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Condo management — a pesky problem

Apartment owners began taking control of their buildings in 2007.

Two years later, they tell SANTHA OORJITHAM that they still have unanswered questions.
ANTHONY Tan moved into his condominium on Jalan Ipoh in 2002. After the Building and Common Property Act 2007 (Act 663) came into force, owners set up the Joint Management Body (JMB) as required and held their first annual general meeting. They voted for the developer to continue managing their property.

But last year, the owners took over.

“We found many discrepancies,” said Tan, who became the JMB chairman. For example, 84 unsold units on which the developer had not paid maintenance fees. It had also failed to contribute to the Sinking Fund (for emergencies and major repairs).

Tan owns another apartment in Port Dickson. Because other owners had not paid their maintenance fees, the developer and managing agents fled, says Tan. Now, “the apartments are run down and filled with termites. And there have been thefts.”

The owners turned to the Commissioner of Buildings (COB), appointed by the state government (usually the mayor) under the Act. His task is to ensure that everyone responsible for maintenance and management — from the developer to the JMB and Management Corporation (formed after strata titles are issued) — follows the provisions of Act 663.

Mak says the Commissioner of Buildings needs independence and enough workers to function properly.
“He told us to go to court,” said Tan. “But Act 663 is supposed to have him circumvent all this and come up with a faster solution. We want him to act using his power — and fast.”

Tan and other JMB chairpersons within the Klang Valley — which has the highest number of condominiums — have been meeting each other, as well as lawyers of the National House Buyers Association, to discuss problems in implementation of Act 663.

(Within Petaling Jaya, the All Petaling Jaya Residents’ Association Coalition has a Condominiums, Apartments and Highrise Committee.)

For many, the main problem is owners not paying service charges and Sinking Fund fees, noted Amu Tharmarajah, chairperson of the JMB for a condominium in Sentul.

“If there are no services, the value of the property falls, rent drops and the condition of the building continues to deteriorate.

“Who’s the final loser? It’s the owner,” Paul Khong pointed out. He’s executive director of CB Richard Ellis (Malaysia) Sdn Bhd (formerly Regroup Associates) which manages property in the Klang Valley.

“At the lower end, problems are greater and breakdowns more frequent,” he said.

In medium-cost buildings, about 20 to 30 per cent are not paying. And even in the high-cost buildings, about 10 per cent default.

Act 663 is one of three Acts that Housing and Local Government Minister Datuk Seri Kong Cho Ha recently said would be amended “to make direct prosecution valid without having to go through the Public Prosecutor.”

If a developer doesn’t hand over management of accounts to a JMB within a month after it is formed (within a year after vacant possession), the COB can fine them up to RM100,000 upon conviction and RM1,000 daily until the handover.

(From left) Dr R. Jaya Booshane, Amu Tharmarajah and Anthony Tan. - Picture by Munira Abdul Ghani
The COB can also fine those who have not paid maintenance and management charges RM5,000 upon conviction and RM50 daily until he pays.

Such cases can only go to court if the Attorney General approves. That’s why owners would rather the COB use his other powers.

If an owner has defaulted for over six months, the COB can issue a warrant of attachment on his apartment. And if the owner doesn’t pay up within the time given, the assets within the unit can be auctioned.

“The COB is tasked to ensure that each building is being managed well and all rules are followed,” explained Khong. “As much as possible, they will not interfere until and unless a formal complaint surfaces at their desk.”

In many cases, the COB has stepped in to remedy various problems, he noted. When the maintenance and management of some buildings was not carried out properly, for example, the COB appointed a professional property manager.

But with the huge number of “stratified” buildings (apartments and office blocks) which is growing by the month, said Khong, the various COB are just not equipped, both logistically and administratively, to handle their major task especially in Penang, the Klang Valley and Johor, where the concentration is the highest.

Petaling Jaya, for example, has about 1,300 stratified buildings, noted Mak Khuin Weng, the Petaling Jaya City Council (MBPJ) councillor handling COB cases. The COB unit has five people — one senior officer from the federal government, and the rest who have an accountancy background.

Mak reckons they need at least 10 to 12 people: investigation officers to assess complaints, accountants to check the books, lawyers to go through the minutes of meetings and the house rules, engineers and architects to go through the building plans.

“The COB was supposed to be like the Registrar of Companies or Registrar of Societies with his own premises and workers, to be independent and to function properly,” he argued. “A lot of these problems wouldn’t occur if the COB were set up as an independent unit and given what it needs to take up all these issues, litigate and test the powers of the law.”

MBPJ’s unit has not begun any prosecutions yet. But it has sent about a dozen warning letters, at the request of the relevant JMBs, to apartment owners who have not paid their maintenance fees.

“We hope that once people receive these letters, they will pay,” said Mak. “Those who don’t will face a warrant of attachment.”

Enforcement is also difficult since different agencies are responsible during different stages of development. “None of the agencies are talking to each other and it is difficult to treat the problems separately because the issues are mostly intertwined,” explained Mak.

After the local council gives approval, when a building is under construction it comes under the jurisdiction of the council’s Planning Department and Building Department.

After the certificate of fitness is given, the residents move in and form the JMB, the building comes under the COB until it gets strata titles. Strata titles are processed by the Land and Mines Department.

Once at least 25 per cent of the strata titles are issued, a Management Corporation takes over from the JMB. After that, any disputes should be settled by the Strata Titles Board under the Strata Titles Act but, as Mak points out, “the Board has never been formed.”

Ideally, JMBs should do as much as they can to collect payment and enforce house rules before turning to the COB.

About 30 per cent of the unit owners at Dr R. Jaya Booshane’s condominium in Brickfields were not paying the fees. The JMB chairperson brought it down to 20 per cent by sending first a friendly letter, then another threatening to cut the water supply. Finally, a lawyer’s letter stated “we would get a warrant of attachment if they don’t pay.”

And most JMBs agree the last resort should be going to court.

“One developer I know took a defaulter to court,” recalled Tan. “It took him five years and about RM60,000 in legal fees — and he lost the case!”


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