Besides Strata Title, there is another piece of document that is equally important for strata homeowners – the Schedule of Parcels and its share units.
In this article, we will discuss how the schedule of parcels and share unit formula play an important role in the management and maintenance of strata properties in Malaysia.
Before we dive in, it should be noted that share units are important to strata property owners as they determine:
- the amount strata property owners have to pay for maintenance fees and sinking fund
- the number of votes each strata property owner is allocated for voting by poll
- the number of individuals that may be nominated by an owner of two or more parcels, for election as a committee member, subject to a threshold.
Below are some key facts to understand about Schedule of Parcels and share units.
1. What is the Schedule of Parcels?
Under Strata Management Act 2013 (SMA) and Strata Title Act 1985, any individual unit in a residential or commercial development is known as a parcel. A Schedule of Parcels is essentially a ‘floor plan’ that shows the overview and floor measurements of the parcels in a development. The Schedule of Parcels also shows the proposed share units of each parcel or proposed parcel and the total share units of all the parcels. In the case of a phased development, the Schedule of Parcels would show the proposed quantum of provisional share units for each provisional block. Total share units of all parcels, including the provisional block, is normally referred to as the aggregate share unit.
Under S.6(1) of the SMA, a developer cannot sell any parcel in a development area unless the Schedule of Parcels has been filed with the Commissioner of Buildings. S.6(3) states that the developer’s licensed land surveyor and a certified architect are required to certify that the building/land can be subdivided.
Furthermore, developers must display their Schedules of Parcels in prominent locations at their sales offices/galleries so that buyers can see what they are buying.
The SMA also requires that developers comply with certain major pre-requisites before proceeding with any sale of the parcel, such as:
a) ensure payment of all premiums and fees to the relevant authorities and bodies;
b) conduct land and strata title survey;
c) obtain approval of building plans and allocation of share units.
Generally, a Schedule of Parcels is prepared by a developer’s licensed land surveyor and would comprise of the location plan, the storey plan and the delineation plan, all of which are drawn based on approved building plans. The Schedule of Parcels shall show all the parcels with dimensions, areas, share units, all accessory parcels and common properties using the same format as the approved strata title plans. An example is shown below.
As such, developers cannot simply carve out common properties and accessorise as they like (as they did in the past), such as accessorising any remaining unsold residential car parks to developer units.
Also, while it is not compulsory to have the Schedule of Parcels for any parcels that have been sold prior to the enactment for SMA 2013, S.6(2) of the Strata Management (Maintenance and Management) Regulations 2015 state that in the case of a sale of a parcel on any building or land intended of subdivision in a development area or such sale took place before the commencement of the 2013 Act, the developer shall include in the Schedule of Parcels the building or land in which the parcel has been sold.
2. What are share units?
Essentially, share units are the numbers assigned to each parcel by the developer’s licensed land surveyor to determine maintenance charges, sinking fund and other outgoings. This ensures that any payments due from each parcel owner are calculated in an equitable and transparent manner.
When the SMA 2013 was enacted, it provided that the amount of charges payable by each parcel owner should be calculated using share units and introduce the formula in its First Schedule. However, this formula was only applicable to any property that did not have any share units assigned to it at the time of sale (which was before 1 June 2015), as certain development areas at that time could be sold without having share units assigned to the parcel.
After the enactment of the SMA 2013 on 1 June 2015, developers are required to file the schedule of parcels with the Commissioner of Buildings showing the proposed share units of each parcel. Developers are also required to apply for the Certificate of Share Unit Formula (SiFUS) from the Land and Mines director (PTG) of each state. The formula in the SiFUS would be governed by the relevant strata title rules of each state.
As share units are computed based on area, usage, size and location of the accessory parcel using the formula prescribed under the relevant strata title rules of each state, share units must be determined before any sale so that purchasers would know from the get-go their share of payment as well as that of the developer for any unsold units.
In addition, share units are essential in knowing an owner’s voting rights in the voting by poll at a general meeting, as each share unit will represent one vote under the SMA. A majority shareholder will have a bigger say in decision-making at any Annual General Meeting or Extraordinary General Meeting of the apartment or condo’s management body.
This means the owner of a penthouse would have bigger share units and therefore more voting rights (if voting is done by poll) as compared to an owner of an intermediate unit. A parcel owner with a bigger share unit would also have to pay higher maintenance charges.
3. Computation of share units
To show an example of share unit calculation, we will refer to the Kuala Lumpur constitution, where the share units in a strata scheme are calculated using the formula in the Second Schedule of new Strata Titles (Wilayah Persekutuan Kuala Lumpur) Rules 2019:
Formula for Calculation of Allocated Share Units
Share Unit of a Parcel = (A x F¹ x F²) + (B x F³)
Share Unit of a Land Parcel: (A x 0.8) + (B x F³)
A = area of the parcel
B = area of the accessory parcel
F1 = weightage for the type of parcel as specified in Schedule A
F2 = weightage for the overall floor parcel as specified in Schedule B
F3 = weightage for the accessory parcel as specified in Schedule C
In the past, many owners of stratified property were charged on a square feet basis for maintenance fee. The larger their property in square feet, the higher the maintenance fee. However, things have changed following the amendments to the SMA and a recent court case involving Ekuiti Setegap Sdn Bhd vs Plaza 393 Management Corporation  in which the High Court ruled that the square feet calculation method was incorrect and that legislation required the rate to be on a share unit basis.
Therefore, many management bodies of older stratified properties would have to re-calculate their maintenance fees based on the share units of each parcel. For example, the maintenance fees for an apartment parcel would be calculated as follows:
4. What are the weightage factors for mixed-use developments?
In a mixed-use development, different weightage factors are given to different types of property. For example, under the First Schedule, the residential portion would have a weightage factor of one, retail complexes and medical centres would have a weightage factor of two or more, whereas car parking facilities would have a factor of less than one.
All the various types of parcels also enjoy minor adjustments depending on whether the parcels in question have the benefit of a lift, escalator or air conditioning facilities. As illustrated in the example above, the weightage factor of each parcel type and its available facilities would determine the final amount of maintenance fees to be paid.
Recently, the Court of Appeal in Muhamad Nazri Mukamad v. JMB Menara Rajawali & Anor held that a Joint Management Body (JMB) may not determine different rates of charges for different types of parcels.
The owner of a serviced apartment in Menara Rajawali sued his JMB and the car park owner when the JMB fixed the maintenance rate for residential and retail owners at RM2.80 per share unit, and the car park maintenance charges at RM1.68 per share unit. The court held that the JMB did not have “the inherent power” nor can it lay claim to such powers as to fix and impose the different rates.
5. Why are share units better for strata property owners?
Share units are important to stratified property owners as it creates a fairer calculation of the various maintenance and sinking fund charges.
Furthermore, it allows owners to quickly and easily identify how many votes they would have in a poll vote during any of the general meeting held by the management body.
Also, share units enable owners of two or more parcels to determine the number of individuals they may nominate for election as committee members, subject to any committee regulations.
So there you have it. Knowledge about the Schedule of Parcels and share units, no matter how basic, is an essential part of any smart homeowner’s knowledge base. If you are having problems dealing with your management body, check out this article about Strata Management Tribunal.