It pays to know the facts on strata title

  • Letters
  • Monday, 31 Jul 2017

High rises building are seen in mont kiara.AZHAR MAHFOF/The Star (27/3/2015)

IT is a known fact that most banks are reluctant to provide financing for residential or commercial property that has been held under a master title for a long time, in some cases more than 20 years!

As a title is a property’s birth certificate, owners without the strata title would be stuck in a difficult situation if they want to sell as buyers cannot obtain loan financing.

If, by chance, you own such a property, you need some proactive action to push your developer hard to get your strata and individual title.

For long-suffering owners who are currently frustrated in their attempts to obtain strata titles for their residential or commercial property, the Strata Management Act 2013 (Act 757), which duly came into force on June 2, 2015, is a boon to assure that their property can be passed on to their next of kin. This resolves potential legal heartache and headache for the next of kin if the property has not obtained a title when the owner dies.

Of late, there have been many articles on the obligations of the owners to pay maintenance fee and how not paying is considered a “crime”.

However, few have delved into the crux of the matter behind the stand-off due to the collection problems for the developer or Joint Management Body (JMB) or Management Corporation (MC).

Issues pertaining to rights and fiduciary duties plague properties which received vacant possession especially before the SMA 2013. In this respect, the SMA 2013 offers remedy for owners caught in this situation.

Firstly, know that SMA 2013 offers uniformity of law and policy relating to the maintenance and management of buildings and common property in peninsular Malaysia and the Federal Territory of Labuan.

This Act requires the developer, JMB, MC or subsidiary MC to open and maintain a sinking fund account and maintenance account. All monies collected are to be deposited into the maintenance account. Under this Act, it’s a crime if the developer, JMB, MC or subsidiary MC does not maintain or audit the accounts or hide it from stakeholders.

From the developer’s management period to the preliminary management period, specifically from the date of delivery of vacant possession of a parcel to a purchaser by the developer until after the first AGM of the MC, the developer bears the responsibility to maintain and manage properly any building or land intended for subdivision into parcels and the common property.

During this period, developers are duty bound to, among others: determine and impose charges to be deposited into the maintenance account; determine and impose the contribution to the sinking fund to be deposited into the sinking fund account; prepare and maintain a register of all parcel owners for the subdivided building or land; and ensure that the accounts required to be maintained by the developer are audited and provide audited financial statements for information of all purchasers.

In accordance with SMA 2013, the charges are determined in proportion to the allocated share units of their respective parcels.

The developer must open one maintenance account and one sinking fund account in respect of each development area before the charges are collected from the purchaser of any parcel in the development area.

All money in the accounts shall not form part of the property of the developer but must be held in trust for the purchasers.

A developer shall, in respect of the maintenance account and the sinking fund account, cause to be prepared such accounts and records of accounts as will sufficiently explain the transactions of the accounts and enable a true and fair balance sheet, income and expenditure statement, and profit and loss statement for the period starting from the commencement of the developer’s management period.

Most importantly, the developer must file with the Commissioner of Buildings (COB) a certified true copy of the audited accounts together with the auditor’s report within 14 days of the accounts being audited.

A developer shall prepare and maintain a register containing the allocated share units assigned to each parcel, the floor area of the parcel, and name and address of every parcel owner. Failure to comply with this requirement is an offence that, on conviction, shall be liable to a fine not exceeding RM10,000 or to imprisonment for a term not exceeding three years, or both.

“Allocated share units” means the share units assigned to each parcel intended for subdivision for strata title by the developer’s licensed land surveyor, or in a case where share units have not been so assigned, means the share units assigned under Section 8 of the Strata Titles Act 1985 (Act 318). The allocated share unit is an important determinant for maintenance charges of the common property and the voting rights of an owner of a unit.

Lastly, I encourage property owners to ask for and look carefully through the yearly audited accounts for the maintenance and sinking fund. Don’t be shy to question your developer about how the charges are derived as you have the right in law to do so.


Kuala Lumpur


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