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Transition
Pitfalls
01/03/2004 Published in Malaysian Business - Housing & Property By
National House Buyers Association of
Malaysia
Seven
recommendations for a smooth handover
It is not uncommon for
owners of subdivided properties to be
stressed out by the transition of the
management corporation (MC) developer's
control to owners’ control.
Here are some of HBA's recommendations
to enhance the subdivided property’s
management and maintenance:
First Annual
General Meeting (AGM)
The current Strata
Titles Act does not provide for the
transfer of documents that are crucial
for the MC to fulfill its role and
obligation. The developer must prepare
these documents for the first AGM,
namely:
1. Notice of the first AGM
2. An annual budget of the MC,
detailing:
-
The opening
balance in the management fund and
sinking fund
-
The itemised
estimated income from all sources other
than levied contributions
-
A list of
estimated expenditures from the
management fund
-
A total of all
contributions to the management fund and
the special fund
-
Each parcel
proprietor’s monthly contributions to
the fund
-
The estimated
balance in the funds at the end of the
fiscal year.
3. A financial
statement that sets out
-
The opening and
current balance in the management fund
and the special fund
-
The details of the
MC’s income from all sources, except
special levies
-
The details of
expenditures from the management fund
-
Income and
expenditures by special levy, if any.
4. Documents to be
presented
At the first AGM, the developer should
give the MC copies of the following:
-
all plans
required to obtain a building permit and
any amendments
-
any document
that indicates the location of service
facilities are not shown on the plan or
plan amendments filed with the local
authorities/council
-
all contracts
entered into by the MC
-
the registered strata plan and plan
amendments
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the names and addresses of the
project's contractors, subcontractors,
suppliers
-
all
documentation and information relating
to common property or assets
-
minutes of
special general meetings
a list of owners and details
-
contacts of
end-financiers
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names of tenants
-
assignments of voting or other rights
by parcel proprietors to tenants
-
books of account showing money
received and spent and the reason for
the receipt or expenditure
-
the Act and Regulations
-
a copy of the MC’s bylaws and rules
-
any court decision and legal opinions
in a proceeding in which the MC was a
party
-
income tax
returns, if any
-
correspondence
sent or received
-
bank
statements, cancelled cheques and
certificates of deposit
After the
first AGM
The developer must do the following
after the first AGM
-
transfer control of the MC’s money, keys
to the new MC Council within a week
-
ensure that the MC’s insurance
coverage continues for at least four
more weeks
-
deliver an updated financial statement
to the MC within eight weeks
-
pay any difference
in the event the actual management fund
expenses exceed the estimated expenses
to the MC within eight weeks
Budgets and
special funds
HBA believes
that the developer should prepare and
disclose the initial budget to assure
accurate estimate of projected operating
costs and special fund. Owners should
get full disclosure and the opportunity
to develop the budget.
The revamped Schedule H of the Housing
Development (Control and Licensing)
Regulations 1989 provides for
a service charge statement form be
approved by the Controller of Housing or
relevant authority.
Better property management
HBA encourages the national
certification of property managers. We
recommend the mandatory qualification,
registration, and licensing of strata
property managers, with a course in the physical
maintenance of buildings as
part of the required training.
Help for orphaned projects
In cases where developers have
dragged their feet or
caused themselves to be liquidated
before transferring the titles to the
owners, there should be a provision in
the Act to ensure that the subdivided
building can be managed and maintained
properly by the beneficial owners.
Completion of common facilities
Although there is a defects liability period
for developers to rectify defects at
their own cost and
expenses, there is no legal entity at
the onset to see to this. Effort must be
made to see that an
association of buyers is created from day
one.
We hope the
authorities would seriously look into
these as we move from
the building stage to maintenance stage.
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