Developer’s Edition:

Current Issues on Strata

Management Act & Regulations
How to manage key challenges
moving forward?
By Chris Tan
Founder and Managing Partner
CHUR ASSOCIATES®
advocates & solicitors ||| registered trade mark agent
 Homebuyers’
protection over
Investor’s
protection

Property
Strata is the
Management is
way of life 5 MUST the Driver
KNOW
LEGAL
TRENDS

Collective Harder to be
Investment Developer
 National Land Code 1965

Strata Titles Act 1985

Building and Common Property (Management and

Maintenance) Act 2007

Strata Management Act 2013 (effective date 1.6.2015)

 One Year
On……….
Challenges?
 Lack of Awareness/ Knowledge
• Owners/ Committee Members (JMB/ MC) – processes,
fillings and liabilities etc.
• Developer (Management/ Staff) – APDL/ management
handover etc.
• Outsource Property Manager (licensed/ unlicensed)
• Real Estate Agents
• State VS Federal – Confusion/ Readiness (Selangor
1/1/16, NS only recently)
• Authorities – non-committal, passing the balls
(PTG/JUPEM/COB)
 Contribution by
Schedule of Parcel Unsold Parcel

COB vs Strata
Computation of
Share Units CHALLENGES Management
Tribunal

Tenure of Limited Common

Committee in Property
Management
Committee
Member’s Liability
 Schedule of Parcel
• Developer before the selling (or continue to
sell) of any parcel or proposed parcel shall file
schedule of parcel (SOP) with the
Commissioner: -
– Developer have to committ to the entire
development before selling; no more testing the
market or adjustment for commercial feasibility.
– Amendment ALMOST impossible.
– Mindset: Developer SELL ASAP; Consultant can
always amend (eg. Building Plans).
 Schedule of Parcel
A
B

C D

• Problem of adjustment, i.e.:

– Block A’s drawing already firm up and Block B,C and D not to firm up
pending A’s market demand.
– In this situation, the Developer cannot do so because the developer
have to file the schedule of parcels for the entire piece of land.
– Should SOP adjustment be made possible if everyone is benefiting? –
Under thecurrent law: we can only lobby the authority now to instruct
the developer.
 “Per Square Foot”
• Old law – Share Unit is for Control; not as a basis of
Contribution.
• The way to compute monthly service fees and
sinking fund: Size of the parcel
• Problem? – psf is so entrenched and acceptable
Difficulties in explanation and justification
 “Share Unit”
• New law – for both Control and Contribution
• Formula provided to compute allocated share units
Allocated share = (area of parcel x WF1 x + (area of accesory
units WF2) parcel x WF3)
of a parcel

• WF1 = weightage factor for the type of parcel as

specified in Table 1
• WF2 = weightage factor for whole floor parcel as
specified in Table 2
• WF3 = weightage factor for accessory parcel as
specified in Table 3
Table
1
Table
2
Table
3
 Challenges
• Is maintenance fees computed based on the
old law disputable?
• Can the allocated share units under the old
law be challenged?
– Some maintenance fees computed based on the
old law may be cheaper / more expensive; and
– Vice versa for the maintenance fees computed
based on the new law.
Tenure of Committee in Management

• After handover from the developer, owners

are required to participate in the council.
• However, what is the participation rate for
most strata properties nowadays?
• High or low?
 Committee Member’s Liability
• Strata Management Act 2013 laid out the management
corporation’s and joint management body’s duties.
• However, are there any liabilities imposed on the
committee members themselves?
• Are there any liabilities imposed on the developer if
the developer is part of the committee member?
• There many filling requirements under the new regime,
are the members equiped to comply? What about
costs? More staffs and even legal consultation?
 Committee Member’s Liability

• Example:-
– Section 26(5) : Duties of JMB in relation to
accounts
• “If the joint management body fails to comply with …
every member of the joint management committee
commits an offence and shall, on conviction, be liable
to a fine not exceeding two hundred and fifty thousand
ringgit or to imprisonment for a term not exceeding
three years or to both.”
 Committee Member’s Liability

