Management of a strata titled
development (Part 1)
16/02/2007 The Sun - Law & Realty By Nicholas Chang Chen Seng
THE management corporation is the medium in which the proprietors of strata
parcels in a strata development would eventually control the management of
the strata scheme. Pursuant to the Strata Titles Act 1985 (the Act), the
management corporation of a strata development would come into existence
upon the opening of the strata register which would to the man in the street
mean when the strata titles of a strata development are issued. The
management corporation is a statutorily-created body corporate having
perpetual succession and a common seal. Being a body corporate, the
management corporation may sue or be sued. The management corporation will
be known by the name appearing in the book of strata register of the strata
development.
Upon coming into existence, the management corporation would be constituted
by all parcel proprietors of the strata development. This means that
initially and upon its coming into existence, the management corporation
would be inevitably made up of the original proprietor of the land upon
which the strata development is erected.
The importance and relevance of the management corporation is that upon
coming into existence, the management corporation would become the
proprietor of the common property of the strata development and the
custodian of the issue of document of title of the lot. The management
corporation, being the registered proprietor of the common property of the
strata development, would be conferred all the powers of a proprietor under
the National Land Code 1965. However, this does not mean that the management
corporation would be endowed with all the rights of a registered proprietor
of a land. The rights of the management corporation in relation to the
common property are restricted under the Act.
So, the perennial question would be when will the purchasers, being
beneficial proprietors of strata parcels of a strata development, be
entitled to gain control of the management corporation. It is the duty of
the original proprietor to convene the first annual general meeting of the
management corporation within one month after the expiration of the initial
period. The initial period in relation to a management corporation of a
strata development means that the period commencing on the day on which the
management corporation is formed and ending the day on which there are
proprietors excluding the original proprietor of the lot who is registered
as proprietor or proprietors of a parcel or parcels or a provisional block
or blocks the sum whose share units is at least one-third of the aggregate
share units.
If the original proprietor should fail to comply with its statutory duty to
convey the first annual general meeting within the period specified by the
Act, the original proprietor shall be guilty of an offence and shall be
liable on conviction to a fine not exceeding RM1,000. A registered
proprietor of a strata parcel of a subject strata development may, upon the
failure of the original proprietor to comply with the Act pertaining to the
convening of the first annual general meeting of the management corporation,
apply to the Director of Lands and Mines for the State (which shall include
the Deputy Director of Lands and Mines), and in the case of the Federal
Territory, the Land Administrator, to appoint a person to convene the first
annual general meeting of the management corporation within such time as is
specified.
In the interim period, before the parcel proprietors take over effective
control of the management corporation, the latter is under the control of
the developer, and the law imposes certain restrictions on the powers of the
management corporation. During this interim period, the management
corporation may not amend, add to or repeal its by-laws in such a manner
that a right is conferred or an obligation is imposed on one or more but not
all proprietors or in respect of one or more but not all or provisional
blocks, to borrow monies or give securities or enter into maintenance or
service contracts for any period extending beyond the expiration of the
initial period.
The primary duties of the management corporation of a strata development are
found in the Act, and the most popularly-perceived duties of a management
corporation are the control, management and administration of the common
property of the strata development for the benefit of all the proprietors.
The management corporation is entrusted with the responsibility to ensure
that, on the whole, the management of the common property would be for the
benefit of all the proprietors and not only to some of the proprietors and
to the detriment of some proprietors.
To achieve the above objectives and duties, the management corporation is
empowered to collect a management fund from the proprietors of the strata
development. The management corporation may invest any monies in the
management fund but only in such investment or in such manner as may be
approved at a general meeting. In contemplation of repair works to the
common property of a strata development, the management corporation would
collect what is popularly known as a “sinking fund” from the proprietors.
The sinking fund shall be maintained in a special account in accordance with
the Act, and may be utilised, by special resolution, to meet the actual
expenses or expected liabilities in respect of the painting or repainting of
the common property, to acquire any moveable property for the use of the
common property, to renew or replace any fixture or fixtures or fittings
comprised in any common property vested in the management corporation.
The second part of this article will appear next Friday.
The writer is a member of the SRO Enforcement Committee, Bar Council
Malaysia www.malaysianbar.org.my
