Your questions on crucial property management answered

Questions from the audience were forwarded to the respective speakers of Edgeprop.my’s Symposium on Excellent Property Management 2019 “Is your investment future-proof?” following the event on April 27. The replies reflect the speakers’ personal views and do not constitute legal advice. Questions have been edited for clarity. Visit www.EdgeProp.my for more Q & A’s from the symposium.

Anthony Lee Tee

Architect Centre Sdn Bhd accredited architect and trainer

Q. Certain designs such as traffic flow and location of guardhouse boom gates in the project were grossly impractical and have potential hazards. Certain areas were not equipped with "one-way signs" nor speed bumps on angled turnings. Developer’s response was: "This is done based on the traffic engineer's approved consultation and certain areas are not guided by an approved standard in Malaysia". If the building design is illogical and unsafe - what can purchasers do?

A. The design of vehicle circulation i.e. ingress and egress are governed by aspects of turning radii, line of sight and other practical considerations related to safe movement of vehicles, including delivery, garbage and emergency vehicles with clear signage. Design of traffic flow near the vicinity of the guardhouse must also consider pedestrian safety (residents, staff, visitors, children and the elderly); the security control of visitors on foot and in their vehicles; and controls to regulate the speed of vehicles. A poorly designed traffic flow that is unfit for its purpose, may lead to hazardous and unsafe conditions. The owners can seek redress by engaging a third party to conduct safety inspections and provide independent assessment and recommendations in accordance with best practices and prevailing standards.

Q. Can design failures constitute a defect under the defects liability period (DLP)?

A. The design of properties are governed by a myriad of codes, by-laws and regulations governing architecture, structural, mechanical, electrical engineering and strata in Malaysia. In the event that a design has been established as having failed to perform as intended, it should constitute a defect under the DLP. If the defect was discovered much later after DLP - we term this a “latent defect”.

Q. Regarding life cycle costing, does it apply to just mechanical and electrical (M&E) equipment? If we manage an old building, we may not have the purchase price for most of the items handed over to the Joint Management Body (JMB) or Management Corporation (MC), then how do we go about it?

A. Building life cycle costing includes every aspect of your property, not just M&E. For example, repainting, fixing cracks and leaks, sealants, removal of overgrown trees, resurfacing of roads and replacement of old drains. The big ticket items are usually M&E equipment, such as lifts, pumps, pipes and control boards. All buildings undergo aging. However, buildings which have been designed and constructed properly to begin with, will age better with less unexpected breakdown or damage.

There are templates available but these require highly skilled facility managers in their related fields of expertise to prepare. There is no shortcut in preparing a “sinking fund management plan or SFMP”. We recommend an SFMP which is able to look ahead for at least 15 to 20 years i.e. the first cycle when the main big ticket items will be required for replacement. Once an SFMP has been prepared, implement predictive and preventive maintenance programmes. Avoid corrective maintenance, i.e. only after a breakdown has occurred as it is disruptive, expensive and exposes the property and occupants to unsafe conditions. It must be understood that the sinking fund should not be used until it is needed!

Q. With respect to aluminium cladding (that is flammable) on buildings, can you provide the “correct” specifications? Are there any guidelines we can follow?

A. Unlike the situation in the UK, Singapore and Australia, there has been very strict laws governing the installation of aluminium composite panels (ACP) for external wall cladding in Malaysia for over three decades. Only approved “fire retardant (FR)” ACP panels are allowed to be used for external cladding in building exceeding 18m in height. ‘’Non-FR’’ ACP are only allowed for buildings below 18m in height. Without getting too technical, the prevailing MS 2571:2017 serves as a benchmark for ACP compliance. If in doubt, building owners may carry out independent verification inspections to determine compliance with the Fire and Rescue Department of Malaysia (Bomba) requirements. Better to be safe than sorry.

Q. Do all residential apartments and high-rises in Malaysia need to be inspected structurally every 10 years?

A. Section 85A of the Street, Drainage and Building Act 1974 or Act 133 provides for a mandatory requirement for periodic inspections of buildings of more than 5 storeys and after the 10th year of the commencing of Certificate of Fitness for Occupation (CFO) or Certificate of Compliance and Completion (CCC) to be carried out by a structural engineer. Therefore, residential high-rises more than 5 storeys must comply.

Q. Are there any laws and regulations governing the maintenance of apartments and condominiums?

A. Absolutely. Apart from the structural engineering inspection described above, there are laws governing the maintenance of lifts, escalators, movable “genie’’ hoists, gondolas, electrical installations and central gas piping. For serviced apartments located above commercial podiums with shared fire fighting equipment, a yearly fire certificate may be required.

Building owners must however, be cognizant that although the prevailing laws and regulations of apartments and condominiums may be less onerous when compared with “designated” buildings that carry a higher risk (such as commercial buildings), the responsibility to maintain all aspects of building safety in good working order is equally important and necessary.

