Strata For Investors
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Strata title is one of the title structures of ownership and control over a property. It is usually applied to subdivided buildings or complexes such as high-rise buildings, town houses, duplexes, flats, apartments, condominiums and commercial buildings.
It gives individual unit holders title over the space they occupy, while the land and common property are controlled by the Management Corporation (owner’s committee).
We recently spoke to key opinion leaders at the Strata Management Workshop and Dialogue at Rehda Institute in Kelana Jaya, Selangor to dig deeper within this concept.
Strata schemes are designed to give property owners more control over the space they occupy. The structure of strata titles designates the Management Corporation (MC) as the owner of the land. In the eyes of the government, MC is solely responsible for matters involving legal obligations of the council.
For the owners, MC generally takes responsibility for maintenance of the common area, insurance and/or informal mediator between residents.
Unfortunately, many residents and owners of strata titled properties have not reached the stage where MC is formed.
WHY IS HAVING THE TITLES TO YOUR PROPERTY IMPORTANT?
House Buyers Association urges people to “get, keep and preserve” the strata titles to their high-rise apartment units for these reasons:
As ultimate proof of their property ownership.
As a dealing instrument for instances of charging to banks for s.
As final proof of the built-up area of your unit and ultimately your apportionment of the share in the total aggregate units.
One need not obtain the consent of a third party (the developer) who imposed administrative charges of between 1% and 2% as their consent fees if and when you should decide to sell your property.
The forming of an MC by owners of the subdivided building is needed to maintain and manage the building, and to have their own by-laws, usage or restrictions. Until then, owners usually do not have a say in the way the building is managed or maintained, the monies collected from maintenance charges, building funds etc.
As long as the strata titles have not been transferred, the land and the common property are still owned by the developer. Should the developer-company go under liquidation or becomes insolvent before the strata titles have been obtained, the unit owners will get into a lot of trouble, or might eventually have to pay for the application of the strata titles themselves (which by the grand scheme of things, should not have happened in the first place).
WHOSE RESPONSIBILITY IS IT TO APPLY FOR STRATA TITLES?
Strata schemes are meant for owners to take charge of the maintenance and management of the common properties, and if so, due care should be given to expedite the transfer of titles to the owners for them to start learning the process.
“It is the obligation of developers nowadays; in fact, it is compulsory for them to get the strata titles. If there are no titles being issued, purchasers can take action on the developer,” says lawyer YP Cheong.
Meanwhile, National Housing Department deputy director-general- Jayaselan K. Navaratnam says there are over 300,000 properties which have yet to receive strata titles.
“If you don’t have a strata title and anything goes wrong, it’s much more difficult to obtain one as you will face difficulty tracing the stakeholders,” he says.
“There are even buildings with no strata title after 20 years, and the purchasers have no idea who the original architects are.”
Unless this issue is addressed, house buyers will continue to wait for developers to take time in transferring the titles to them. Perhaps, the Strata Titles Board would be able to seek a solution to this problem.
HBA proposes the following suggestions to expedite the application of strata titles:
-Once Certificate of Fitness has been issued for a particular building, copies should be made available to the Land Ministry to ensure Section 8 of the Strata Titles Act is strictly adhered to;
-To withhold part of the balance purchase price, of say, 2.5% until strata titles have been transferred to the individual unit owners;
-To change regulations that all aspects of maintenance and cost incidental there to shall be the sole responsibility of the developer until control has been transferred to the MC.
There is no standard to monitor the developer-controlled management of strata title properties, except those set by the developers themselves. As such, we can only assume it is so profitable, that developers see this as a cash cow.
Chur and Associates founding partner Chris Tan says: “Strata living is a form of community living that require a higher participation from owners collectively to ensure the entire property is maintained and unchanged properly.
“It’s akin to shareholders in an elected committee members during the general meetings.”
Strata owners should be aware of their rights and responsibilities now more than ever. As Chris says, developers will not be managing the strata property forever; hence its owners will have to take full responsibility for the entire building eventually.
