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Transition Pitfalls
01/03/2004 Published in Malaysian Business - Housing & Property By National House Buyers Association of Malaysia

Seven recommendations for a smooth handover


It is not uncommon for owners of subdivided properties to be stressed out by the transition of the management corporation (MC) developer's control to owners’ control.

Here are some of HBA's recommendations to enhance the subdivided property’s management and maintenance:

First Annual General Meeting (AGM)


The current Strata Titles Act does not provide for the transfer of documents that are crucial for the MC to fulfill its role and obligation. The developer must prepare these documents for the first AGM, namely:

1. Notice of the first AGM
2. An annual budget of the MC, detailing:

  • The opening balance in the management fund and sinking fund

  • The itemised estimated income from all sources other than levied contributions

  • A list of estimated expenditures from the management fund

  • A total of all contributions to the management fund and the special fund

  • Each parcel proprietor’s monthly contributions to the fund

  • The estimated balance in the funds at the end of the fiscal year.

3. A financial statement that sets out

  • The opening and current balance in the management fund and the special fund

  • The details of the MC’s income from all sources, except special levies

  • The details of expenditures from the management fund

  • Income and expenditures by special levy, if any.

4. Documents to be presented

At the first AGM, the developer should give the MC copies of the following:

  • all plans required to obtain a building permit and any amendments

  • any document that indicates the location of service facilities are not shown on the plan or plan amendments filed with the local authorities/council

  • all contracts entered into by the MC

  • the registered strata plan and plan amendments

  • the names and addresses of the project's contractors, subcontractors, suppliers

  • all documentation and information relating to common property or assets

  • minutes of special general meetings
    a list of owners and details

  • contacts of end-financiers

  • names of tenants

  • assignments of voting or other rights by parcel proprietors to tenants

  • books of account showing money received and spent and the reason for the receipt or expenditure

  • the Act and Regulations

  • a copy of the MC’s bylaws and rules

  • any court decision and legal opinions in a proceeding in which the MC was a party

  • income tax returns, if any

  • correspondence sent or received

  • bank statements, cancelled cheques and certificates of deposit

After the first AGM


The developer must do the following after the first AGM

  • transfer control of the MC’s money, keys to the new MC Council within a week

  • ensure that the MC’s insurance coverage continues for at least four more weeks

  • deliver an updated financial statement to the MC within eight weeks

  • pay any difference in the event the actual management fund expenses exceed the estimated expenses to the MC within eight weeks

Budgets and special funds


HBA believes that the developer should prepare and disclose the initial budget to assure accurate estimate of projected operating costs and special fund. Owners should get full disclosure and the opportunity to develop the budget.


The revamped Schedule H of the Housing Development (Control and Licensing) Regulations 1989 provides for a service charge statement form be approved by the Controller of Housing or relevant authority.

Better property management

HBA encourages the national certification of property managers. We recommend the mandatory qualification, registration, and licensing of strata property managers, with a course in the physical maintenance of buildings as part of the required training.

Help for orphaned projects

In cases where developers have dragged their feet or caused themselves to be liquidated before transferring the titles to the owners, there should be a provision in the Act to ensure that the subdivided building can be managed and maintained properly by the beneficial owners.

Completion of common facilities

Although there is a defects liability period for developers to rectify defects at their own cost and expenses, there is no legal entity at the onset to see to this. Effort must be made to see that an association of buyers is created from day one.

We hope the authorities would seriously look into these as we move from the building stage to maintenance stage.


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