Building and Common Property
(Maintenance and Management) Act 2007 (Act 633) – Highlights (Part I)
15/11/2007 By National House Buyers Association
Published in Iproperty Magazine
Introduction
Legally, the common property of a strata development is owned by the
developer until the handover of such on or after the first annual general
meeting stipulated under the Strata Titles Act, 1985 (Act 318). However, the
issuance of individual strata titles, leading to the handover of the common
property, takes years and resulted in numerous complaints on maintenance and
management issues. It is for this reason, that the Building & Common
Property (Maintenance and Management) Act, 2007 was passed by Parliament in
December, 2006 and in operation from 12th April, 2007.
The main aim of the Building and Common Property (Maintenance and
Management) Act, 2007 (Act 633) [‘BCP Act’] is to regulate the maintenance
and management of common property in strata developments by providing a
framework for the establishment of a Joint Management Body (‘JMB’) and the
appointment of a Commissioner of Building (COB) to administer the Act. The
BCP Act is designed to complement Parts VI and VII of the Strata Act with
regards to rights and obligations of owners and management issues.
Allocated Share units
Sections 8(1)(a) and 23(2) requires that contributions for maintenance and
management charges be collected in proportion to the “allocated share
units”. The “allocated share units” is defined in this Act as “share units
to be assigned to each parcel by a developer’s licensed land surveyor”.
Malaysians are so used to the practice of contributions for common funds &
expenses (maintenance charges, sinking fund, insurance premium, quit rent)
according to rates like 20 sen per square foot, that it will take a while
for these share units allocation to be a common term. Holders of strata
titles would be familiar with the term as the share units are stated in the
titles. Purchasers of units in strata development after the 1st December,
2002 would also have indication of the allocated share units in Schedule 5
of their Schedule H – the regulated sale and purchase agreement under the
Housing Development (Control and Licensing) Regulations, 1989.
Common Property
Section 2 of the BCP Act gives the definition of “common property” as:
“in relation to a development area, means so much of the development area as
is not comprised in any parcel, such as the structural elements of the
building, stairs, stairways, fire escapes, entrances and exits, corridors,
lobbies, fixtures and fittings, lifts, refuse chutes, refuse bins,
compounds, drains, water tanks, sewers, pipes, wires, cables and ducts that
serve more than one parcel, the exterior of all common parts of the
building, playing fields and recreational areas, driveways, car parks and
parking areas, open spaces, landscape areas, walls and fences, and all other
facilities and installations and any part of the land used or capable of
being used or enjoyed in common by all the occupiers of the building”
Of interest is the inclusion of car parks and parking areas. Does this mean
that once the developer has assigned car parks intended for use with parcels
as accessory parcels and comply with the necessary allocation of visitors’
bays, those extra car parks are ‘common property’? From the definition given
in this Act, it would appear so.
Contributions from developer on unsold units
Section 12 requires the JMB or the developer to maintain a register of
purchasers and unsold units and Section 17(b) requires the developer to
contribute equally for the unsold units as if the units have been sold to
purchasers. This resolves the problem of owners of the past where there is
no transparency on whether developers have contributed their portions or
when the units are gradually sold off or if the developer actually intends
to hold the units as investment properties.
Information
Section 13 provides purchasers and intending purchasers the right to
information such as:
-
the amount of charges payable
by a purchaser
-
the time and manner of payment
of the amount of charges
-
the extent, if any, to which
the charges have been paid
-
the amount, if any, then
recoverable by the JMB in respect of the parcel
-
the sum standing to the credit
of the Building Maintenance Fund and the sum in the account that has been
committed or reserved for expenses already incurred by the JMB
-
the nature of the repairs and
estimated expenditure, if any, where the JMB has incurred any expenditure
or is about to perform any repairs, work or act in respect of which a
liability is likely to be incurred by the purchaser of the parcel under
any provision the Act, and
-
the amount paid and to be paid
by the developer for unsold parcels.
This certainly makes it easier
for a subsequent purchaser to check on the financial health of the
development as a whole and to make informed decisions on their intending
purchase.
House Rules
In this Act, the governing document for the proper maintenance and
management of the building is called the ‘house rules’ whereas the same is
called the “by-laws’ in the Strata Act. This Act does not provide a
‘standard’ house rule as such the JMB has the power to make and amend the
house rules provided in Section 8(2)(f). This document must be lodged with
the COB within fourteen (14) days of the passing of the resolution of the
JMB.
Like any governing documents, the House Rules must be drafted carefully as
it is also the duty and in the power of the JMB to enforce the House Rules.
The House Rules would probably be adopted as the By-Laws once the Management
Corporation is formed as such for long term used, the JMB would be wise to
spend time on the drafting this document.
The second part of this article will appear in the next issue.
The National House Buyers Association (HBA) is a voluntary, non-governmental
organization manned by unpaid volunteers. For more information, check out
their website at http://www.hba.org.my
