Act comes under scrutiny
30/07/2007 The Star

There is a lot of uncertainty pertaining to the Building and Common Property (Maintenance and Management) Act, 2007 and industry players, including purchasers, want it to be further fine-tuned

THE new Building and Common Property (Maintenance and Management) Act 2007 (BCPMM Act) that was gazetted on April 12 came under intense scrutiny at a seminar on property management recently.

While the lively one-day seminar on Defusing the Property Management Time Bomb held in Petaling Jaya once again focussed on the perennial problem of stratified properties, speakers and participants also brought up many grey areas in the new Act.

Although the Act is aimed at plugging loopholes and grey areas not covered by the Strata Titles Act, it is felt that it has to be fine-tuned to be effective and fair.

Under the BCPMM Act, the roles of the developers, buyers (parcel owners) and management corporations (MC) are clearly defined and three new bodies were introduced to implement proper building maintenance, namely the joint management body (JMB), the commissioner of buildings (COB) and managing agent (MA).

The role and responsibilities of developers of stratified properties are limited to only one year. After that a JMB must be formed to manage and maintain the common property until the issuance of strata titles and formation of the MC.

The COB is a new authority established by the Government to oversee and enforce the Act. The COB is also responsible for adjudicating all recovery procedures against errant parcel owners.

All stratified properties, including low-cost flats, apartments, condominiums, town houses, shopping complexes, industrial buildings, shop offices and gated communities, fall under the BCPMM Act.

The seminar raised many issues.

Lawyer Lee Kim Noor, in her paper COB: The Mission Impossible, said although the BCPMM Act was intended to help purchasers, it was a “double-edged sword” as now JMB members could be jailed or fined heavily for offences under the new Act.

For example, if they fail to dissolve the JMB within a month from the first meeting of the MC, every JMB member could be fined RM10,000. Such punitive actions, she said, would deter parcel owners from wanting to be elected to the JMB.

She said there was also the question of who should be the COB. “The COB should be formed before the BCPMM Act comes into force. It is too wide and ambitious. It gives the COB so many duties, but it does not have the power of a Consumers Tribunal in handing down judgments.”

She said the drafter of an Act should be more open-minded before finalising an Act.

Another grey area is the JMB's first meeting where election is by a show of hands. Lee said a developer may own 80% of the properties but it had only one vote. There is nothing mentioned whether a show of hands or ballot is required for subsequent meetings.

Another issue is the procedure for recovery of service charge arrears that differed between the BCPMM Act and the Strata Titles Act. “The COB should have the power to enforce recovery of service charges against the tenants,” she added.

Meanwhile, another issue is whether the JMB can be formed before the April 11, 2008 deadline. This is because under the BCPMM Act, all completed buildings (vacant possession handed over before the Act) have 12 months from the start of the Act (April 12, 2007) to form a JMB.

For new buildings where vacant possession is handed over after the Act, they are given 12 months after handing over of vacant possession to form a JMB.

Bunga Raya Management Corporation secretary S. Venkateswaran, in his paper How effective is pre-management corporation?” said the Selangor state government first introduced pre-management corporation about two years ago and it was aimed at helping to streamline the transition between developer-managed and owner-managed stratified properties.

He said the initial quorum for establishing the JMB was 25% of the parcel owners having paid their maintenance charges to vote at the JMB's first general meeting.

“In practical terms, the JMB can only be established if the developer has succeeded in collecting 25% of the maintenance charges from the parcel owners. This will be difficult to achieve if it is a 'sick' project,” he said, adding that the JMB would comprise a representative from the developer and a minimum of five and a maximum of 12 representatives from parcel owners elected at the first general meeting.

He however, noted that Section 15 of the BCPMM Act stated that JMB members were personally liable for any breach or offence committed by the JMB, particularly with regards to the management of the building maintenance fund.

“Section 15 may discourage parcel owners from becoming JMB members, especially when all the financial records are kept by the developer, and when they are unaware of detailed financial transactions involving the building maintenance fund,” he said, adding that it might drive away parcel owners who were keen to help out.

“It may hamper the subsequent formation of the MC,” he added.

He said the rights and responsibilities of the JMB, including those of its members, would become more complicated if the developer became insolvent and the project was handed over to receivers and liquidators, or to state-owned asset management companies.

Among the grey areas in the BCPMM Act was that the term maintenance charges seemed to refer to only payments due to the building maintenance fund.

“What about statutory levies such as quit rent which are payable to the Department of Lands and Mines?” he asked.

He said the biggest problem faced by the MCs was that the COB was not fully equipped, both logistically and administratively, to handle such a mammoth task covering all states in the country, especially Penang, Federal Territory, Selangor and Johor which have the largest number of stratified properties.

He proposed that a joint multi-stakeholder advisory panel comprising the land office, COB, local authorities, developers, engineers, architects, building managers and MCs be formed soon to address these issues.