Hot Issues in Property

Management Legislation

By YBhg Tan Sri Dato CK Teo, Deputy President, BMAM

INTRODUCTION

1. Timely and necessary for The Strata Management Act (SMA)

2. 1.5m living in Strata Buildings and growing, not only residential ,

but strata offices, commercial buildings, landed strata “gated-

guarded” communities.

3. Strata Management Act amalgamation of the Building and

Common Property (Maintenance and Management ) Act and Part

VII Management of Subdivided Buildings of the Strata Titles Act.

Both repealed.

4. Intention and concept is good but too idealistic and not practical

with many pitfalls and negative consequences.

The Strata Management Act 2013 should be read together with the

Strata Management (Maintenance and Management ) Regulations

(SMR) 2015

There are actually many impractical and unfair provisions but I will

highlight three of them and I am sure the other speakers will be

addressing those others throughout this seminar.

PRACTICAL PROBLEMS FACED BY DEVELOPERS

(SMA) : Schedule of parcels

Schedule of parcels to be filed with the Commissioner before sale of

any parcels

6. (1) A developer of any building or land intended for subdivision

into parcels in a development area shall not sell any parcel or

proposed parcel unless -

(a) a schedule of parcels showing the proposed share units of

each parcel or proposed parcel and the total share units of all

the parcels has been filed with the Commissioner under this

Part; and

(b) in the case of any phased development, the schedule of

parcels filed with the Commissioner shows the proposed

quantum of provisional share units for each provisional block.

6. (3) A schedule of parcels filed under subsection (1) shall -

(d) contain a certificate by the developer’s architect or

engineer that the buildings or land parcels to be

constructed in accordance with the approved plans and

specifications and any amendments to the plans and

specifications under the Street, Drainage and Building

Act 1974 [Act 133]

and any by-laws made under that Act, prepared by the

developer’s architect or engineer, are capable of being

subdivided under the provisions of the Strata Titles Act

1985; and

(SMR) : Schedule of parcels

6 (3) If the plans or legend filed with the Commission ….are altered…

(a) due to requirement of the local authority; or

(b) with the agreement of ALL purchasers of the parcel in the

development….

And provided that there is no change in the proposed quantum of

provisional share units for the affected provisional block…..

DIFFICULTIES

These clauses envisaged that there will be no change to any parcels

nor change in the share units.

How many buildings have been build without having to submit

amended plans before CCC?

Where in the world can anyone get a 100% consensus of ALL

purchasers?

There are many circumstances that minor changes need to be done

from the points of view of architecture, engineering , aesthetics,

constructability, site constraints, availability of materials etc.

Not to mention all the additional new conditions imposed by the

multitude of technical departments up to as late as point of CCC.

This need to determine all the share units of the entire

development before selling the first parcel is idealistic but not

practical. This problem is compounded when the development is

phased.

This is further compounded when the development is a mixed-

use development .

Projects today are getting larger in scale and integrated.

It is indeed a very difficult , almost impossible task, to determine

the entire share units especially in mixed-use developments

comprising of apartments, service apartments, hotels, offices,

shopping malls , hospitals etc.

There are many advantages and synergies in developing and living

in mixed-used projects and is a growing trend.

The determination of share units means the developer has to

determine exactly what he has to build. This restrict the changes need

due to changes in demand and market conditions. Many projects

takes 5 to 10 years to complete.

Even for a phased totally residential project, market needs and

saleability of build products changes rapidly and we need a really no-

mistake crystal-ball to firm up what are in demand over the several

phases even merely for totally residential development, what more if

mixed-use and large scale developments.

PROPOSED SOLUTION

Our compromise proposal was to give the developer the leeway of

massaging the total share units within , say +/- 25%.

CIVIL MISDEMEANOUR DEEMED CRIMINAL

All civil misdemeanours now deemed as criminal offences.

…liable to fines in the hundreds of thousands or to imprisonment

for a term not exceeding five years OR BOTH.

This apply also to those serving as volunteers in the JMBs and

MCs. I will expand on this later on.

OPINION: Absolutely Overkill.