Meanwhile, the maintenance of slopes, retaining walls, sewerage, water pipes and final connections for gas fittings and gas leak detectors are currently NOT regulated.

Datuk Chang Kim Loong

Hon Secretary General of National House Buyers Association

Q. I have a condo whereby the developer has mentioned "clubhouse facilities" in its marketing brochures, but upon VP, we couldn't find it. Developer's response was, "the design of the (clubhouse) facilities is not in the approved building plan, the current facilities built are in adherence to the current building plan" - would this be a misrepresentation and what can purchasers do?

A. The Sale & Purchase Agreement (‘SPA’) and Deed of Covenants signed by the contracting parties are the ultimate proof of purchase and such Contracts shall suffice. The list of ‘common facilities’ and ‘common properties’ are stated in the First Schedule attached to the SPA.

If the developer promotes such features as the ‘clubhouse facilities’ at the time of sale, then you (as the house buyer) should take down the statements given by the developer, the name of the developer’s staff and designation and have your lawyer confirm it in writing. That is why buyers must have their own lawyers, not the legal firm chosen by the developer

It may constitute what is known in law as “a collateral oral warranty to the transaction” and may be read into the SPA to make it binding on the developer. These matters are not provided for in the SPA because the SPA is a standard form to be used in a whole range of property transactions where the details vary. There are precedents where the Courts of Law have held that representations set out in a marketing brochure given prior to signing of sale and purchase agreements could amount to pre-contractual statements which induce a purchaser to enter into a sale and purchase transaction. It is important to study the wording used in marketing brochures carefully to find out if there are any ‘disclaimers’ which may negate the developer's obligations. In order to bolster your case. You may extract the building plan from the relevant local authority using the reference numbers of the plan set out in the SPA to ascertain if the developer has deviated from the building plan.

We suggest that the aggrieved buyer galvanise all the affected buyers together (those who were ‘promised’ the clubhouse facilities), to appoint a law firm with a view to consider to commence a class action (collective action) against the developer/vendor.

Q. If my property does not have strata title and the developer is wound up, how do I get my strata title? I bought the property under deed of assignment. The individual from whom the developer purchased the property has demised. How do I go about getting the strata title?

A. You may conduct an insolvency search at the Department of Insolvency, Malaysia: www.mdi.gov.my , or at the Companies Commission, Malaysia: www.ssm.com.my on the developer’s status to find out the details of the liquidator(s) appointed by the Court to take over the affairs of the developer company.

Thereafter, you may find out from the liquidator whether the strata titles for the development project have been issued. If strata titles have been issued, you may appoint a lawyer to handle transfer of the strata title.

Q. Does a Unit Holder (a resident of a condominium) have the right to view the accounts and the invoices of expenses incurred for the property or is the Unit Holder only allowed to view the audited accounts during the AGM?

A. Paragraph 7(6)(b), Second Schedule of the Strata Management Act, 2013 (Act 757) provides that a purchaser/ proprietor may make a request to the Management Committee to inspect the books of accounts at a fee not exceeding RM50 for each inspection.

In the event that you encounter problems with the managing agents, you may lodge an official complaint to the Commissioner Of Buildings (COB) for their intervention.

Q. Are there any laws and regulations with regard to the maintenance of apartments and condominiums?

A. The main laws governing maintenance of stratified properties are:

i)             Strata Management Act, 2013;

ii)            Strata Management (Maintenance and Management) Regulations, 2015

Chris Tan

Founder and managing partner, Chur Associates

Q. I have a question on the issuance of Strata titles. My late husband and I have purchased a walk-up apartment from developer - Maju Delima Sdn Bhd (MDSB). We have signed the sales and purchase agreement (SPA) and Deed of Mutual Covenant dated Sept 19, 2005, with MDSB and Perbadanan Setiausaha Kerajaan Johor (PSKJ).

Letter for Delivery of Vacant Possession was issued in Nov 1, 2013, and payments of monthly service charges and sinking fund started from November 2013 as well.

I am quite concerned about the issuance of the strata titles of my unit and have checked with the staff in the management office but they didn’t provide me with any updates on this matter. What should I do next? I also noticed that there are many unsold units held by the developer. Will it affect the application of the strata title?

A. Your walk-up apartment was completed prior to the enforcement of the latest Strata Titles (Amendment) Act 2013, under which the Developer shall apply for the Strata Title within 6 months from the date of issuance of certification of completion and compliance for the subdivision of building into parcel (strata title). The time taken for strata title to be issued will now depend on the progress and processing by the relevant authority. The unsold units do not affect the developer’s statutory obligation to apply for subdivision of strata title.

You can check with the Land Office on the progress of the Strata Title issuance and then follow up on any impending issues with the relevant stakeholders. In any event, you can still legally transact your property with or without a Strata Title. Your ownership remains intact.

Q. If my property does not have strata title and the developer is wound up, how do I get my strata title? I bought the property under deed of assignment. The individual from whom the developer purchased the property has demised. How do I go about getting the strata title?

