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Strata Living
01/11/2003 Malaysian Business-Housing & Property By National House Buyers Association of Malaysia

Own a strata property? Know your rights and responsibilities

Most people are not aware that in buying a strata title property, they become a member of a corporate body called the management corporation. Under the Strata Titles legislation, as a member of this corporation, one will involve assuming certain obligations, duties, restrictions and liabilities as well as various rights, entitlements and privileges apart from the ownership of their own parcel.

Pre-management corporation

In Malaysia, strata titles are not issued immediately upon vacant possession. Pending the issuance, it is the housing developer's duty to manage and maintain the building and common areas. The developer would have signed a 'Deed of Mutual Covenant' with the purchasers at the time of the sale and purchase agreement signing. Once you have signed this document, you have agreed to comply with the developer's by-laws (or house rules). If the rules say you cannot fix any iron grilles on your windows, you cannot do it, or you would face substantial fines or penalties.

Forming the management corporation

When the Registrar of Titles (Land Office) opens a book in respect of the subdivision of building, in the strata register, a newly created legal entity comes into existence. This corporate body is now known as 'XXX (name of strata scheme) management corporation'. The name is  a little misleading as it is actually an owners' corporation and has nothing to do with the management agents.

The original proprietor

From the time the strata plan is registered, the original proprietor, usually the developer, will control the management corporation. The principal duties imposed on the original proprietor during the initial period include the following:

  • Exercise and perform the powers, authorities, duties and function of a council until such positions are filled at the council's first annual general meeting election (AGM)
  • Fulfill the duties of the owners' corporation contained in the Strata Title legislation, subject to restrictions.
  • Convene and hold the first AGM of the management corporation in the prescribed manner within one month after the expiration of the initial period.

Although it is not provided for in the Strata Titles legislation, it makes sense for the original owners to provide certain plans (building, engineering and drainage), specifications (building contract and land survey), diagrams (location of pipes, wires, cables and ducts), list of owners, accounting records and other documents. We hope that the lawmakers would include this requirement in the next amendment to the legislation to allow for smooth transition in the control, management and administration of the strata scheme from the original proprietor to the parcel owners.

Time is given for the transition of control from the developer to the owners during the 'initial period'. This initial period commences the day the management corporation is formed and ends the day when at least one-third of the parcel owners (calculated as one-third of the aggregate share units) have registered their individual strata titles.

By-laws

During the initial period, the by-laws as legislated in the Strata Titles Act,1985 (Third Schedule) are enforced. This means that the 'Deed of Mutual Covenants' you have signed earlier is not legally binding anymore. This regulated by-laws cannot be amended by the management corporation; however, the management corporation can make additional by-laws or amendments to additional by-laws by special resolution.

First AGM

The developer has to give written notice of the first AGM to all parcel owners not less than 14 days before the meeting and prepare the agenda. The items of the agenda, fixed by the Strata Titles legislation, includes decisions to be made on insurance, service-charge contributions, sinking-fund contributions, the number of council members, election of council, by-laws. After the first AGM, the transition for control from developer to owners takes place.

Who owns the common property?

The management corporation is now the owner of the common property and the custodian of the issue of document of title to the lot (land). This is one issue that most parcel owners have forgotten. Although you have bought an apartment unit, you can still be part owner of the piece of land on which the building stands, albeit you cannot deal with it on a personal basis.

The management corporation being a corporate body has perpetual succession and a common seal, with an elected council as compared to appointed board of directors. For an insight of the law on strata schemes you can buy copies of the Strata Title Act, 1985, and any amendments from the Government Printers or check with the information available on the National House Buyers Association's website.

 

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