or basically to even make a complaint to the management company so that they can refer it back to the developer. So that’s ultimately kind of an easiest way and the easiest approach. And I highly recommend that
all those who find themselves in this situation and you believe that you have your property sustained damage because of a construction defect. Send them the email, start with an email and just send some sort of evidence to show that the extent of the damage and why you believe this is a construction defect.
Tim Elliott
What What What What What What kind of evidence do you need? Because you have to convince a developer that it was a construction defect. What evidence might do that?
Ludmila Yamalova
There’s different types of evidence, but perhaps best to include more rather than less. So one is just pictures, right? I mean, if you just see a ceiling come down on a picture or a video, I think that kind of speaks for itself. So as the saying goes, a picture is worth a thousand words. So certainly you can attach, it’s very powerful and very effective evidence. It’s pictures and videos.
And especially if you’re trying to appeal to developer kind of in an informal way by email, right? So if you just attach a photo or a video that clearly shows that the property was not well constructed, I think even kind of at an emotional and perhaps ethical level, developers may just not even argue and send their team to remedy the defect.
So that’s basically one type of evidence. An additional evidence perhaps that I would encourage everybody to consider getting is a contractor’s report from a reputable contractor and someone perhaps that’s maybe have even done similar work with that particular developer.
just to give even more legitimacy to the contractor. And so, and they would document the extent of the damage and also their own conclusion as to what would have caused the damage. And we have already seen a report like this, even though it’s only been about a week since the incident, we have had clients have come forward to us with these kinds of claims where they believe brand new properties and suffered significant damage.
And they’ve already retained contractors that come and sort of documented the extent of the damage and what they believed caused the damage. And in these reports that we have seen, we have already seen the contractors clearly state this as construction defects. So the damage was caused clearly due to poor construction.
Tim Elliott
Okay, so you provide adequate evidence and a developer agrees to fix the problem. Who do they have to use? Can they use whoever they want to fix it? Can they make their own decision on what needs to be fixed and how to fix? How does that work?
Ludmila Yamalova
So obviously, developers, if they do agree to fix, they want to use their own contractors, and they want to use their own methods of fixing and what they believe needs to be fixed and how. And once again, I speak from experience, we have seen a number of instances and claims where developers want to do a quick fix for obvious reasons, especially in cases like this where you have so many claims. And you can imagine they will have to spend significant resources to fix so many units.
And if they agree to fix one, you can anticipate that all the other owners will also request to have their units fixed. So the expenses for the developers mount very quickly. So predictably, they will try to use kind of the cheapest, the quickest methods of repairing a particular issue.
So, but in the very least, you need to request, as the homeowner should request, for an engineer to sign off on the repairs. But even prior to that, that there is a specific job description as to what they’re going to do and how they’re going to repair these issues, so that later on when the engineer comes, they can sign off on that specific job description and not simply, well, you know, the wall came down, we’ll just kind of come and…
paint over it, which we’ve seen often. So in that way, you want a very specific mandate of how the developer plans to repair the defect. And then also, once that’s been finished, that there is an engineer sign off on that report confirming that, A) that job was performed and that it was performed to the relevant standards.
and then the engineer signs off on it. Once again, we’ve seen these kinds of cases where developers just, it’s much easier for developers, management companies, contractors to come and just do a quick fix. And then where clients said, we’d be objected to that kind of a quick fix, and they either requested to bring their own contractors or in the very least to have an engineer sign off. And obviously when the engineer starts adding his or her signature to the report,
it’s a different kind of approach and they’re not going to just sign off on the quick and dirty, just repaint or paint over a crack in the ceiling or a wall. So it takes a different sort of different level of responsibility. So yeah, so certainly request that or if in some cases and we have seen this as well successfully, just bring your own, just insist that you want your own contractor.
and that you want because you know that it’s going to be an unbiased party and that they will they will repair to the best of of their abilities and since it’s going to be a covered claim they won’t be short short changing or or cutting short perhaps the scope of work.
Tim Elliott
Okay, what if a developer, your developer, just says, no, I’m not even going to entertain your claim?
Ludmila Yamalova
Also happens a lot and I predict that this will happen quite a bit in this case. Again, just by sheer sort of number of cases, unfortunate cases that are happening. So basically when all fails, as is always the case, you go to court.
So, and you would file a case in court for a construction defect. And in this case, which where you will need all of that evidence, you will need to have and the pictures and the videos and the contractor’s reports or engineering reports showing that this was a construction defect. And all your communication with the developer pleading to come and repair the damages and perhaps their refusal to
take responsibility or their silence is also evidence. So, and then you just need to make sure you bring that case and you claim, you make the right claims, which is on the UAE Civil Transactions Law and the specific provision on construction defects. And then you just let the courts decide.
Tim Elliott
this just happens you file a claim for construction defect at the local courts.
Ludmila Yamalova
Yes, indeed. These kinds of cases are filed in the local courts with regards to a few other kinds of claims, for example, insurance or car insurance. There’s other authorities that you go to before you file with the court. But here you go directly to the court. And it should be a local court, a court where your property is located. So let’s say if it’s in Dubai, it should be a Dubai court.
And if you’re in the DIFC, then you’ll be at the DIFC Courts and you will file with the local court and you’ll make your claims as per the law and reciting or relying on some of the earlier precedents.
Tim Elliott
Ludmila, could you cite any, I don’t know, court cases on construction defects and are there any successful cases to cite?