• Example:-
– Section 72(3) : Strata Roll
• If a management corporation fails to comply… every
member of the management committee commits an
offence and shall, on conviction, be liable to a fine not
exceeding ten thousand ringgit or to imprisonment for
a term not exceeding three years or to both.”
 Limited Common Property
• Submission
MC to make application for APPROVAL with PRESCRIBED
FEE
Questions
• Are there any successful
approval up to this moment?
• Are there even submission?
• How much MC has to pay?
(Surveyor for the special plan
and submission; and Lawyer to advise
on the processed – comprehensive
resolution.)
 Limited Common Property
• Comprehensive Resolution – 2/3 of the total share
units (not quorum)
 All share units under the SOP?
 Trasferred only?
 Provisional blocks of the subsequent phases?
 Unsold units counted in favour of the developers?
 How to conduct the poll?
 Limited Common Property
• Formation of sub-management corporation
– If Sub-MC is not performing up to par, can Sub-MC
be fired (like Singapore)? Subsequently can MC
regain control? Separate legal entity now.
 Limited Common Property

• Limited Common Property vs Common

Property
– When conflict, who will win?
 Limited Common Property
• In a situation where there is only one lift
access to the LCP and the lift is a Common
Property asset. In a situation where the lift is
faulty, who should pay for the repair fee?

LCP

Only 1 lift to
access the
entire building
 Limited Common Property
• 2 tiers system – “Malaysia”
– Disputes between the main and subsidiary
management corporations

– Conflicts between subsidiary management

corporations concerning boundaries, common
services and limited common property, as ambiguities
may arise from delineation, marking or description.

– More members are required in a 2-tier management

corporation – more participation or more devision?
Commissioner of Building (COB) vs Strata
Management Tribunal (SMT)
• Division of power
– Confusion as to approaching which body first.
– Is there a need to go through COB first?

– Example:
– Inter-floor leakage situation
– If both the party responsible to rectify the leakage
and the management failed to do so, should the
victim make a complain to COB or SMT? Furthermore,
should the victim make a reference to COB first then
follow up with filing a claim to SMT?
Commissioner of Building (COB) vs Strata
Management Tribunal (SMT)
• Too easy to file in SMT – only RM100 to start a
claim – should there be a mediation first? Should
COB be the mediator? – Staff/ Support/
Efficiency?
• JMB/ MC equiped to submit defence to any
claim?
• Should SMT be under the Ministry of Housing?
There are strata beyond residential usage.
• COB is a state appointee and SMT is federal, who
shall take precedent over the other?
 Contribution by Unsold Parcel
• Unsold Parcel

• Provisional Unit
(in provisional block)

A provisional block is also defined as

(a) a block in respect of a building proposed to be, or in the course of
being, erected on building or land, for which a separate provisional
strata title is applied for;
(b) in relation to an approved strata plan, such a block shown therein, for
which a provisional strata title is to be registered; and
(c) in relation to a book of strata register, such a block shown therein, for
which a provisional strata title has been registered.
 Contribution by Unsold Parcel
• Problem
– Are there any requirement for unsold parcel and
provisional unit to pay for Service Fee and Sinking
Fund?
 Moving forward
– The success of any strata developments is on the
management upon the delivery – branding benchmark for
Developer.
– Compulsory education for Committee Members (JMB/MC)?
– Continuos communication by all stakeholders to ensure
timely improvement on the enforcement and processes.
– Developer to fund the LCP submission?
– Income generating Common Property?
• Billboard
• Designated commercial area to collect rental
– Laundry, commercial stall, clinic
• Community garden
– To plant vegetables and able to sell off to generate income
• Swimming pool/ Gym – pay per use?
 STRATA OMG
(OWNER’S MANUAL
& GUIDEBOOK)
[email protected]