PROBLEMS FACED BY PARCEL OWNERS AND JMB/MC MEMBERS

SMA: Second Schedule

2(5) ….no chairman, secretary or treasurer shall hold office for

more than two consecutive years.

2(6) ….no member of the management committee shall hold office

for more than three consecutive terms.

Duties of the Management Corporation in relation to accounts

62(5) If the management corporation fails to comply…..every member

of the management committee commits an offence and shall,

on conviction , be liable to a fine not exceeding two hundred and fifty

thousand ringgit or to imprisonment for a term not exceeding three

years or to both.

Strata Roll

72(3) If a management corporation fails to comply….every member of the

management committee commits an offence and shall, on conviction, be

liable to a fine not exceeding ten thousand ringgit or to imprisonment for a

term not exceeding three years or both.

These restrictions, while ideal are not practical.

1. These restrictions can only work on the premise that there are many

parcel owners willing to volunteer and serve in the JMBs and MCs.

In actual fact, JMBs and MCs are experiencing difficulties to have

adequate volunteers willing to serve.

2. These restrictions assume there is a trust deficit in the people willing to

serve and that the parcel owners are not knowledgeable enough to

exercise their rights to vote and choose at the Annual General Meetings.

3. The fiduciary duties are normally a collective responsibility of the

Management Committee and thus there are adequate check and balance

to minimise any fraud or misdemeanour.

4. The punitive remedies of personal liabilities, fines and imprisonment

introduced in the Act should have enough deterrence and are already an

overkill to deter volunteers to serve.

5. Each term is merely 1 year and the limitation of 2 and 3 years will not

allow adequate time to accumulate adequate and in depth knowledge to

best serve the buildings' maintenance.

Many JMBs and MCs are experiencing difficulties in encouraging the

parcel owners to volunteer and serve as members of their respective

JMBs and MCs.

This reluctance is compounded by the possibility of personal liabilities

both fines and imprisonment terms for any misdemeanours,

neglect and omissions in many situations as provided for in many

provisions and circumstances as contained in the Strata Management

Act.

PROPOSED SOLUTION

1. All restrictions relating to tenure of office be removed.

2. All other posts both office-bearers and committee members, shall

have no limitations on their tenure of office.

3. In the event that there are inadequate volunteers to serve the

Management Committee and there are those who are willing to

continue serving but barred by limitation of tenure, then it should be

acceptable that these candidates continue to serve if they are so re-

elected at the Annual General Meeting.

4. In the event that there are inadequate volunteers to serve the

Management Committee and there are those who are willing to

continue serving but barred by limitation of tenure, then it should be

acceptable that these candidates continue to serve if they are so re-

elected at the Annual General Meeting.

PROBLEMS FACED BY MANAGING AGENTS

SMA Services of any person or agent to maintain and manage

common property

21(1) If a joint management body ….employ….any person or agent to undertake the maintenance and management of the common

property….

21(2) If the person or agent is not a registered property

manager…he has to lodge ….a bond given by a bank, finance company or insurer.

21(3) The amount of the bond shall be equivalent to the

management fees for a period of twelve months or a sum of fifty

thousand ringgit whichever is higher.

For the past 10 years, the property valuers have been attempting , by

legislation, to create a monopoly exclusively for property valuers to

manage property.

BMAM have managed to constantly blocked their sinister attempts.

However they managed to sneak in the following unfair

requirements for non valuers who are appointed to management

properties.

The need for a person or agent who is not a registered property

manager to provide a bond equivalent to the ANNUAL remuneration

or ANNUAL management fees is far too onerous and

discriminatory.

This is overly compounded by the need for a separate bond for

each job undertaken for each JMB/MC.

In most circumstances, the financial institution issuing the Bond

would require the applicant to deposit with the financial institution

equal to the amount of the bond.

It is onerous and not practical to have ready funds to deposit the

FUTURE ANNUAL income to secure the issuance of the bond.

If the manager is a natural person, he would be remunerated and

would merely be an employee and should not be made to provide

any bond as an employee.

As for an agent which is a corporate entity, it should be fair and

acceptable practice and suffice if the agent take out a Professional

Indemnity Insurance Policy in lieu of the bond.

This is the same cover undertaken by all professionals including

property valuers and is thus equitable and fair.

Thank You