5 things you need to know about strata living in an urban community

WE tend to forget the meaning of community living while climbing the career ladder to put food on the table and the kids through private school. Urban Malaysians live in private spaces, outsourcing our community responsibilities to our maids and elected representatives. In fact, we outsource everything outside our own nests, especially in the management and maintenance of apartment buildings and common property.

Given the sharp increase in the number of Malaysians now living in apartments and the popularity of gated communities, the authorities have introduced the Strata Management Act 2013 (SMA 2013), which came into effect on June 1. It replaces the piece-meal regulatory framework of before with a coherent system that takes into account lessons learnt about how Malaysians organise themselves, or fail to.

SMA 2013 provides clearer provisions on the management of all stratified residential and commercial buildings in Peninsula Malaysia. It replaces the Strata Titles Act 1985 and Building and Common Property Act 2007 on strata management, and puts higher standards of governance on the members of the residents’ management committee, as well as on all residents (owners) in the same development.

Are you an owner or tenant of an apartment or a house in a gated community? Here are five things you need to know about what SMA 2013 means for your lifestyle.

1. Pay now, or pay (lots) more later

In general, the collection of monthly maintenance charges for the upkeep of common facilities and property in the neighbourhood is a task worthy of Hercules.

SMA 2013 says you have to pay your maintenance charges and sinking-fund contribution within 14 days of being asked to in writing by the management committee. And if you don’t? You’ll be charged interest on the amount owed at 10% per annum calculated on a daily basis.

So forget about famously flexi-Malaysian time. You pay for being late. Those who pay on time should not have to subsidise (or contribute to the interest earnings) of those who do not.

2. Think you can afford to be late? Think again

And there’s more about late-payment interest in SMA 2013: it prescribes by-laws that function as the house rules or deed of mutual covenant for your development. (These can be found in the third schedule of the Strata Management (Maintenance and Management) Regulations 2015.)

In plain English, the management committee now has explicit legal authority to disable any electronic access card or transponder to deny defaulters access to common facilities, including their designated parking bays  — until they pay up in full. The management committee may also charge a reactivation fee of up to RM50 for electronic access cards and put up a list of defaulters on the residents’ notice board.

3. Your destiny, in your hands: Residents can now take charge of their own affairs earlier than before

Residents (owners) can now gain control of the management of their development much earlier than previously.

This is because the developer must call for the first annual general meeting (AGM) within one month of 25% of the all share units in the development being registered to their respective owners,

After the AGM, the developer must then handover management of the development to the management committee within one month.

Stuff you might be interested to know: the statutes and regulations that govern delivery of strata title upon the delivery of vacant possession to purchasers are the SMA 2013, Strata Titles (Amendment) Act 2013, Housing Development (Control and Licensing) (Amendment) Act 2012 and the Housing Development (Control and Licensing) Regulations 2015.

4. Volunteer, for real. Because it’s not just a thankless task but you can go to jail for it

Previously, there was no restriction on management committee members holding office for consecutive terms. Now, SMA 2013 makes it clear that no committee member shall hold office for more than three consecutive terms. Are you the chairman, secretary or treasurer of your residents’ management committee? Then you can’t hold office for more than two consecutive terms.

Despite the fact that most committee members are unpaid volunteers, they face a fine of up to RM250,000 or imprisonment not exceeding three years or both, in the event of any breach of their obligations.

5. The new Act has teeth: Meet the Strata Management Tribunal

To give effect to its provisions, SMA 2013 has established the Strata Management Tribunal, which has jurisdiction to hear cases where the sum in dispute is not more than RM250,000.

The maximum fine the tribunal can impose on a party found to be in the wrong is also RM250,000.

Who can file a claim with the Tribunal? The developer, purchaser, proprietor, joint management body (the precursor to the residents’ management committee) and the residents’ management committee are all entitled to file a claim with the tribunal.

Matters that can be brought before the tribunal must relate to strata management. No legal representation is necessary to appear at a hearing unless it involves complex issues of law, or one party will suffer severe financial hardship if not legally represented.

The award made by the tribunal shall be final and binding on all parties and be treated as a court order.

So, how now...

SMA 2013 stipulates the rights and responsibilities of each party in a strata development. Nonetheless, the purpose of communal living has always been self-management and self-sufficiency, with the active participation of all residents in the neighbourhood.

And remember: a steady cashflow goes a long way towards paying contractors on time and their motivation, and work performance.  That’s why it’s imperative to pay your maintenance fees on time.

Chris Tan is a lawyer, author, speaker and keen observer of real estate locally and abroad. He is founder and managing partner of Chur Associates. If you have questions that you would like to ask Tan, please go to the Tips section of theedgeproperty.com.

Disclaimer: The information here does not constitute legal advice. Please seek professional help for your specific needs.

This article first appeared in property+, a section of the digitaledge Daily, on Aug 7, 2015. Download property+ here.