- PROVIDE MANDATE DIRECTION TO THE MANAGEMENT
A Joint Management Body is tasked to manage and maintain the common property in strata developments from the time of delivery of vacant possession by the developer to the purchasers until an MC is formed.
The MC can only be established after strata titles have been issued and at least, a quarter of the aggregate share units have been transferred to the owners.
This gap in time of forming the MC is also meant to be a grace period for the owners to learn the trade of managing their own property with the holding hand of the developer.
- RIGHT TO REQUEST FOR AN EXTRAORDINARY GENERAL MEETING (EGM)
To provide timely intervention in any issues, the committee council chairman shall convene for an EGM within six weeks of receiving requisition in writing from strata owners who are together entitled to at least 25% of the aggregate share units.
- RIGHT TO REQUEST FOR INCLUSION IN THE AGENDA
Owners also have the right to voice out their opinions and discuss any matters they find important, by requesting for an inclusion in the agenda of an EGM or AGM, provided that they hand in a notice at the management body’s registered office no less than seven days before the meeting.
- RIGHT TO VOTE DURING AGM AND EGM
In order to exercise this right, owners will have to settle all of their outstanding service charges prior to the AGM or EGM.
Those who fail to do so will not be allowed to cast a vote for any resolution.
Each parcel of land (unit) will be entitled to one vote, on a show of hands, and on a poll, the number of votes shall correspond with the number of share units or provisional share units attached to the parcel or provisional block.
- RIGHT TO REQUEST FOR THE REVIEW OF SC AND SF
In the event where owners are not satisfied with the SC or SF implemented by the management, they could apply for its review to the Commissioner of Buildings (COB).
The COB will then determine the adequate amount that should be charged or get a registered property manager to recommend the said amount.
- STATUTORY PRESUMPTION
Should there be any inter-floor leakage — dampness, moisture or water penetration on the ceiling or any furnishing material attached to the ceiling, the owner of the upper floor shall be responsible to the said leakage in the absence of proof to the contrary. This means the owner of the above unit will have to foot the bill for repairs.
- RIGHT TO FILE A CLAIM UNDER THE SMT
Every strata owner’s rights are protected under the SMT, where any dispute related to strata management falls under the jurisdiction of the SMT. Established under the Urban Wellbeing, Housing and Local Government Ministry, the SMT was formed to provide feasible solutions to disputes on the failure to perform a function, duty or power imposed by SMA 2013.
- RIGHT TO FILE A CLAIM AGAINST COMMON PROPERTY DEFECT ACCOUNT
Common Property has a defect liability period of 24 months, for residential property, similar to the one for your strata unit. Strata owners have the alternative to claim for any defect in their common property such as leakages or faulty elevators within the defect period.
Before the handing over of units, developers will have to submit 0.5% of the estimated construction cost or RM50,000; whichever is higher with the COB.
This amount is to be deposited into a statutory account as a provision for any possible defect in the development.
Should the sum be insufficient to cover any expense, the developer must settle the remaining amount.
- RIGHT TO SET UP A SUBSIDIARY MANAGEMENT CORPORATION (SMC)
The MC now may establish SMCs to represent the interests of a particular group of parcel proprietors who are entitled to the exclusive benefit of a limited common property.
These areas must be clearly defined and marked on a special plan, which must be submitted to the survey director.
This is especially useful for mixed developments, where the owners of commercial units do not utilize certain common property, for instance, an office unit owner will not use the swimming pool facility.
- RIGHT TO DISPUTE THE LEGALITY OF ATTACHMENT OF MOVEABLE PROPERTY
The COB has the right to issue an attachment for strata owners who fail to pay their service charge on time.
A Warrant of Attachment (Form A in the third Schedule of SMA 2013) will be issued, following which the COB would hire people to confiscate the defaulter’s removable property (car, settee, television, etc).
If the attachment is done in error, however, owners can then apply to the magistrate’s court for the release of their property within 14 days from the date of attachment.
