Amendments to the Strata Titles Act 1985 & Strata Management Bill 2012

November 2013

Current position

Under our present law, the main legislation governing the strata-titled properties are the Building and Common Property (Maintenance & Management) Act 2007 (“Building and Common Property Act”) and the Strata Titles Act 1985 (“Strata Titles Act”).

The Building and Common Property Act governs the maintenance and management of buildings and common properties of strata-titled properties before the formation of the management corporation; whilst the Strata Titles Act regulates the subdivision of any building or land into separate parcels and maintenance and management of the buildings and common properties after formation of the management corporation.

Under the Strata Titles Act, developers are only required to apply for subdivision of the building into separate parcels within 6 months from the date of erection of the building (if the sale and purchase agreement of the parcel takes place before the building is erected) or 6 months from the date of the sale and purchase agreement (if the sale and purchase agreement takes place after the building was erected). Therefore, the strata titles to the parcels would not have been issued yet when the purchasers take possession of the parcels.

Under the Building and Common Property Act and the Strata Titles Act, there is only one Joint Management Body (“JMB”) and one Management Corporation (“MC”) established to maintain and manage the common property of a development area held as one lot under the final title. For example, in a mixed development that comprises both retail and residential parcels, there is only one JMB or MC established to maintain and manage the common property in the development area. As such, purchasers of residential properties would also be required to contribute to the service charge and sinking fund in maintaining the common property which is “exclusively” used by the retail owners.

 

Amendments to the Strata Titles Act 1985 and the new Strata Management Act 2013

The Parliament of Malaysia had recently passed the Strata Titles (Amendment) Bill 2012 (“STAB”) and Strata Management Bill 2012 (“SMB”), which entail some changes to the abovementioned current position.

Firstly, with the aim to curb delay in the issuance of strata titles to the parcels and for the purposes of application for the approval of the Director of Lands and Mines for the State or the Federal Territory for the subdivision of building and land before the building or land parcels are completed, original proprietors of an alienated land are required to:

(a) apply for the certificate of proposed strata plan to the Director of Survey within three (3) months from the date of issuance of the document that certifies the super structure stage (applicable to the case where the sale and purchase agreement of any parcel that takes place and the document that certifies the super structure stage is issued after the commencement of the Strata Titles (Amendment) Act 2013); and

(b) apply for subdivision of building or land within one (1) month from the date of issuance of the certificate of proposed strata plan.

Secondly, with the SMB taking effect, it is possible to have a two-tier management corporation, namely a main management corporation to maintain and manage common property enjoyed by all parcel owners and a subsidiary management corporation to maintain and manage the limited common property that is exclusively enjoyed by the limited parcels owners. The two-tier management corporation is ideal for mixed development projects so that common property which is exclusively enjoyed by limited parcels owners are maintained by only those parcels owners.

Thirdly, for new projects that are approved after the implementation of the Strata Titles (Amendment) Act 2013 and the Strata Management Act 2013, strata titles to the parcels will be issued upon purchasers taking vacant possession of the parcels. Therefore, there is no need to establish the JMB. A developer would be responsible to manage and maintain the common property for the period commencing from the date of delivery of vacant possession of a parcel to a purchaser by the developer until one (1) month after the first annual general meeting of the management corporation (“preliminary management period”), and the developer shall, not later than the date of the expiry of the preliminary management period hand over control of records, balances of moneys in the maintenance account and in the sinking fund account and all assets of the management corporation to the management committee of the management corporation.

Lastly, Strata Management Tribunal (“Tribunal”) is set up to address strata management disputes, such as claims for recovery of charges or contribution to the sinking fund by the property managers.

It is believed that tribunal proceedings would hear claims fairly and impartially as each party is given reasonable opportunity to present his case. Further, members of the Tribunal are comprised of members of the judicial and legal service or persons who are admitted as advocates and solicitors under the Legal Profession Act 1976, who are of not less than 7 years standing.

The Tribunal proceedings also provide for friendly sittings as parties would not be represented by any advocate and solicitor at the hearings, unless in the opinion of the Tribunal the matter in question involves complex issues of law or if one party may suffer severe financial hardship if he is not represented by any advocate and solicitor.

 

Impact of the Strata Titles (Amendment) Act 2013 and the Strata Management Act 2013

In conclusion, the implementation of the Strata Titles (Amendment) Act 2013 and the Strata Management Act 2013, may expedite the process of issuance of strata titles and provide better protection to parcels owners.

 

Neoh Li Ting

LL.B. (Hons) (London)

Telephone (Secretary): +603 2164 0200 – ext no. 160
Email: neoh.liting@azmandavidson.com.my