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Strata title woes
06/07/2002 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

 

In the first of a two-part article, the House Buyers Association addresses the problems on strata titles and their importance to homeowners.

Strata titles was first introduced in Malaysia by way of certain sections of the National Land Code 1965 (NLC) that dealt with 'subsidiary titles'. 

However, in a case in 1985, weaknesses in the NLC were detected. In the case of Faber Merlin Sdn & Ors v Lye Thai Sang & Anor [1985] 2 MLJ 380  concerning a dispute over the sale of parts of a commercial building in Johor, Wan Sulaiman SCJ, found that  'It is not in dispute that strata titles have as yet never been issued in this country and that no register of strata title exist'. Therefore the provisions of the NLC, relating to strata titles were irrelevant. Thereafter, the Strata Titles Act (STA) was introduced as a single piece of legislation.

With titles, owners of strata properties are able to enjoy benefits of indefeasible title, unfettered right to charge and to transfer or lease their properties in a similar way that owners of landed properties can.

Strata property types

Strata titled units fall into the following categories: residential, commercial,, retail, mixed-use (residential/retail or commercial/residential) and serviced apartments.

With the increasing number of such properties being built today, more people will be dealing with strata titles when they buy their homes.

The cost of buying and maintaining a strata titled unit requires a major investment and the continuing obligation to pay "common" expenses. However, many people are not familiar with the concept or the provisions of the STA and complain about the management/maintenance problems of a developer-managed property without realising that the issuance of strata titles as provided by the law would have enabled them to take control instead.

Importance of strata titles

According to statistics compiled by the House Buyers Association (HBA), problems with strata titles make up most of the complaints received from buyers. It is no secret that numerous strata title properties are still managed by the developer even though the Certificate of Fitness for Occupation (CF) were issued years ago.

The HBA's advice to house buyers is to "get, keep and preserve" the strata titles to their units for the following reasons:

  • As ultimate proof of ownership.

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

  • To facilitate disposal should they wish to sell so that they will not be imposed "consent fees" by the developer.

  • To be able to initiate and get involved when the Management Corporation (MC) is formed by owners of the units in the subdivided building to maintain and manage the property.

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

  • As long as strata titles have not been transferred, the land the common property are still owned by the developer.

  • Should a project be orphaned (as when the developer 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.

Addressing the shortcomings

The STA, which was recently amended and gazetted on Dec 1, 2001, is the existing legislation governing stratified properties.

The STA has been in existence for nearly 18 years but it has become clear that specific  problems still 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 were 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. However, HBA feels it would be best to start a new enactment that is far-sighted enough to reform the entire law governing stratified properties instead of a short-sighted and unsatisfactory "piece-meal" approach, which means making cosmetic changes in bits and pieces as and when the situation arises.

Less lip service

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 for them to start learning the process. Relevant authorities should help to give detailed guidelines on the process of obtaining strata titles, the period before, during and after transition, as well as the actual running of the MC.

Pursuant to Section 8 of the STA, developers are required by law to apply for the titles within six months from the date of the issue of CF 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), developers are statute-bound to apply for strata titles expediently at their own cost and expenses. Yet how often has this been done?

We often read of threats to charge developers in court for not applying for strata titles, but in reality, how many developers have been charged for breaching this provision of the Act?

It's time that the authorities begin taking a firm stand on  the issue of strata titles and to ensure that developers play their part in the efficient delivery of these vital documents into the hands of house buyers.

 

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National House Buyers Association (HBA)

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Tel: 03-21422225 | 012-3345 676 Fax: 03-22601803 Email: info@hba.org.my

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