Many people, especially the younger generation prefer living in condominiums and apartments. In today’s market, generally high rise residential property seems more ideal considering certain aspects such as prices, facilities and location. You have to admit that it is difficult to get a landed property in a good location for an affordable price. However, many people tend to overlook certain obligations and responsibilities that come with living in high rise residential buildings. For example, in addition to your usual utility bills, you would also have to bear the maintenance charges and sinking fund payments for the upkeep of the high rise residential building. The maintenance charges are utilised towards payments of services in the maintenance of the upkeep of the common property in a building such as the gym, swimming pool, garden area, security and so on. The sinking fund on the other hand is utilised towards the maintenance of actual or expected capital expenditure such as repainting or upgrading the common property for example.
Who is in charge of the collection of the maintenance charges and sinking fund you may ask? Well, under the Strata Management Act 2013, the initial collection of the abovementioned payments shall be done by the Developer during the developer’s maintenance period. The developer’s maintenance period usually is from the date of vacant possession of the units in a high rise residential area until one month after the formation of a Joint Management Body (“JMB”). Once the JMB is formed, such responsibility for the collection will be handed over to the JMB and thereafter the Management Corporation (“MC”) once it is formed. The JMB is normally formed within one year from the date of vacant possession but before the date that the title to your property is transferred to you. The JMB is made up of the developer and the parcel owners who will carry out the duties under S.21 and S.22 of the Strata Management Act 2013 which generally revolves around the maintenance and upkeep of the common property. The MC on the other hand shall be formed upon the delivery of the individual strata titles to the strata title owners and shall only contain the strata title owners without any further involvement from the developer. Upon the formation of the MC, the JMB shall be dissolved and all duties and obligations are passed on to the MC including the maintenance of the accounts in relation to the sinking fund and maintenance charges.
Now, to understand the topic at hand, one vital point to note is that both the JMB and MC are body corporates which have a common seal which means that they can both sue and be sued. How is this relevant in relation to the maintenance charges and sinking funds? Well, it would mean that JMB or MC can take action against parcel owners for non-payment of the maintenance charges and sinking fund. Fear not however, there are certain procedures in place under the Strata Management Act 2013 to minimize abuse of power by the JMB or MC in relation to the exercise of their powers under the act. As many of you are aware of, the calculation of maintenance charges and sinking fund is no longer based on the square feet of each parcel but by virtue of the Strata Management Act 2013, it is now calculated based on shared units which is determined based on area, usage, size and location of accessory parcels which are determined by a licensed land surveyor. The JMB and MC further has the power through Annual General Meetings to increase the maintenance charges and sinking fund if it determines that it necessary to do so provided always that enough votes are obtained for such a move.
Now the question comes about, what can the JMB or the MC do to a parcel owner if the parcel owner refuses to pay the maintenance charges and sinking fund? The cause of action that can be taken by the JMB and MC is specifically contained under the Strata Management Act 2013 where provisions for the JMB is contained under Section 34 and provisions for the MC is contained under Section 78. Generally speaking where a parcel owner fails to pay the maintenance charges and sinking fund within fourteen (14) days from the date notice is served upon the parcel owner, the JMB or the MC (as the case may be) may initiate a summons in court or before the Strata Management Tribunal (specifically for claims below RM250,000.00). The act, by virtue of Section 34(3) & 78(3) further places a burden on the parcel owner to comply with the written notice given by the JMB or MC with regards to the payment of the maintenance charges and sinking fund where failure to comply shall, when convicted, result in a fine not exceeding RM5,000.00 or to imprisonment for term not more than 3 years or to both. In the case of a continuing offence, the parcel owner shall be liable to a further fine of RM50.00 for every day or part thereof, during which the offence continues after conviction.
If that isn’t scary enough, the act by virtue of Section 35 & 79 allows the JMB and MC to resort to recovery by way of seizure of movable property whether in the parcel or elsewhere in the same state. Fret not however, as the JMB or the MC may not proceed with such recovery without a warrant that has to be obtained from the Commissioner of Building. Upon the obtainment of such warrant, the warrant can only be executed in daylight in the presence of the Commissioner of Building or an officer from the Commissioner of Building’s office and if necessary a police officer not below the rank of Inspector. This means that the JMB and MC may use forcible entry in order to recover the movable property belonging to the defaulting party. Once such movable property is seized, the JMB or MC may, if the outstanding amount owed is not paid within 14 days from the date of seizure, auction of the seize items and all proceed therein shall be used to offset the amount owed to the JMB or MC. The act also gives a tenant who pays the outstanding amounts to the JMB or the MC on behalf of the parcel owner to avoid seizure of property the right to deduct such amounts paid from the rent owned to the parcel owner until full repayment of the amount paid on behalf of the parcel owner.
It is not all doom and gloom for parcel owners as a parcel owner who has had his movable property seized may, if he is disputing the legality of the seizure, apply to the magistrate’s court having jurisdiction over the place of seizure for an order for release of the movable property which shall be at the discretion of the courts to grant or refuse. The parcel owners may also lodge complaints against the JMB or the MC to the Strata Management Tribunal in the event of mismanagement or abuse of power which ensure the check and balance of JMBs and MCs.
With such strict implications and wide powers given to JMB’s and MC’s under the Strata Management Act 2013, the best piece of advice that can be given to the parcel owners to avoid lengthy and unnecessary processes which will cost more money, is to simply pay the maintenance charges.
is a partner in the Corporate Department. His areas of practice include corporate and commercial law, information and communication technology law, probate law, and mining and construction law.