Gated and guarded communities
(Part 2)
06/07/2007 The Sun LAW & REALTY By Derek Fernandez
(Part 1 of this article appeared last Friday.)
PRIOR to the amendment to the Strata Titles Act 1985, the legal basis for
the creation of a gated and guarded community (GACOS) scheme was grounded on
a set of agreements between the developer and the purchasers in relation to
their respective rights and obligations for the management and use of the
areas in the development. Hence a developer would apply for subdivision of
land into lots and subject to planning approval being obtained for the GACOS
scheme, enter into a set of agreements and covenants to regulate the use of
land in the scheme and, in particular, the land which would normally be
public land or land to be surrendered to the authorities if it were not a
GACOS scheme.
The problem with this was that many of these agreements, often referred to
as Deeds of Mutual Covenants (DMC), were not enforceable against
sub-purchasers once the separate issue documents of title were issued unless
the developers were very careful in ensuring that the DMC was made to “run
with the land”. The general view is that the DMC is merely a contract
between the developer and the purchaser, and cannot be binding on and
enforced against a sub-purchaser, unless he consented to it.
The consent of a sub-purchaser can easily be done in a case where the
developer’s consent is required for the sub-sale. However, once a separate
individual title is issued and transferred to the first purchaser, the
developer’s consent will no longer be required and it is common for some
purchasers in GACOS scheme to sell their property to sub-purchasers without
getting the sub-purchasers to agree to sign a DMC with the developer or the
person managing the GACOS scheme. Although the first purchaser shall
contractually remain responsible to the developer if the sub-purchaser did
not pay, for example, his security charges, this will be of little use in a
case where the first purchaser has long gone, and the sub-purchaser is
occupying the property.
One measure that could have been implemented by developers of a GACOS scheme
prior to the amendment of the Strata Titles Act 1985, was to register the
DMC as an easement under Section 282 of the National Land Code 1965, and
upon registration the easement could then be enforced against any subsequent
purchaser. The definition of easement under Section 282 of the National Land
Code 1965 is wide
enough to cover the DMC. Alternatively, the developer could have sought the
state authority’s permission to impose a condition or restriction in
interest on the land to incorporate the DMC.
Thus, it is not surprising that many GACOS schemes have got themselves into
problems with some sub-purchasers who refuse to pay the dues, but yet enjoy
the facilities paid for by others. Of course, in some cases these
sub-purchasers did have good reasons for not paying.
Planning requirements
Currently, a developer may elect to proceed with subdivision of land under
the National Land Code 1965, or subdivision of land into land parcels to be
held under strata titles, under the Strata Titles Act 1985. Even if a
developer chooses to subdivide the land under the Strata titles Act 1985, it
does not necessary mean that the developer can develop a GACOS scheme.
Planning law requirements as well as the State Authority have set out strict
guidelines for approving GACOS. These guidelines also take into account
socio-economic factors in determining whether to allow GACOS. Some of the
matters addressed by the guidelines (in the case of Selangor) are as
follows:-
(i) Application is made only by the land owner / developer;
(ii) The maximum area allowed for each “parcel” for “gated community” should
not exceed 20 acres;
(iii) Type of development, number of units, building set-back and densities
are regulated;
(iv) Roads in the housing scheme are not connected with the adjoining areas
at the time the application is made or in the future;
(v) Facilities and open spaces to be provided are generally more onerous
than normal development;
(vi) Facilities outside GACOS area are to be also provided by the developer;
(vii) Construction of guard house without barrier is permitted. The location
should not obstruct the traffic (situated at road shoulder only);
(viii) The location and design of the guard house must be shown in the plan
when the Planning Approval is being made;
(ix) The fencing height is regulated;
(x) Road reserves, street lights, drains, rivers, pavements, playground and
vacant area remain as public reserved area. Developer can maintain the
facilities based on agreement entered with the Local Authority;
(xi) Local Authority and other utility companies are free to conduct their
maintenance work in the guarded area; and
(xii) Developer to propose detailed information with regards to the concept
of ‘Gated Community’ development in:-
a)Disclosure statement; and
b) Deed of Mutual Covenants (minimum requirements must be incorporated as
set out by the authority);
(xiii) Where developer wants local authority to provide some of the services
then an agreement containing prescribed terms is to be included in the
maintenance agreement between the local authority and the developer. These
prescribed terms include a security bond.
Finally, it must be understood and appreciated that all purchasers of houses
in a GACOS will have to pay considerably higher charges for the maintenance,
sinking fund, security fees, electricity and water and other services
because the cost of all facilities within the boundary of GACOS will have to
be borne by them in addition to the usual quit rent and rates levied.
The writer is a member of the Conveyancing Practice Committee, Bar Council,
Malaysia www.malaysianbar.org.my.
Note: This column is brought to you by the Malaysian Bar Council for your
information only. It does not constitute legal advice. You should,
therefore, seek professional legal advice for your specific needs. Neither
the Malaysian Bar nor the Sun Media Corporation Sdn Bhd shall be liable to
any reader who suffers losses as a result of relying on this column.
