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Building and Common Property (Maintenance and Management) Act 2007 (Act 633) – Highlights (Part II)
 
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Building and Common Property (Maintenance and Management) Act 2007 (Act 633) – Highlights (Part II)
Posted Date: Dec 01, 2007
By: The National House Buyers Association (HBA)


Dissolution of a Joint Management Body

Once the first general meeting of a Management Corporation, formulated under the Strata Titles Act, 1985, has been convened, the Joint Management Body (JMB) shall be deemed to be dissolved three (3) months from the date of the first general meeting. During the first meeting of the Management Corporation, there is also an election of Council Members. Although it could be almost the same set of owners of the same strata property, Section 15 of Act 633 stipulates that the JMB must transfer within one (01) month from the date of the first general meeting the followings:

1) the house rules;
2) the audited or unaudited accounts of the Building Maintenance Fund of the JMB and if only unaudited accounts have been handed over, the JMB must not later than three (3 )months from the date of the first general meeting of the management corporation;
3) all the assets and liabilities of the JMB; and
4) records related to and necessary for the maintenance of the building and its common property.

Section 15(3) stipulates that if the JMB fails to comply with Section 15, every member of the JMB commits an offence and shall on conviction be liable to a fine not exceeding ten thousand ringgit and shall also be liable to a further fine not exceeding one thousand ringgit for every day during which the offence is continued after conviction.

It should be noted that the Strata Titles Act, 1985 Schedule 3- By-Laws for the Regulations of Subdivided Building or Land is mandatory and by-laws not inconsistent with Schedule 3 By-Laws, may be added by special resolution. For continuity sake, the House Rules adopted by the JMB should be added to the Schedule 3 By-Laws to be passed at the first general meeting of the management corporation.

Building Maintenance Account

Under Part IV Section 16, the developer of a strata development must open a Building Maintenance Account (BMA) in the name of the strata development for each development before the delivery of vacant possession. This applies to all newly completed strata development where the vacant possession has not been delivered to the purchasers as of 12th April, 2007.

For developments where vacant possession has been given but the management corporation has not been established and the developer has been collecting charges for the maintenance and management, the developer can continue to do but the developer must comply with Section 21, which is to submit to the Commissioner of Buildings (‘COB’) audited accounts of all moneys including sinking fund collected and expended within six (6) months from the commencement of the Act.

The BMA is maintained by the developer until the JMB is formed.

The duties of the developer as to the BMA includes:


a) deposit all collections (eg. deposits, service charges, sinking fund charges, etc) within two working days of receiving the moneys into the BMA account;
b) pay all charges for unsold units;
c) cause proper accounts of the BMA to be kept in respect of all sums of money received and payments made out
d) appoint a professional auditor to audit the BMA annually or one month before the date transfer to the Building Management Fund set up by the JMB.
e) within fourteen days of the accounts being audited, file with the Commissioner of Building (COB) a copy of the statement of accounts certified by the auditors and a copy of the auditor’s report.

The Commissioner of Building has;

a) the power to hear any dispute arising in respect of the BMA;
b) full and free access to the accounting and other records of the BMA;
c) right to appoint an approved company auditor to investigate books, accounts and transactions of a BMA and the developer must pay all the expenses incurred for that purpose;

Under Section 17(4), the developer must insure and keep insured the completed building against any loss of the building and against fire and other risks until the JMB is formed.

Building Management Fund and Sinking Fund

The developer must transfer any surplus moneys in the BMA to the JMB not later than one (1) month from date of establishment of the JMB. Such moneys shall constitute the funds of the JMB which is called the Building Management Fund which shall be administered and controlled by the JMB.

The JMB must open and maintain a separate sinking fund, which shall pay such portions to the BMF for the following matters:

a) the painting or repainting of any part of the common property;
b) the acquisition of any movable property for use in relation to the common property;
c) the renewal or replacement of any fixture or fitting comprised in any common property; or
d) any expenditure as the Committee deems necessary.

This section gives powers to the Committee elected by the JMB to decide on expenditures deem necessary by the Committee.

Managing Agent

A managing agent for the strata development is only appointed by the COB, if purchasers entitled to vote do not attend the first meeting or if there are no volunteers to be office bearers of the Committee.

Defects on Common Property

The developer must deposit in cash or bank guarantee with the COB upon the handing over of vacant possession, such sum as may be prescribed by the State Authority for the purpose of carrying out any work to rectify any defects in the common property of the development area after its completion.
Any unexpended deposit is refunded to the developer on the expiry of the defects liability period.

This means that the JMB or its Committee should expeditiously do a joint inspection of the common property of the development area for defects, so that the defects can be rectified within the defects liability period.

Purchasers duty to pay charges

Purchasers must pay for charges for the maintenance and management of the common property apportioned and determined by the JMB in proportion to the allocated share units. A fourteen-day grace period is allowed for payments after which a late payment interest not exceeding 10 per cent per annum is chargeable.

Without any reasonable excuse, any person who fails or refuse to pay the maintenance and management charges commits an offence and on conviction is liable to a fine not exceeding five thousand ringgit and also liable to a further fine not exceeding fifty ringgit for every day the offence is continued after conviction.

Conclusion

A person who purchases a unit in a strata development enters into a three-fold legal relationship; firstly, he is the individual owner of his unit; secondly, he is a co-owner with all other owners of the common property and the land of the strata development, and thirdly, he is automatically a member of the owners’ body to whom the management and maintenance of the scheme is entrusted.  Harmony can only be achieved if the strata development is managed properly, the common property and facilities maintained adequately and regularly. The proper maintenance, efficient management and ultimately the success of the strata development will depend on a steady flow of payments to the coffers of the common fund of the owners’ body. Repeated failure to contribute to common expenses may hinder timely maintenance and efficient management and ultimately wreck the whole strata development scheme. Every strata property purchaser or owners should read the BCP Act to understand their duties as an individual owner firstly, secondly as a co-owner of the common property of the strata development and thirdly as a member of the owners’ body formed.  

Note: A copy of the Building and Common Property (Maintenance and Management) Act 2007 (Act 663) is placed in HBA’s website for reading. Printed copies can be purchased from shops selling printed statutes. 

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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