A new law to regulate the rights and duties of developers and homeowners within projects with communal facilities is to be brought before Parliament, in order to fill the existing void in legislation governing this type of housing scheme.

The Bill, which will be proposed by the Ministry of Housing and Local Government, is likely to take the form of the “Common Property Management Act” and will cater to the interim period between the completion of a project and the handing over of strata titles.

According to Real Estate and Housing Developers’ Association (Rehda) president Datuk Jeffrey Ng, the Bill if made law would provide “a vital legislative bridge for what has long been a missing link” to govern projects such as gated-and-guarded housing schemes.

“There is no specific law in this area at present. What we have is a contractual agreement, the Deed of Mutual Covenants, to bind the duties of the developer and homeowners,” he said.

The terms of such agreements are often cited as “vague and argumentative”, due largely to the absence of clear-cut laws.

By defining the rights of both parties, Ng said the new law would create a more complete picture, provide for consistency in regulations and help remove the many “grey areas” in dealing with housing schemes providing common ground and facilities.

“Once this law comes into play, we can also expect clarifications on the role of the management bodies in these communities. Hopefully, this will lead to stronger regulations in areas such as the payment of management and maintenance fees, the empowerment of security and so on.”

Asked whether the proposed law would make the Deed of Mutual Covenants obsolete, Ng said while Rehda hoped for the general controls in such agreements to be incorporated into the law, the various schemes would still have “house rules” that residents would have to comply with.

Metro Kajang Holdings Bhd managing director Datuk Eddy Chen, agreed with the need for this “interim period” law and is hopeful that the legislature would give developers a stronger legal platform to impose controls on residents.

“The interim period can take between three and 10 years, so we’re talking about a fairly long period of time when the developer is responsible for the community.

“During this time, should a house owner reject certain rules in the Deed of Mutual Covenants or refuse to pay maintenance fees, the only remedy available to the developer is a civil suit for breach of contract,” Chen said.

However, he said, such legal action is cumbersome and often expensive. Some developers, he pointed out, would even resort to holding back the strata titles until the payment, as in the case of maintenance fees, owed to them has been received.

“But, as most developers will tell you, this course of action can be equally messy, because there have been cases where house owners have not collected their strata titles for as long as 15 years.”

Without the backing of proper legislation, Chen added, developers would often find themselves at the mercy of such un-cooperative residents.

- Property Times 22 January 2004 issue -