Service Charge Reconciliation in Dubai: The Mollak Guide

Two approval gates, one lien that stops a sale, and a governing law that most published guides still get wrong. What the legislation actually says about service charges on jointly owned property — and where reconciliation breaks in practice.

If you search for Dubai service charge rules, most of what you will find cites Law No. 27 of 2007 — the "strata law" — as the governing legislation.

It is not. It has been repealed.

That is not a pedantic point. It is the single most useful thing in this article, and it tells you how carefully the rest of the material you are reading was checked.

The law changed: Law 27 of 2007 has been repealed

Service charges on jointly owned property in Dubai are governed by Law No. 6 of 2019 Concerning Ownership of Jointly Owned Real Property in the Emirate of Dubai. Article 51(a) is unambiguous: "The above-mentioned Law No. (27) of 2007 is hereby repealed."

Every provision quoted below is from Law 6 of 2019, cited by article, with the Dubai Legislation Portal linked at the end. If a consultant, an agent or an owner quotes you Law 27 of 2007, they are quoting law that no longer exists.

What is the Mollak system?

Mollak is the Dubai Land Department system of record for service charges on jointly owned property. For owners and managers, the practical entry point is DLD's Service Charge Index, which — in DLD's own words — allows a customer to "inquire about the approved service fees for jointly owned properties from RERA."

Three things about it are worth knowing:

• It is searchable by project name, use type and year.
• The service time is immediate.
• It runs through the DLD website (Mollak system) and the Dubai REST app.

The consequence is the part people miss: approved service charge rates are publicly checkable. An owner who asks what rate was approved for their project is not making an unusual request. They are asking for something DLD publishes.

Who approves a service charge? Two gates, in order

This is the structural fact that makes sense of everything else, and it is almost never explained properly.

Article 27(b) prevents RERA from approving a charge "unless it is approved by a certified audit firm recognised by RERA." Article 27(a) then provides that a management entity "must not charge Owners… without first obtaining the relevant approval of RERA."

So the order is fixed: budget, then audit firm, then RERA, then — and only then — the owner invoice. A charge that reaches an owner without having passed both gates was not lawfully chargeable in the first place. That is a materially different position from "the owner disagrees with the amount," and it is worth knowing which of the two you are actually in.

Can an owner simply refuse to pay?

No. Article 28: "An Owner or Sub-developer may not refrain from paying the Service Charges or Usage Charges approved by RERA."

The wording repays attention — the obligation attaches to charges approved by RERA. The remedy for a charge an owner believes is wrong is to challenge the approved rate, not to withhold. Withholding does not create leverage; it creates arrears, and arrears run into the next article.

What happens to unpaid charges when a unit is sold?

You will find a good deal written about "pro-rata settlement" of service charges on sale. We looked for it in the legislation. It is not there — Law 6 of 2019 contains no article codifying apportionment between seller and buyer, and no clearance-certificate regime.

What it contains is considerably more consequential. Article 32(a) gives the management entity a lien on the unit for unpaid charges: "A Unit may not be disposed of unless these charges are paid to the Management Entity."

Unpaid service charges do not follow the seller, and they are not quietly split at closing. They stop the transfer.

For a managing agent this is the strongest collections instrument available, and it is passive — it works whether or not anyone chases. For an owner preparing to sell, an unreconciled account is not an administrative loose end; it is the thing standing between them and the transfer.

Where the money has to sit

Article 30(a): "A Management Entity must open a Service Charges account for each Jointly Owned Real Property with a bank licensed to operate in the Emirate and recognised by RERA."

Note for each jointly owned property. Not one account per management company. Pooling collections from several buildings into a single operating account is not a reporting-presentation choice; it is a structural problem.

Article 30(e)(8) permits a separate cash reserve "to cover emergency expenses, or to replace equipment," usable in critical emergencies without first obtaining RERA's approval. That is the reserve fund's actual legal basis and its actual scope — emergencies and equipment replacement, not a general contingency to be drawn on when collections run behind.

How RERA audits the account

Article 33(a)(3) empowers RERA to "audit the revenue credited, and the expenditure debited, to the Service Charges account," and to engage a certified auditor recognised by RERA to do it.

Read alongside Article 27(b), the picture is of a regime auditing at both ends — the budget before charging, the ledger afterwards. A reconciliation that can only be assembled retrospectively, by exporting and cross-referencing, is a reconciliation that will be painful exactly when it is examined.

Where reconciliation actually goes wrong

The legislation is not usually the difficulty. These are:

• Timing differences. Invoiced in the budget year, collected in the next, spent in a third. Cash and accrual diverge and nobody restates.
• Partial payments applied by owner, not by invoice. A unit is then simultaneously in credit and in arrears depending on how the query is written.
• Expenditure ahead of approval. Spending committed before the budget has cleared both gates, then reconciled against a figure that was later reduced.
• Reserve drawdowns treated as operating income. The reserve is depleted and the deficit is invisible until the equipment needs replacing.
• Mid-year ownership change. With no statutory apportionment, whatever the parties agreed at closing has to be carried into the ledger by hand — and frequently is not.
• Pooled banking. Contrary to Article 30(a), and fatal to a per-property reconciliation.

Reconciliation at portfolio scale

One building with two hundred units and a clean ledger reconciles in an afternoon. Twelve buildings, each with its own approved budget, its own RERA-recognised bank account, its own audit cycle and its own reserve, do not — and the effort does not scale linearly, because the errors above compound across properties rather than repeating independently.

What makes it tractable is unglamorous: one ledger per property rather than per company, payments applied to invoices rather than to owners, the approved rate stored against the budget year so that the comparison is always to the figure RERA actually approved, and the reserve held and reported separately as the law requires.

How PropertyPad handles service charges

PropertyPad keeps a separate service charge ledger per jointly owned property, records the approved budget and the year it was approved for, applies receipts against specific invoices, tracks arrears per unit against the Article 32(a) position, and reports the reserve fund separately from operating collections — so the reconciliation exists continuously rather than being assembled when an auditor asks for it.

See what PropertyPad does across leasing, maintenance, service charges and owner reporting. If Ejari renewals are the other half of your compliance burden, the workflow is set out in Ejari renewal in Dubai.