A. When the Developer is wound up, either a liquidator or an official assignee will take over all its assets as well as carrying its affairs, including any ongoing obligations yet to be completed like the obligation to procure the individual strata title. Buying a property through a Deed of Assignment simply means that the original purchaser has assigned all his interest on the property to you as a new purchaser, given that the strata title has yet to be issued. Part of the process, if done properly includes a confirmation from the Developer regarding the status of the seller being the owner on its record and it’s acknowledgement of the notice of this assignment. Therefore, the developer would have taken notice of the change of ownership and dealt with it accordingly when the strata title was issued.

Find out the status of the application from the liquidator or the official assignee and then verify the same with the relevant authorities and thereafter keep following up.

Q. My leasehold property now has only 40 years left, what and how should I do to maintain my property value?

A. The property value depends on many things like location, supply and demand, purpose and of course the remaining tenure of the leasehold term. You can apply to the State Authority to extend the lease before its expiry. There are processes, timing and additional premium to be observed. There is no obligation to extend but it is strictly within the power and discretion of the State Authority.

Q. Thanks for the OMG book by Chris Tan, but besides this book, do you have any other books related to rules and regulation in property management to recommend?

A. We are updating the OMG now and looking to launch OMG2.0 by year end. There is another useful book in this vein, published by REHDA Institute, known as “Strata Management Handbook - a clear and comprehensive guide to strata living in Malaysia”

Q. If I am interested to know more about the rules and regulations of strata living, where can we get the information or guidelines from?

A. Besides the Strata Management Act proper, the Third Schedule of the Strata Management (Maintenance And Management) Regulations 2015 provides all the statutory bylaws that is applicable to all the strata owners. If you are the owner of a strata property, you can also refer to any applicable House Rules as a guideline and normally, you can get it from the Management Office.

Q. In a strata condominium, if the owner upstairs is using a sledgehammer to knock the floor of his unit and it affects my unit’s ceiling, can I sue him or can I claim from the developer under defects?

A. There is a statutory presumption in Section 142 of Strata Management Act 2013 that if the parcel below suffers damage or leakage to the wall the owner of the parcel above shall be responsible for it unless the owner of the parcel above can prove otherwise. We advise that you lodge a complaint to the management office so they can carry out an investigation. The owner, if found responsible for the damage shall rectify it accordingly.

Q. Does a Unit Holder (a resident of a condominium) have the right to view the accounts and the invoices of expenses incurred for the property or is the Unit Holder only allowed to view the audited accounts during the AGM?

A. Section 73 of the Strata Management Act, a proprietor or prospective proprietor can request that the management issue/certify the amount of charges and sinking fund payable by the proprietor to the management. Other than that, the proprietor has a right to view the audited report during the AGM/EGM.

Q. Are there any laws and regulations with regard to the maintenance of Apartments and Condominiums?

A. Yes, it is in the Third Schedule of the Strata Management (Maintenance And Management) Regulations 2015.

Dr. Lim Lan Yuan

Association of Property and Facility Managers (APFM) Singapore president

Q. I’m staying in a public housing project in Cheras. The environment and building management can never compete with a Singapore HDB. I would like to do something to improve the environment, where do I start?

A. Improving the environment is a big task. You should try to gather a few like-minded people to form a committee or an interest group to work out the plan and organise the work. You require financial resources and know-how. Community support is also important. What is possible and can be done will have to depend on the situation, the nature of the estate and the commitment of the residents and occupiers,  as well as whether there is an existing homeowners association.

Q. What do you suggest Malaysia learn from Singapore in terms of property management?

A. Singapore has slightly more experience in property management. The university degree in estate management started in the late 1960s. A professional body was also established to promote property management. At the initial stages, Singapore also learned from others, particularly those with more experience and a longer history of property management practice. The suggestion is for Malaysia’s property managers to acquire all the best practices people have found useful. There is no need to reinvent the wheel.

Q. You scored Malaysia “good” in property management but what is our main weakness?

A. For the general public and potential buyers and homeowners, it is about education and awareness that property investment and ownership is a long-term and not short-term affair. Property needs to be maintained to keep it in a good state.

For the property management professionals, there is a need to engage with developers or designers more. Many management problems arise from inadequate design or planning at the onset. It would be useful if a proper feedback loop can be established, where lessons gained in poor maintenance can be conveyed to the developers and designers for them to avoid in future projects. Focus on design for maintainability.

Q. What is the qualification for a property manager in Singapore?

A. Besides the professional and technical skills, a property manager would also need to understand the local legislations governing the management of properties in a particular country. A good way to get involved is to join a local property management firm or alternatively join the local property management association as its member. This provides an opportunity to network with local property managers where you can very quickly acquire knowledge and understanding of the local management practices and regulations.

Check out our full report on the event in the EdgeProp.my pullout on May 3, 2019. You can access back issues here.