Building and Common Property
(Maintenance and Management) Act 2007 (Act 633) – Highlights (Part II)
01/12/2007 By National
House Buyers Association
Published in Iproperty Magazine
Dissolution of a Joint Management Body
Once the first general meeting of a Management Corporation, formulated under
the Strata Titles Act, 1985, has been convened, the Joint Management Body (JMB)
shall be deemed to be dissolved three (3) months from the date of the first
general meeting. During the first meeting of the Management Corporation,
there is also an election of Council Members. Although it could be almost
the same set of owners of the same strata property, Section 15 of Act 633
stipulates that the JMB must transfer within one (01) month from the date of
the first general meeting the followings:
1) the house rules;
2) the audited or unaudited accounts of the Building Maintenance Fund of the
JMB and if only unaudited accounts have been handed over, the JMB must not
later than three (3 )months from the date of the first general meeting of
the management corporation;
3) all the assets and liabilities of the JMB; and
4) records related to and necessary for the maintenance of the building and
its common property.
Section 15(3) stipulates that if the JMB fails to comply with Section 15,
every member of the JMB commits an offence and shall on conviction be liable
to a fine not exceeding ten thousand ringgit and shall also be liable to a
further fine not exceeding one thousand ringgit for every day during which
the offence is continued after conviction.
It should be noted that the Strata Titles Act, 1985 Schedule 3- By-Laws for
the Regulations of Subdivided Building or Land is mandatory and by-laws not
inconsistent with Schedule 3 By-Laws, may be added by special resolution.
For continuity sake, the House Rules adopted by the JMB should be added to
the Schedule 3 By-Laws to be passed at the first general meeting of the
management corporation.
Building Maintenance Account
Under Part IV Section 16, the developer of a strata development must open a
Building Maintenance Account (BMA) in the name of the strata development for
each development before the delivery of vacant possession. This applies to
all newly completed strata development where the vacant possession has not
been delivered to the purchasers as of 12th April, 2007.
For developments where vacant possession has been given but the management
corporation has not been established and the developer has been collecting
charges for the maintenance and management, the developer can continue to do
but the developer must comply with Section 21, which is to submit to the
Commissioner of Buildings (‘COB’) audited accounts of all moneys including
sinking fund collected and expended within six (6) months from the
commencement of the Act.
The BMA is maintained by the developer until the JMB is formed.
The duties of the developer as to the BMA includes:
a) deposit all collections (eg. deposits, service charges, sinking fund
charges, etc) within two working days of receiving the moneys into the BMA
account;
b) pay all charges for unsold units;
c) cause proper accounts of the BMA to be kept in respect of all sums of
money received and payments made out
d) appoint a professional auditor to audit the BMA annually or one month
before the date transfer to the Building Management Fund set up by the JMB.
e) within fourteen days of the accounts being audited, file with the
Commissioner of Building (COB) a copy of the statement of accounts certified
by the auditors and a copy of the auditor’s report.
The Commissioner of Building has;
a) the power to hear any dispute arising in respect of the BMA;
b) full and free access to the accounting and other records of the BMA;
c) right to appoint an approved company auditor to investigate books,
accounts and transactions of a BMA and the developer must pay all the
expenses incurred for that purpose;
Under Section 17(4), the developer must insure and keep insured the
completed building against any loss of the building and against fire and
other risks until the JMB is formed.
Building Management Fund and Sinking Fund
The developer must transfer any surplus moneys in the BMA to the JMB not
later than one (1) month from date of establishment of the JMB. Such moneys
shall constitute the funds of the JMB which is called the Building
Management Fund which shall be administered and controlled by the JMB.
The JMB must open and maintain a separate sinking fund, which shall pay such
portions to the BMF for the following matters:
a) the painting or repainting of any part of the common property;
b) the acquisition of any movable property for use in relation to the common
property;
c) the renewal or replacement of any fixture or fitting comprised in any
common property; or
d) any expenditure as the Committee deems necessary.
This section gives powers to the Committee elected by the JMB to decide on
expenditures deem necessary by the Committee.
Managing Agent
A managing agent for the strata development is only appointed by the COB, if
purchasers entitled to vote do not attend the first meeting or if there are
no volunteers to be office bearers of the Committee.
Defects on Common Property
The developer must deposit in cash or bank guarantee with the COB upon the
handing over of vacant possession, such sum as may be prescribed by the
State Authority for the purpose of carrying out any work to rectify any
defects in the common property of the development area after its completion.
Any unexpended deposit is refunded to the developer on the expiry of the
defects liability period.
This means that the JMB or its Committee should expeditiously do a joint
inspection of the common property of the development area for defects, so
that the defects can be rectified within the defects liability period.
Purchasers duty to pay charges
Purchasers must pay for charges for the maintenance and management of the
common property apportioned and determined by the JMB in proportion to the
allocated share units. A fourteen-day grace period is allowed for payments
after which a late payment interest not exceeding 10 per cent per annum is
chargeable.
Without any reasonable excuse, any person who fails or refuse to pay the
maintenance and management charges commits an offence and on conviction is
liable to a fine not exceeding five thousand ringgit and also liable to a
further fine not exceeding fifty ringgit for every day the offence is
continued after conviction.
Conclusion
A person who purchases a unit in a strata development enters into a
three-fold legal relationship; firstly, he is the individual owner of his
unit; secondly, he is a co-owner with all other owners of the common
property and the land of the strata development, and thirdly, he is
automatically a member of the owners’ body to whom the management and
maintenance of the scheme is entrusted. Harmony can only be achieved if the
strata development is managed properly, the common property and facilities
maintained adequately and regularly. The proper maintenance, efficient
management and ultimately the success of the strata development will depend
on a steady flow of payments to the coffers of the common fund of the
owners’ body. Repeated failure to contribute to common expenses may hinder
timely maintenance and efficient management and ultimately wreck the whole
strata development scheme. Every strata property purchaser or owners should
read the BCP Act to understand their duties as an individual owner firstly,
secondly as a co-owner of the common property of the strata development and
thirdly as a member of the owners’ body formed.
Note: A copy of the Building and Common Property (Maintenance and
Management) Act 2007 (Act 663) is placed in HBA’s website for reading.
Printed copies can be purchased from shops selling printed statutes.
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
