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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.

New Act

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 financier.

The writer is the Deputy Chairman of the Conveyancing Practice Committee, Bar Council, Malaysia www.malaysianbar.org.my

 

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