Sticky Side of Strata

Sticky Side of Strata

The laws prescribed in the newly introduced Strata Management Act 2013 (SMA 2013) and its complement, the Strata Management (Maintenance and Management) Regulations 2015 (SMRs 2015) function to regulate the management, control and administration of a strata development. However, ‘grey areas’ in the Acts have caused much frustration for strata stakeholders.

Prof. S. Venkateswaran, Treasurer of Building Management Association of Malaysia (BMAM) shared with REENA KAUR BHATT what are some of the consequent strata issues that have cropped up in the past year.

Penalty for Volunteering

One of the regulations which has generated much ire is SMA 2013’s Section 26 which describes the duties of the joint management body (JMB) in relation to submission of accounts. Sub-section 5 places the burden of personal liability on the JMB’s members should there be a breach in submitting the annual returns and financial accounts to the Commissioner of Buildings (COB). 

This has compounded the problem of getting owners to be involved in the management of their building – nobody wants to face the risk of being sued for serving the community as a volunteer. Similarly, Section 62 places the same encumbrance on management corporations (MCs).

Inter-Floor Leakages – Who should pay the price?

Another issue is regarding inter-floor leakages or Part XV of the SMRs 2015. In most sub-divided residential buildings, most know from experience that the ‘window’ period for full occupation is roughly two years. This is upon the issuance of Certificate of Completion and Compliance (CCC) by the project architect /engineer and the handing over of vacant possession by the developer. It should be noted that the developer’s defect liability period would have ended by then.

Subsequently, when an owner (or the JMB/MC) living below an inter-floor leakage unit detects slab leakage affecting his or her unit or the common area as the case may be, the burden of rectification falls wholly on the shoulders of the owner living in the ‘culprit’ unit.

This begs the question – it is fair for these owners to bear the expense when they have no knowledge of any leakage-causing defect at the time of purchase? Had the unit been occupied before the expiry of the defect liability period, it would, in fact, have been rectified by the developer instead.

Safely displaying list of defaulters

Other sketchy provisions include those under the SMRs 2015, which relates to by-laws or ‘house rules’ of a strata development. For instance, the Third Schedule, Part 2, Rule 6, sub-regulation 3 states that the JMB/MC is permitted to publicly display the names of defaulting proprietors in the common areas, though such an act is in breach of the Personal Data Protection Act (PDPA), 2011.  Hence, there is the imminent risk of the JMB/MC being sued by the owner concerned. 

Venkat lamented that this constraint has not been thought through carefully- there should have been a waiver or an indemnity provision included in the sub-regulation to enable the JMB/MC to safely display the names of defaulters without the risk of possible litigation.

Proper usage of units

Besides that, sub-regulation 9 of part 3, Rule 8 merely says that the strata proprietor shall “not use or permit to be used his parcel contrary to the terms of use of the parcel shown in the plan approved by the relevant authority.” This exposes the units to be wrongly utilised by irresponsible or profit-seeking owners.

This in particular, has caused a major headache for many strata owners. Its lack of clarity has affected the comfort and quality of living of many residents.

There are many condominium projects in the Klang Valley located close to factories, colleges and universities that have been converted illegally into workers’ and students’ hostels. There is no clear-cut restriction in this sub-regulation in regards to the (mis)use of such units, hence the owners concerned are still within the scope of the approved plan and the category of land use, i.e. for residential purposes.

Manipulation of legal loopholes

As the rule does not state as to how many occupants are permitted to stay in a unit, and whether or not all of them shall be granted restriction-free access to the common areas and facilities – some owners have taken advantage of this loophole to rent out their units to college students and foreign workers. In many cases, the units are modified and portioned off to enable the housing of more renters, which could go up to 10 people in a mid-sized unit!

Due to overcrowding, the common facilities such as elevators, swimming pools, sports facilities, etc have been subjected to heavy wear and tear and are often not accessible to other owners. There are also issues of general cleanliness, public safety, inadequate fire safety measure and overall security in such projects.

In some cases,the owners of one block of a multi-phased condominium project have banded together to convert their units into serviced apartments in order to carry out their own ‘homestay’ business. By engaging the services of, a hotel management company or a hotel room booking agent, these owners lease out their units to short-term renters.

The movement of renters in and out of such service apartments do cause a nuisance to the other residents – especially in terms of noise pollution, rowdy behaviour and disregard for cleanliness.

Even worse, one too many strata managers have also faced some difficult situations involving illegal activities. There have been media reports of numerous cases of condominium units and serviced residences being used as brothels and drug nests. In such instances, the strata managers and JMB/MC have to often seek the assistance of enforcement agencies (police, local authorities, immigration) to weed out the bad hats.

Some JMBs/MCs have tried to include provisions in their respective house rules with regard to the maximum number of occupants. However, it is difficult to enforce such rules especially in cases where some units are occupied by extended families with many family members, along with visitors staying over during weekends and holidays.

Steps Moving Forward

Venkat strongly feels that the restrictive provisions in Sections 26 and 62 of SMA 2013 should be repealed as they attribute personal liability on JMB/MC committee members. At the very least, amendments should be made to encourage participation instead.

Whereas, in regards to the Strata Management (Maintenance and Management) Regulations 2015, Venkat suggests that the following adjustments be carried out: 

(1) The JMB/MC should be authorised to collect higher maintenance charges and a higher sinking fund rate from owners who have exceeded the defined threshold of occupants in their respective units.

(2) These units should also be charged a “loading” of fire insurance premiums as they pose a higher risk to other units.

(3) The Act should empower the JMB/MC to institute legal proceedings against errant owners renting out their units as ‘boarding rooms’ or hostels. This misuse is in breach of the Uniformed Buildings (By-Laws); which clearly defines the category of use of a building – be it industrial, commercial or residential. The proper usage of a strata unit is also actually highlighted in the property’s master title under “Conditions of Use”.

 

DISCLAIMER: The opinions stated in the article are solely of Prof. S. Venkateswaran and is not in any form an endorsement or recommendation by iProperty.com. Readers are encouraged to seek independent advice prior to making any investments.

This article was first published in the iProperty.com Malaysia August 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine.  Better yet, order a discounted subscription by putting in your details in the form below!

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