Ludmila Yamalova
Indeed, yes, there are a number of successful cases and we have seen and we’ve also done a quick and dirty search since then. But yes, absolutely. So this is a very well established legal principle and construction defect that is, I mean, the law, the UAE Civil Transactions Law number five, it goes back to 1985. It’s been amended a few times, but the construction defect provision hasn’t really been amended. It’s been more or less the same. So it’s not a new law.
And so the courts have seen this claim, they’ve considered this claim. Obviously in cases like this, the courts will appoint an expert and there will be a construction expert. And it could also be an accounting expert to kind of to provide expertise on the extent of the damage. And so then these cases have been successful and we’ve seen a number of successful cases that were resolved
in the interest of the homeowners against the developers. And the developers were required either to compensate or to actually remedy the situation. So yes, it’s an established legal principle. And there’s enough precedence on record now to rely on. So certainly, all those homeowners who find themselves in these unfortunate situations where the developers are not responding to them and not cooperating,
they should know that the law is there, the practice is also well established. And so it’s as long as you’ve got evidence and the right legal perhaps approach, citing the right laws, then this should not be something that they would fear or that they should be concerned because the law does cover them in these kinds of circumstances.
Tim Elliott
Can I ask you for an opinion, Ludmila? Dubai is not short of new builds, newly constructed housing developments and complexes. What do you think is going to happen with the newer builds constructions here in Dubai?
Ludmila Yamalova
Personally, I think there will be a number of developers, in particular more reputable developers whose projects were recently handed over, who will just accept it at face value, or in particular their responsibility to make the repairs, and who will do so on their own accord. We’ve already seen statements, for example, from the likes of EMAAR, that they would repair certain neighborhoods at their own cost.
So we don’t know the extent of what it is that they’re going to repair. But certainly we’ve already seen statements from some of the developers. So I do anticipate that certain developers, in particular related to newer constructions, will just, so to speak, do the right thing and not wait for homeowners to bring court cases and to challenge them and threaten them, but rather respond to these simple requests that could be sent by email. And this is why.
I propose that that should be the first step. It should be just kind of a matter of fact because under certain circumstances, especially when there you have the new construction and there have been some fairly evident, perhaps, examples of construction defects and we’ve seen photos and pictures of these. So, you know, it’s not in anyone’s interest to argue something like that and certainly see it in public being kind of aired out. So I would say I expect a number of developers will, so to speak, do the right thing and just…
fix it. And don’t forget, also developers should, at least theoretically, they also have insurance. And so a lot of these additional repairs will also be covered by their insurance. So, you know, plus they have access to all these contractors and builders and engineers that are in many cases their own staff. So it should not be a significant expense for them to, especially if they do things in bulk. There’s some economies of scale that they can achieve.
So that’s my personal view, perhaps a little bit idealistic, but I’d like to be right. And then I think other developers perhaps will need a little more nudging, a little more convincing, and maybe a few legal threats and legal notices, and a little more robust evidence before they respond positively. And then obviously, there will be all those developers who flat out refuse or just ignore.
and in those cases the only option would be to go to court.
Tim Elliott
Final thoughts Ludmila, in conclusion, any final words of wisdom?
Ludmila Yamalova
I’d say number one, homeowners insurance. Just like the cases with the renters insurance, it’s not common, although what we’re talking about in most cases in Dubai, it’s multi -million dollar properties. And yet homeowners insurance still to this day is not very common. In most cases, those homeowners who have homeowners insurance, a lot of these problems get resolved much, much, much easier and much faster simply because they have homeowners insurance.
Although there is still a risk of this natural disaster in force majeure, right? Especially if the damage may be deemed as caused by flooding, but again, depends on the insurance. But in the very least, this homeowner insurance will cover a number of other things, such as damage to the person and belongings, and even maybe alternative accommodation, and so on and so forth. But yes, so number one, homeowner’s insurance. And…
And then kind of even perhaps to preempt all that or for all those who are considering to buy or will be handing or taking possession of the property soon, I highly recommend that they bring in inspectors, maybe unbiased independent inspectors and contractors before they take handover, right? So they document the state of the property.
thoroughly before they purchase or before they take possession of the property. So in the US we call them inspectors, like inspection reports. Once again, they’re not very common. They are becoming more common than they used to be when I came here first and for many years after. They are becoming a little more common, but still not as common as, for example, in the US, they just, there’s not that common. They are basically a must in every transfer of property.
a transaction, but here they’re more still kind of an exception. But I would say that’s a fairly affordable expense as well, just to hire a contractor so you have a proper and a thorough inspection report so that you know, because you might be able to discover some of these defects then. And then at that point, this is your leverage to get them fixed, especially if you’re buying direct from the developer. Or it may even make you reconsider.
Or you may want to make your own decision and just invest and then redo and fix those properties on your own dime just so that you avoid these kinds of greater problems in the future. So I’d say highly recommend all those new property owners, but maybe even now those who already own properties, get an inspector and get a very thorough special report so that you know because information is power.
Tim Elliott
That’s LAWGICAL. This time, weather, the rights, the options that we have as homeowners when dealing with property damage, such as the damage caused by the recent storm here in the UAE. As ever, thanks for listening, watching as well if you’re with us on YouTube. And thanks as always to our legal expert, Managing Partner at Yamalova and Plewka in Dubai with Ludmila Yamalova, thank you.
Ludmila Yamalova
Thank you, Tim. Always delightful to be chatting with you.
Tim Elliott
Find us at LY Law, social media, we’re on TikTok, we’re on LinkedIn, we’re on Facebook, we’re on Instagram. All the podcasts are free at lylawyers.com. For a legal question to be answered in an episode of LAWGICAL, or if you’d like to talk to a qualified UAE experienced legal professional, click contact at lylawyers.com.
