Problems faced by owners of
strata title properties
23/03/2007 The Sun - Law & Realty By Nicole Tan and Sumathi Murugiah
Lately, the authorities have insisted that the current year’s quit rent for
the master title must be paid before the authorities will accept for
registration any instrument of dealing relating to a parcel.
It is quite common for Malaysians to ask whether one’s property is “landed
property” or with “strata title”. The issue document of title to a landed
property is issued by the relevant authority under the National Land Code,
1965 (“NLC”), whilst the issue document of strata title is issued under the
Strata Titles Act 1985 (“STA”).
Strata title properties are parcels of properties in a building to be
subdivided into separate parcels. Examples of properties with strata titles
are office suites, parcels in a commercial complex, apartments, flats,
condominiums and townhouses. When strata titles for such properties are
issued, the master title for the lot of land on which the subdivided
building has been erected thereon, continues to exist and will be registered
in the name of the developer or, when the book of strata register is opened,
in the name of the management corporation (“MC”). It is pertinent to note
that the master title is issued under the NLC and not the STA.
Owners of properties with strata titles tend to face certain problems which
are not faced by owners of landed properties.
The first problem is a major and common complaint relating to the period of
time it takes for strata titles to be issued. Sometimes this delay is
attributable to the developer or its financier, and sometimes, to the
relevant authority responsible for issuing the strata titles.
There are sufficient provisions in the STA to regulate the period within
which a land proprietor (usually also the developer) must apply for the
strata titles in a completed development, failing which the land proprietor
shall be guilty of an offence and liable on conviction to a fine of not less
than RM10,000 but not more than RM100,000 and a further fine of not less
than RM100 but not more than RM1,000 for each day the offence continues to
be committed.
However, the lack of enforcement of such provisions is a sore issue, as one
hardly hears of or learns of anyone being convicted for such an offence. In
the meantime, and until the coming into force of the Housing Development
(Control and Licensing) (Amendment) Act 2006, owners of properties with
strata titles will have their sub-sale transactions or re-financing
transactions inordinately delayed as the consent of their respective
developers is required before the property owners can proceed with these
transactions. The Amendment Act has done away with the requirement of
obtaining the developer‘s consent before a sub-sale or refinancing
transaction.
The second problem is the responsibility of parcel owners to pay monthly
charges for the maintenance of the common areas and other contributions, to
the developer, with the parcel owners having no say in the amount of the
monthly charges and the standard of service provided.
Parcel owners can only participate in matters pertaining to the maintenance
of the common areas after the strata titles have been issued and the MC has
been formed from amongst them. This problem will soon be gone when the
Building and Common Property (Maintenance and Management) Act 2006 comes
into force, as this Act will establish a Joint Management Body (JMB)
comprising of the developer and the purchasers and the JMB will maintain the
common areas and determine the amount of monthly charges, prior to the
formation of the MC.
The third problem relates to the payment of the quit rent for the master
title, which is registered in the name of the developer or the MC, as
explained earlier. When strata titles have been issued for the development,
a parcel owner will want the strata title for his parcel to be quickly
transferred and registered in his name. In the normal course of lodging an
instrument of dealing for registration at a land registry or land office,
the quit rent of the property which is the subject of dealing must be shown
to have been paid for the current year. Quit rent is charged on the master
title and not on the property with strata title and parcel owners are
required to
pay a proportionate amount to the developer or the MC, who will then pay the
quit rent for the master title to the relevant authority on or before May
31, each year.
Previously, in Selangor as well as in Wilayah Persekutuan, a letter of
confirmation from the developer or the MC that the parcel owner has paid his
portion of the quit rent for the master title is required before the
registration authority will accept the instrument of dealing for
registration.
Lately, however, the authorities have insisted that the current year’s quit
rent for the master title must be paid before the authorities will accept
for registration any instrument of dealing relating to a parcel. This change
in practice has affected many parcel owners as they are unable to register
any dealing in connection with their property even though they have paid
their portion of the master title quit rent to the developer or the MC.
Instrument of dealings which are lodged in the months between January and
May of each year are inevitably affected as most developers or MCs do not
pay the quit rent for the master title until the month of May each year, if
at all. Penalties, fines and interests are imposed on the parties to the
transactions, with some transactions being terminated and ending in
litigation.
The Strata Titles (Amendment) Act 2006, which has yet to come into force,
appears to have addressed this problem as provisions are in place to allow
for payment of quit rent on the parcels and not on the master title.
However, before this amendment comes into force and quit rent is made
payable on each parcel and not on the master title, the problems highlighted
above will continue unless the relevant land authority accepts a letter of
confirmation from the developer or the MC to state that the parcel owner has
paid his portion of the quit rent for the master title.
It is, therefore, prudent for owners of strata title properties to seek
independent legal advice on their rights and liabilities in any transaction
in order to avoid any pitfall.
The writers are members of the Conveyancing Practice Committee, Bar
Council, Malaysia (www.malaysianbar.org.my).
