Penal sanctions for not
completing transfer of ownership of strata titles
07/12/2007The Sun LAW & REALTY by Andrew Wong
WHEN a purchaser buys a flat or an apartment or a condominium, he is buying
a parcel of property in a building, which will be subdivided. Each parcel
will then be issued with a separate strata title. Purchasers of such
properties generally encounter two sets of nagging problems.
The first problem is the time taken for strata titles to be issued by the
appropriate authority. It is quite common for strata titles to be issued
between a period of seven to 12 years after the building has been completed
and occupied by the purchasers. This delay can be attributed to the original
proprietor of the lot to be subdivided or to the appropriate authority or to
both. In most instances the original proprietor is also the developer. The
original proprietor is the proprietor of the lot, commonly referred to as
the master title, before the subdivision of the building.
Purchasers of such properties will be happy to know that concrete steps have
been taken by the government to address this problem. All over the country,
one-stop centres are now in place to expedite the approval of property
development, building plans, subdivision and the issue of strata titles. The
aim of these one-stop centres is to ensure that strata titles are issued not
later then 12 months from the date of submission of complete applications.
Let us hope for the best.
The second problem is that the time taken to complete the transfer of strata
titles to parcel proprietors is also too long. Most original proprietors
will refuse to execute and deliver the instrument of transfer until all
outstanding maintenance charges for the parcel have been paid in full.
Purchasers who have defaulted on their loans with their respective
financiers will not bother to come forward and complete the transfers to
their names, as their properties are already, or in the process of, being
put up for sale by auction. Financiers of loans in default will generally
not incur any expenditure until they have secured a successful bidder for
the property. Cash purchasers or purchasers who are not in default on their
loans will generally want to complete the transfer of strata titles, only
when they have raised sufficient monies to pay the legal fees, stamp duties
and registration fees required.
Liable to fines
A new section 40A of the Strata Titles Act, 1985 (Act 318) provides for
penal sanctions against any original proprietor or any purchaser who fails
to execute the transfer of strata titles when the strata titles has been
issued. The original proprietor is now required to execute the transfer of
strata titles to the parcel proprietors within 12 months from the date of
issue of strata titles. If he fails to do so, he shall be guilty of an
offence and shall, on conviction, be liable to a fine of not less than
RM1,000 and not more than RM10,000 per parcel. Any person or body appointed
by a court, which must include the liquidator of the developer or the
original proprietor, who fails to comply with this provision shall also be
liable to be punished with a similar punishment.
A purchaser is now required by law to execute and complete the documents of
transfer of strata titles within 12 months from the date of notice of
transfer of strata titles issued by the original proprietor or from the date
of purchase of the parcel, whichever is later. Any purchaser who fails to do
so, shall be guilty of the same offence mentioned above and shall, on
conviction, be liable to a similar fine.
Any delay in executing, completing and registering the transfer of strata
titles into the name of purchasers, is detrimental to the interest of
purchasers. Although the management corporation had come into existence when
the book of strata register has been opened and the strata titles have been
issued, the first annual general meeting of the management corporation
cannot take place until at least a quarter of the aggregate share units have
been registered in the name of the purchasers. This delay in convening this
first annual general meeting of the management corporation will mean that
parcel proprietors are unable to elect a council to exercise the powers and
perform the duties of the management corporation.
Nowadays the situation may not be so bad, as with the coming into force of
the new Building and Common Property (Maintenance and Management) Act 2007
(Act 663), the building and common property will be managed and maintained
by a Joint Management Body (comprising the developer and all purchasers)
until the council of the management corporation has been elected at its
first annual general meeting. Act 663 has given purchasers an earlier
opportunity to maintain and manage their common property.
Act 318 applies to all kinds of properties, whether housing accommodation or
not. In respect of housing accommodation, even before the new section 40A of
Act 318, there were already statutory provisions that govern the execution,
completion and registration of the transfer of strata titles and provide
penal sanctions for contravention.
Regulation 11A (3) of the Housing Development (Control and Licensing)
Regulations 1989 (the 1989 Regulations) specifically states that, a housing
developer shall execute the instrument of transfer within 21 days from the
date the strata title is issued and received by the housing developer from
the appropriate authority, and thereafter forward the same to the purchaser
who shall execute the instrument of transfer within 21 days from the receipt
of the same from the housing developer. Any person who contravenes any of
the provisions of the 1989 Regulations shall be guilty of an offence and
shall be liable on conviction to a fine not exceeding RM5,000 or to a term
of imprisonment not exceeding three years or to both. Further, any person
who knowingly and willfully aids, abets, counsels, procures or commands the
commission of an offence against any provisions of the 1989 Regulations
shall be liable to be punished with a similar punishment.
An interesting question that has yet to be answered, is whether a financier
can be guilty of the offence in a case where the purchaser has failed to
execute the instrument of transfer, and the financier willfully and
knowingly refuses to execute the instrument of transfer on behalf of the
purchaser under a power of attorney granted by the purchaser to the
The writer is the Deputy Chairman of the Conveyancing Practice Committee,
Bar Council, Malaysia www.malaysianbar.org.my