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Building and Common Property (Maintenance and Management) Act 2007 (Act 633) – Highlights (Part I)
 
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Building and Common Property (Maintenance and Management) Act 2007 (Act 633) – Highlights (Part I)
Posted Date: Nov 15, 2007
By: The National House Buyers Association (HBA)
November 15, 2007

Introduction

Legally, the common property of a strata development is owned by the developer until the handover of such on or after the first annual general meeting stipulated under the Strata Titles Act, 1985 (Act 318). However, the issuance of individual strata titles, leading to the handover of the common property, takes years and resulted in numerous complaints on maintenance and management issues. It is for this reason, that the Building & Common Property (Maintenance and Management) Act, 2007 was passed by Parliament in December, 2006 and in operation from 12th April, 2007.

The main aim of the Building and Common Property (Maintenance and Management) Act, 2007 (Act 633) [‘BCP Act’] is to regulate the maintenance and management of common property in strata developments by providing a framework for the establishment of a Joint Management Body (‘JMB’) and the appointment of a Commissioner of Building (COB) to administer the Act. The BCP Act is designed to complement Parts VI and VII of the Strata Act with regards to rights and obligations of owners and management issues.

Allocated Share units

Sections 8(1)(a) and 23(2) requires that contributions for maintenance and management charges be collected in proportion to the “allocated share units”. The “allocated share units” is defined in this Act as “share units to be assigned to each parcel by a developer’s licensed land surveyor”.

Malaysians are so used to the practice of contributions for common funds & expenses (maintenance charges, sinking fund, insurance premium, quit rent) according to rates like 20 sen per square foot, that it will take a while for these share units allocation to be a common term. Holders of strata titles would be familiar with the term as the share units are stated in the titles. Purchasers of units in strata development after the 1st December, 2002 would also have indication of the allocated share units in Schedule 5 of their Schedule H – the regulated sale and purchase agreement under the Housing Development (Control and Licensing) Regulations, 1989.

Common Property

Section 2 of the BCP Act gives the definition of “common property” as: 

“in relation to a development area, means so much of the development area as is not comprised in any parcel, such as the structural elements of the building, stairs, stairways, fire escapes, entrances and exits, corridors, lobbies, fixtures and fittings, lifts, refuse chutes, refuse bins, compounds, drains, water tanks, sewers, pipes, wires, cables and ducts that serve more than one parcel, the exterior of all common parts of the building, playing fields and recreational areas, driveways, car parks and parking areas, open spaces, landscape areas, walls and fences, and all other facilities and installations and any part of the land used or capable of being used or enjoyed in common by all the occupiers of the building”

Of interest is the inclusion of car parks and parking areas. Does this mean that once the developer has assigned car parks intended for use with parcels as accessory parcels and comply with the necessary allocation of visitors’ bays, those extra car parks are ‘common property’? From the definition given in this Act, it would appear so.

Contributions from developer on unsold units

Section 12 requires the JMB or the developer to maintain a register of purchasers and unsold units and Section 17(b) requires the developer to contribute equally for the unsold units as if the units have been sold to purchasers. This resolves the problem of owners of the past where there is no transparency on whether developers have contributed their portions or when the units are gradually sold off or if the developer actually intends to hold the units as investment properties.

Information

Section 13 provides purchasers and intending purchasers the right to information such as:

  • the amount of charges payable by a purchaser
  • the time and manner of payment of the amount of charges
  • the extent, if any, to which the charges have been paid
  • the amount, if any, then recoverable by the JMB in respect of the parcel
  • the sum standing to the credit of the Building Maintenance Fund and the sum in the account that has been committed or reserved for expenses already incurred by the JMB
  • the nature of the repairs and estimated expenditure, if any, where the JMB has incurred any expenditure or is about to perform any repairs, work or act in respect of which a liability is likely to be incurred by the purchaser of the parcel under any provision the Act, and
  • the amount paid and to be paid by the developer for unsold parcels.

This certainly makes it easier for a subsequent purchaser to check on the financial health of the development as a whole and to make informed decisions on their intending purchase.

House Rules

In this Act, the governing document for the proper maintenance and management of the building is called the ‘house rules’ whereas the same is called the “by-laws’ in the Strata Act. This Act does not provide a ‘standard’ house rule as such the JMB has the power to make and amend the house rules provided in Section 8(2)(f). This document must be lodged with the COB within fourteen (14) days of the passing of the resolution of the JMB.

Like any governing documents, the House Rules must be drafted carefully as it is also the duty and in the power of the JMB to enforce the House Rules. The House Rules would probably be adopted as the By-Laws once the Management Corporation is formed as such for long term used, the JMB would be wise to spend time on the drafting this document.


The second part of this article will appear in the next issue.

The National House Buyers Association (HBA) is a voluntary, non-governmental organization manned by unpaid volunteers. For more information, check out their website at http://www.hba.org.my
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