Protection from bullies
08/09/2007 NST By National House Buyers Association

For a decade, more than 50 owners of a 90-unit condominium diligently paid to their developer their share of the project�s quit rent, as apportioned by a surveyor.

For a decade, they thought that this expenditure was bang up to date. For a decade, they were wrong.

What jolted them into this realisation was a random check at their Local Council Land Office, which revealed that their developer had used their remittance towards payment of quit rent that was in arrears, amounting to some RM114,000.

That meant what was owing for the current year was overdue, causing a penalty amounting to a whopping RM96,000 to be slapped (Note: Quit rent has to be paid to the Land Offices by not later than May 31, failing which a 10 per cent penalty will be levied.)

When the owners confronted the developer, they were in for a greater shock: Apparently, its reason for the arrears was because the remaining 40 owners of the 90-unit project had not remitted their share.

Does that mean the 50 law-abiding owners should be saddled with the debt?

The short answer is "no". Since the developer is primarily responsible for paying the quit rent, it should have pursued recovery from the recalcitrant owners via all means... or bear the penalty. Not the 50 owners!

Delay tactic for strata title application

But maybe silently, the developer was happy to be in arrears, as it is just the excuse it needs for not applying for strata titles for the project. (Note: According to Section 9(e) of the Strata Titles Act, 1985, quit rent has to be paid up to date at the time of such application. For so long as the debt is not paid in full, the sub division of any building into strata titles cannot be processed by the local authorities.)

Among the tactics a developer can use to delay transfer of strata titles are:

• It purports to be appealing against the re-adjustment of the quit rent rate;

• It says it is contesting the penalty imposed by the Land Office on the arrears to be paid; and

• It claims there is no point making payment before May 31 as the funds can be used towards other more urgent purposes.

No more excuses

The phenomenal sprouting of stratified projects over the last decade has posed new challenges on the law, which has had to be amended and then re-amended to keep up with the times.

One of the changes in the Strata Titles Act (that came into play on April 12 this year) is the removal of the clause relating to the "duties and power of management corporations" to "pay the rent of the lot" (Section 43(1) (j) of the original law).

Because the "lot" refers to the master (parent) title prior to any sub-division, the deletion implies that it is now possible for quit rent to be billed separately to individual parcel (or strata) owners.

Practical approach

In a recent dialogue between the National House Buyers Association and Dr Azimuddin Bahari, director of Strata Management at the department of Land and Mines in the Ministry of Natural Resources & Environment, the following points were clarified:

• That there will henceforth be a separate billing of quit rent to individual parcel owners;

• Payment for the annual quit rent is for parcels and not on the entire lot; and

• The quit rent for the common areas in a project will be apportioned by the Land Office and incorporated into the individual bills;

Azimuddin added that the separate billing change will be effected from the beginning of 2008, and that any arrears in quit rent prior to the year ending 2007 will be the burden of a project's developer or management corporation.

The onus will thus be on these two parties to take whatever action necessary to recover the debt.

We sincerely hope that with these type of consumer centred amendments in action, buyers can at last find protection against bullying and torment from delinquent developers.

With enforcement of the laws, this wish might come true.

The National House Buyers Association is a non-profit, non-governmental, non-political organisation manned by volunteers. For more information surf to www.hba.org.my or e-mail info@hba.org.my