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Strata Living
01/11/2003 Malaysian Business-Housing & Property
By National House Buyers Association of Malaysia
Own a strata property? Know your rights and responsibilities
Most people are not aware that in buying a strata title property, they become
a member of a corporate body called the management corporation. Under the Strata
Titles legislation, as a member of this corporation, one will involve assuming
certain obligations, duties, restrictions and liabilities as well as various
rights, entitlements and privileges apart from the ownership of their own parcel.
Pre-management corporation
In Malaysia, strata titles are not issued immediately upon vacant possession.
Pending the issuance, it is the housing developer's duty to manage and maintain
the building and common areas. The developer would have signed a 'Deed of Mutual
Covenant' with the purchasers at the time of the sale and purchase agreement
signing. Once you have signed this document, you have agreed to comply with
the developer's by-laws (or house rules). If the rules say you cannot fix any
iron grilles on your windows, you cannot do it, or you would face substantial
fines or penalties.
Forming the management corporation
When the Registrar of Titles (Land Office) opens a book in respect of the
subdivision of building, in the strata register, a newly created legal entity
comes into existence. This corporate body is now known as 'XXX (name of strata
scheme) management corporation'. The name is a little misleading as it
is actually an owners' corporation and has nothing to do with the management
agents.
The original proprietor
From the time the strata plan is registered, the original proprietor, usually
the developer, will control the management corporation. The principal duties
imposed on the original proprietor during the initial period include the following:
- Exercise and perform the powers, authorities, duties and function of a
council until such positions are filled at the council's first annual general
meeting election (AGM)
- Fulfill the duties of the owners' corporation contained in the Strata
Title legislation, subject to restrictions.
- Convene and hold the first AGM of the management corporation in the prescribed
manner within one month after the expiration of the initial period.
Although it is not provided for in the Strata Titles legislation, it makes
sense for the original owners to provide certain plans (building, engineering
and drainage), specifications (building contract and land survey), diagrams
(location of pipes, wires, cables and ducts), list of owners, accounting records
and other documents. We hope that the lawmakers would include this requirement
in the next amendment to the legislation to allow for smooth transition in the
control, management and administration of the strata scheme from the original
proprietor to the parcel owners.
Time is given for the transition of control from the developer to the owners
during the 'initial period'. This initial period commences the day the management
corporation is formed and ends the day when at least one-third of the parcel
owners (calculated as one-third of the aggregate share units) have registered
their individual strata titles.
By-laws
During the initial period, the by-laws as legislated in the Strata Titles
Act,1985 (Third Schedule) are enforced. This means that the 'Deed of Mutual
Covenants' you have signed earlier is not legally binding anymore. This regulated
by-laws cannot be amended by the management corporation; however, the management
corporation can make additional by-laws or amendments to additional by-laws
by special resolution.
First AGM
The developer has to give written notice of the first AGM to all parcel owners
not less than 14 days before the meeting and prepare the agenda. The items of
the agenda, fixed by the Strata Titles legislation, includes decisions to be
made on insurance, service-charge contributions, sinking-fund contributions,
the number of council members, election of council, by-laws. After the first
AGM, the transition for control from developer to owners takes place.
Who owns the common property?
The management corporation is now the owner of the common property and the
custodian of the issue of document of title to the lot (land). This is one issue
that most parcel owners have forgotten. Although you have bought an apartment
unit, you can still be part owner of the piece of land on which the building
stands, albeit you cannot deal with it on a personal basis.
The management corporation being a corporate body has perpetual succession
and a common seal, with an elected council as compared to appointed board of
directors. For an insight of the law on strata schemes you can buy copies of
the Strata Title Act, 1985, and any amendments from the Government Printers
or check with the information available on the National House Buyers Association's
website.
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