This form of title gives individual unit holders title over the space they occupy while the land and common property are controlled by the Management Corporation (owner’s committee).  

Strata schemes are designed to give property owners more control over the space they occupy. The structure of strata titles designates the Management Corporation as the owner of the land.

In the eyes of the government, the Management Corporation is solely responsible for matters involving legal obligations of the council.

For the owners, the Management Corporation generally takes responsibility for maintenance of the common area, insurance and/or informal mediator between residents.

Unfortunately, for many residents and owners of strata titled properties in Malaysia, many of them have not reached the stage where Management Corporation is formed.

It is not uncommon that many buyers of this type of property are not aware of the need for strata titles too.

No strata titles is the main complaint of HBA’s latest statistics

Problems with strata titles have replaced shoddy workmanship as the main complaint according to statistics compiled annually by the HBA.

It is no secret that numerous strata title properties (especially residential) are still managed by the developer even though the certificate of fitness for occupation has been issued for many years.

More often than not, these enlightened owners who are aware of this shortcomings, are at a lost on how to go about insisting that the developers apply and transfer the titles to them without sounding like they are on a warpath with the developers. (see table on the complaints received by HBA for the Year 2001).

Why is having the titles to your property important?

The House Buyers Association’s advise to house buyers is to "get, keep and preserve" the strata titles to their high-rise apartment units for the following reasons:

• As ultimate proof of their property ownership. When you say you own a car, you have the registration card to prove it and there is no need for you to get the consent of the carmaker when you need to refinance or to sell the car.

• As a dealing instrument for instances of charging to banks for loans.

• One need not obtain the consent of a third party (the developer) who imposed administrative charges of between one per cent to two per cent as their consent fees if and when you should decide to sell your property.

• To form a management corporation (MC) by owners of the subdivided building to maintain and manage the building and to have their own by laws, usage or restrictions. Until then, owners usually do not have a say in the way the building is managed or maintained, the monies collected from maintenance charges, building funds etc.

• As final proof of the built-up area of your unit and ultimately your apportionment of the share in the total aggregate units.

• As long as the strata titles have not been transferred, the land and the common property are still owned by the developer. Should the developer company goes under liquidation or becomes insolvent before strata titles have been obtained, the unit owners will have to go through a lot of trouble or might eventually have to pay for the application of the strata titles themselves. (which by the grand scheme of things, should not have happened in the first place)

Are we moving towards the correct direction?

The Strata Titles Act, 1985 which was recently amended and gazetted on the 1^st December, 2001 is the existing legislation governing stratified properties. The Malaysian strata titles legislation owes its origin to the Conveyancing (Strata Titles) Act (Cap. 277, 1970) which itself was modeled on the New South Wales Legislation.

The old Act and other such legislation in New South Wales has since been repealed and is now reformed into "Strata Scheme Management Act, 1996".

The Strata Titles Act has been in existence for nearly 18 years. Strata properties (especially residential) have become common, so the basis of the strata title arrangement have been well-tested. It has become clear that specific problems need to be addressed in many areas.

HBA is of the opinion that we will not be well served by the recent amendments to the Act. We note that the recent amendments was to streamline the existing Act as well as to serve as a deterrent to developers who have deliberately flouted the law by taking advantage of unsuspecting house buyers.

Only time will tell on the effectiveness of the amendments. However, HBA is of the opinion that it would be best to start a new Enactment that is far-sighted to reform the entire laws governing stratified properties instead of a short-sighted and unsatisfactory “piece-meal” approach.

“Piece-meal” meaning making cosmetic changes and bits and pieces changes as and when a situation arises, in other words patch-work job. Reforms are necessary as this concerns the people’s ownership of their own homes.

Whose responsibility is it to apply for strata titles and who is watching to see if they do?

Strata schemes are meant for owners to take charge of the maintenance and management of the common properties, and if so, due care should be given to expedite the transfer of titles to the owners for them to start learning the process.

Relevant authorities should help to give detailed guidelines on the process from: before transition from developer, during transition and the actual running of the Management Corporation.

Pursuant to Section 8 of the Strata Titles Act 1985, the developers are required by law to apply for the titles within six months from the date of the issue of Certificate of Fitness by the local council or such other compulsory circumstances as facilitated in the same section of this Act.

Under Clause 10 of the sale and purchase agreement (Schedule H), the developers are statutorily bound to apply for strata titles expediently at their own cost and expenses. How often has this been dealt with efficiently by the developers? 

We read of warnings from all sources of charging developers in court for not applying for the strata titles, but in reality and honestly speaking, how many developers have been charged for breaching this provision of the Act?

