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Law For Everyone

Thursday, 20 April 2017

Flats, condos and apartments

There are three clearly defined periods of management for the maintenance of high-rise properties in Malaysia.

IN earlier times, people lived in wooden houses with attap roofs. As time went by, concrete and brick structures constituted progress. These were all properties fixed to the land.

Then accommodation which was built upwards came into existence. Flats or apartments, and condominiums, are also referred to as compartmentalised units or parcels. Owners are issued Strata Titles.

All these units have a common feature. These are common property facilities which someone has to manage.

In return, service charges have to be paid. In this connection, words like Joint Management Body and Management Corporation are used. A reader asks why and how these bodies come about.

Once a property is completed, the role of the developer comes to an end, although obligations to rectify defective works continue as provided for in the sale and purchase agreement.

While the owner of each parcel will naturally be expected to look after his own parcel, there is a need to provide for the proper management and maintenance of the building and the common property. In this connection, the provision of proper maintenance by the management falls into three periods of time.

Immediately after possession is handed over, it becomes the duty of the developer. It is referred to as the developer’s management period. Both under the contract and under the law, the developer and buyer assume concurrent obligation.

Thus the developer has the right to collect service charges according to the allocated share unit of the parcel owner. This will be for maintenance and management, and also for the sinking fund. The developer, during this period, is entitled to use this money for the purpose for which it is paid.

The developer must open a maintenance account in respect of each development, and all monies received must be paid into the account. Importantly, it is not only the purchaser who is required to pay the charges into this maintenance account: the developer must also pay in respect of the unsold units. Such money does not belong to the developer but is money held in trust for the owners of all the units as a whole.

The current applicable Strata Management Act came into force in all states in Peninsular Malaysia and the Federal Territories on June 1, 2015, except for Penang, which came into force on June 12, 2015. Sabah and Sarawak have their own legislation, similar in spirit.

Within 12 months of delivery of vacant possession, a Joint Management Body comes into existence. It is, by law, a body corporate. It is the duty of the developer to convene the first AGM of the owners of the parcels.

The attendees will decide on the number of members of the Joint Management Committee. The rest of the agenda will be to deal with matters relating to the management and maintenance of the building, including other concerns relating to the common property.

The developer is required to hand over to the Joint Management Body all documents used for and during the construction of the building and also relating to the parties that they have been dealing with during the management period.

Before the developer management period expires, the developer must also transfer all money and hand over the Administration Office to the Joint Management Body.

The duties and powers of the Joint Management Body are essentially to properly maintain and manage the building, which relates to the common property, as responsibility for an individual unit rests in the individual owner.

While at the first Annual General Meeting, the Joint Management Committee will be elected, it is very often the case that the Committee may find it difficult to carry out the process of managing the building itself, even though it could employ the necessary personnel and make the necessary purchases.

Therefore it is empowered to employ or arrange and secure the services of any person or agent to undertake the maintenance and management of the common property of the building. The Joint Management Body may make by-laws with regards to the use of the building but otherwise fairly detailed provisions exist in the Act.

The Joint Management Body, too, must open and maintain a maintenance account with a bank or financial institution and, as in the case of the maintenance account during the developer’s management period, all charges collected must be paid into this account, while expenses paid out will also come from this account.

The position here, in terms of the management and maintenance, is no different from what takes place during the developer maintenance period, except that there is now involvement by the parcel owners.

In the meantime, activities relating to the issue of strata titles will be going on under the Strata Titles Act 1985. This will lead to the opening of a Strata Title Register in respect of the building by the Registrar of Titles.

When this happens, a Management Corporation consisting of all parcel proprietors will come into existence as a body corporate, which may sue and be sued in its own name. The Joint Management Body must hand over all that it has received from the Developer, as well as whatever it has acquired during its term, to the Management Corporation.

The Developer must, for this purpose, convene the first Annual General Meeting of the Management Corporation within one month after the expiry of the Joint Management Body period. When the Management Committee has been elected, it will carry on the role that has been played by the Joint Management Body.

Thereafter the master title for the property will be held by the Management Corporation. In a way, it is like a community where the unit owners are the members and the Management Body provides the governance in terms of management and maintenance.

Any comments or suggestions for points of discussion can be sent to mavico7@yahoo.com. The views expressed here are entirely the writer’s own.

Tags / Keywords: Bhag Singh , columnist

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