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A 30-year shame
11/06/2005 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

Inertia over issues involving Strata Titles Act a national disgrace

Delays on the part of property developers in obtaining strata titles for subdivided buildings have remained the biggest problem faced by house buyers for the fourth year running, a recent study by the National House Buyers Association (HBA) has shown.

In our annual tabulation of complaints received last year, involving a total of 212 housing projects and more than 37,810 purchasers, the problem of strata titles accounted for 29 per cent of the complaints, a one per cent increase from 2003.

Under Section 8 of the Strata Titles Act, developers must apply for strata titles within six months of receiving the Certificate of Fitness for Occupation (CF) or face a fine of not less than RM10,000 butt not more than RM100,000.

They are also subject to a further fine of not less than RM100 and not more than RM1,000 for each day that the offence continues to be committed.

Who's in charge?

Land owners/developers of strata title projects are by law solely responsible for applying for the issuance of strata titles, at their own cost and expense, from the Land Office in charge of the area the property is situated in. Invariably, this cost and expense have already been factored into the sales price of the lot.

Why then is there such a blatant disregard for the law? Isn't it tantamount to cheating buyers of the final proof of ownership of their property? What if the developer goes belly up and becomes insolvent? This is not uncommon and in such cases, buyers end up paying more for their title.

Errant developers give a lot of reasons for the non-application of strata titles, including:

  • The master title has not been subdivided yet;
  • The block title has not been issued to enable submission of applications for strata titles or floor titles;
  • It cannot be done until the other phases and blocks are issued with CFs;
  • The master title is encumbered;
  • There are numerous caveats on the land title; and
  • The building has been issued with temporary CF only.

The list can go on and on, with excuses after excuses. Who is there to enforce the law that developers are supposed to comply with? The Ministry of Natural Resources and Environment and the related Land Offices must also answer for the delays suffered by owners in obtaining their strata titles. Isn't it their duty to ensure that developers comply with the law by applying for the titles? The ministry therefore should start enforcing the law.

There is no excuse for not doing so. Parliament has vested in the Strata Titles Act vast and sweeping powers to bring to book errant developers that refuse, neglect or conveniently fail to obey the laws.  Every time a strata title problem is exposed in the media, the ministry follows up with threats to charge the developer concerned in court. But the threats have only been lip service. How many developers have been prosecuted for breaching the Act?

In such a laid back environment, is it any surprise that developers keep ignoring the law while house buyers continue to suffer? Recalcitrant developers are aware that the likelihood of escaping prosecution is extremely good because of "overburdened" civil servants or inert law enforcers. They are even willing to take the chance that should they be cited, they will not be successfully prosecuted  - and that the likelihood of heavy penalties is remote.

Complicated

Problems associated with stratified property including building defects, such as water penetration, cracks, management problems, definition of common properties and financial management that owners face are not something new.

Such problems have been commonplace for the last 30 years or so and the longer the problem is left unresolved, the more complicated it will become. The law and all related regulations from conception of the project to the establishment of its management corporation need to be looked into. Australia and Singapore regularly update their laws on strata titles in order to meet the real demand and true situations.

Transition committees formed by owners of a stratified development usually have a hard time pursuing problems with the developers. It is not uncommon for owners to learn, after investigations and numerous meetings with the relevant authorities, that the problem goes back to the conception stage of the development - that the CF was issued despite the status of the land being "agricultural".

Another case the HBA has come across is where part of the common facilities was situated on leased land. In both of these cases, it is not possible for the smooth transition of management control of the property from the developer to the owners.

It will mean more waiting time while the management is under the developer's control, often to the dissatisfaction of the owners.

Firm stand

It is time the authorities begin taking a firm stand on the issue of strata titles and ensure that the developers fulfil their part of the bargain by promptly delivering the vital ownership papers to the buyers.

The developer's management company can collect maintenance fees for the administration of the apartment or condo for so long as the strata title is not issued. The Act stipulates that owners can appoint their own management company only if they have obtained strata titles.

We foresee the strata title problem increasing drastically in the years ahead because no serious effort has been taken to reverse the trend in the market where the number of stratified properties being built is increasing by the day. Developers must not be given room to drag their feet.

It is no exaggeration that the problems of strata title will escalate. Our leaders are not even aware of the consequences of purchasers not having strata titles. Try asking the Minister of Natural Resources and Environment yourself, if you can get him.

Recently in the Dewan Rakyat, some Barisan Nasional MPs were so fed up with the inefficiency of the ministry in charge of environmental issues that one of them, the MP of Sri Gading Datuk Mohamed Aziz, remarked, "If ministries take action only after the issues are highlighted by TV3 journalist Karam Singh Walia, then we might as well just close the ministries. This means Parliament has no powers, Karam Singh has more power because he can move the ministries to take action. They (the ministries) don't bother about what we discuss in Parliament."

That's the ministry for you. The ministry in charge of the environment, the Ministry of Natural Resources and Environment, is also responsible for this key matter of strata title.

 

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