One can think of the various reasons on why developers do not see the urgency in applying for strata titles:

1. The developer has not put aside the expenses/fees for the application;

2. Enforcement is slacking, and threats of charges in court has so far remain threats;

3. Unless purchasers make a complaint, nobody would know if strata titles have not been applied or transferred to the owners.

The Ministry of Lands and Cooperatives Development is the ministry that administers this Act that was passed by Parliament.

A check with the Ministry reveals that unless an owner made complaints on the strata titles issues, no action will be taken. We are taken aback that there is no system to monitor the compliance of strata titles application. The onus, it seems, is on the strata property owners to do the checking.

On the same issue, no one knows exactly how many strata properties owners are still waiting for their titles.

Unless this issue is being addressed promptly, house buyers will continue to wait for the developers to take their time in transferring the titles to them. Perhaps, the Strata Titles Board would be able to seek a solution to this compounding problem.

HBA proposes the following suggestions to expedite the application of strata titles:

• Once CFO has been issued for a particular building, copies should be made available to the Ministry of Land to ensure that Section 8 of the Strata Titles Act is strictly adhered to; 

• To withhold part of the balance purchase price, of say, 2.5% until strata titles have been transferred to the individual unit owners;

• To change regulations that all aspects of maintenance and cost incidental thereto shall be the sole responsibility of the developer till control has been transferred to the MC.

These suggestions would give more protection to the purchasers and a sense of urgency to spur the developers to expediently transfer the titles to the unit owners will then be created.

Some of the complaints from house buyers that HBA have received on the management of their property by their developers who are in control includes: having to pay developers ‘management fees’ built into the monthly maintenance charges, no transparency of the accounts from the money the developer has collected, and poor maintenance of their property, car park (inadequate parking spaces), unsatisfactory repairs on defects, increase of maintenance charges as and when the developers sees fit.

There is no standard to monitor the developer- controlled management of strata title properties except those set by the developers themselves. As such, we can only assume it is so profitable, that developers see this as a cash cow.

We have also received complaints on ‘special account’ or by any other names eg. sinking fund or building fund  being used for other purposes.

Section 46 of the Strata Titles Act defines the restrictions of use of this ‘special account’ and any other utilization of this fund is tantamount to a criminal breach of trust.  

House buyers refusing to take strata title?

In a newspaper article published on the 10^th of December, 2001, the Deputy Minister of Lands and Cooperative Development, YB Dr. Tan Kee Kwong was quoted titled ‘ House buyers refusing to take strata title’.  

Refusal to take the strata title is a retrogressive step and is in advisable. There may be several factors that attributed to the house owners refusing to accept the strata title.

1. Disputes over the standard of management against the maintenance charges the developer have been levying;

2. Non-payment of late delivery compensation by the developer to the house owner and the frustration the house owners have to endure;

3. shoddy workmanship and deviation from the built up plans not in according to the Sale and Purchase Agreement;

4. Developer not providing transparency and accountability of the service charges and sinking funds;

5. Developer practically arm twist house owners to pay “all outstanding charges” (though disputed) as a last effort to collect their charges in consideration of signing the Transfer of the strata title to the house owners;

6. Defect liabilities versus maintenance;

7.  “Chicken and egg” situation – to pay the outstanding charges first or transfer the strata title first;

8. Common facilities not available despite covenanted in the Sale and Purchase Agreement and the Deed of Mutual Covenants.

The Ministry of Land should continue to conduct regular workshop to educate house owners on the importance of having strata title to their property and the essence of running their own apartment. They should conduct courses/lectures on the formation of Management Corporation (“MC”), duties and powers of MC. They should also stress the need for strata title to reflect the purpose for which the Strata Title Act 1985 was formulated.

Melaka State Government’s forerunner to remedy strata title woes

From a report in a local paper, published on the 8^th of March, 2001, we learn that the Malacca State Government has come up with a ruling that requires developers to submit applications for strata titles when they apply for building plan approvals for stratified units.

The Chief Minister Datuk Wira Mohd. Ali Rustam said this is to ensure that strata titles for the projects were issued at the same time as the certificate of fitness.

This is certainly good news for the buyers in Malacca. To lessen the woes of house buyers all over Malaysia, perhaps other states in Malaysia should follow the foresight of Mohd Ali Rustam.  

Although there will be problems when owners take control over the management of their condos, as it is natural where a cluster of human beings living together are bound to argue , this can be later addressed through more education on the role of the MC and the owners.

The delay of issuance or the non-issuance are definitely not advisable when the owners have also pre-paid for it as part of their purchase price.