The strata title is one of the three forms of land titles used in Malaysia, the other two being the master title and individual title. A land title is the most important document that every homeowner should ensure they have in their possession. Here are the reasons why.
There has been a lot of buzz in the news lately that many homeowners have not received the strata title to their properties even though it has been years since they purchased said properties. You must be wondering what is the big deal with strata titles. After all, you already have the keys to the property and have been living there comfortably without any issues. So why the big fuss over not receiving the strata title on time?
If you are completely new to strata titles, you will also want to read the beginner’s guide for strata property owners in Malaysia.
Let’s look in detail some key facts homeowners should know about strata titles:
What is strata title?
Briefly, a strata title is the type of land title issued for stratified properties. This means that you and the other apartment/condo owners own your own particular unit or parcel as well as being responsible for the shared areas known as common areas. These include the swimming pool, gym, elevators, lounge and any area that does not belong to an individual strata unit holder.
Most strata titles would come with attached accessory parcels which could comprise of air-conditioning ledges and car park lots. The schedule of parcels a.k.a the strata plan would also be attached to the strata title.
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Here is an example of what a strata title looks like:
Differences between strata title and master title
Think of the Master Title as the deed or proof of ownership over an entire project. This document is issued before a real estate developer is about to build a project, whether residential or commercial. Typically, the document is registered under the name of the home builder, a developer, or a subsidiary.
On the other hand, a Strata Title is the proof of ownership over a particular unit in a project. Your home doesn’t need to stand directly on land to be eligible for a strata title. For instance, each unit in a condominium is backed by a Strata Title, which the developer needs to give to the corresponding buyer.
Why is a strata title important for homeowners?
Having the strata title is important because:
• It serves as proof of ownership of the apartment/condo.
• It is used as an instrument of charge to banks for loans.
• The issuance of the strata title will initiate the formation of the management corporation (MC) by owners of the apartment/condo.
Due to the delay in the issuance of strata titles, roughly 90% of new strata properties in Malaysia are still being managed by Joint Management Bodies (JMB) while only 10% have formed a Management Corporation (MC). – Datuk Soam Heng Choon, Real Estate and Housing Developers’ Association (REHDA)’s president –
• It serves as proof of the built-up area of your unit and the apportionment of your share in the total aggregate units. This enables the calculation of the maintenance fees by the Management Committee.
• Having a strata title can prevent complications should the developer come under liquidation or become insolvent.
The major consequence of any delay in issuance of the strata title is that according to the master title, the land legally belongs to the developer (or the registered proprietor) and the homeowner only has beneficial ownership of their respective parcels. This can become problematic when through a perfect storm of events; the homeowner finds that they are unable to prove ownership of their parcel without the strata title being registered under their name.
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When should the strata title be issued?
Under the Strata Titles (Amendment) Act 2013, strata titles are to be issued upon vacant possession (VP) of the property. This means that homeowners can expect to receive their strata titles the moment that they are informed that vacant possession can be obtained from the developer and along with their keys and other ownership documents can be collected the moment that they are informed that vacant possession can be taken from the developer.
Previously under the Strata Titles Act 1985, developers were to apply for individual strata titles within six months from the issuance of the Certificate of Completion and Compliance or other compulsory circumstances as facilitated in the Act.
Under the new regime, the application process for the strata title starts from the moment the construction has completed its superstructure stage i.e. the complete construction of the walls and structures necessary for the measurement of all parcels including any accessory parcels and common property needed to be shown on the strata plan. Once the superstructure stage is completed, the developer must apply for and obtain a Certificate of Proposed Strata Plan (CPSP) from the Director of Survey and thereafter commence the application for strata titles within one month from the issuance of the CPSP.
How to check for the strata title issuance?
Checking for the issuance of the strata is actually easy. Homeowners would usually have the details of the master title in their Sale and Purchase Agreement. They may then either call the local land authority such as the Selangor Land and Mines Office, or conduct a quick search on the e-Tanah system using the master title details.
As the strata title application process happens on the developer’s end, many homeowners would not be able to track the various application stages. They may however call the developer to ask if the developer has applied for the strata title and what stage is it at.
How much should I pay for strata title?
Given that the strata title is your proof of legal ownership, you will need to pay everything involved in the home purchase to obtain it along with the keys to the property. In a nutshell, you will need to pay the cost for the Perfection of Transfer, which is mandated for all cases wherein a title is being transferred from under a Master Title to a Strata Title or Individual Title after a purchase. Basically, this document transfers ownership from the developer or previous owner to the new owner.
Aside from the selling price of a unit, the expenses to get a strata title include the following:
- Professional fees or legal fees
- Stamp duty on the Memorandum of Transfer that is owned to the government via the Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri or LHDN)
- Registration Fees
- Search Fees (Land Search / CTC Title / ROC Search as well as Winding up & Bankruptcy & ROC)
- Incidental Fees. These include transportation, courier, and etc, as well as printing, photocopy, faxing, telecoms, and miscellaneous.
Generally, the legal fees and stamp duty depend on the value or selling price of the property being purchased. For more information on how these fees are calculated, check out 2022 Stamp duty, legal fees and 5 other costs when buying a house in Malaysia.
Why is there a delay in the issuance of a strata title?
This, in particular, has been the source of grief for many homeowners who have been left in the dark about their strata titles.
For properties constructed after the amendment of the Strata Title act, the bulk of the delay is due to the local land authority being slow or that their system is unable to process the strata title.
As for properties constructed before the amendment, the delay mostly comes from developers having been liquidated/insolvent or not having enough funds for the entire title application.
What happens after the strata title is issued?
Upon issuance of strata titles by the land authority, the developer shall transfer the titles to the purchasers within 30 days of the date of issuance. This is an important step neglected by many homeowners. If the titles are not transferred over to homeowners, this puts them in a situation where they are not the legal owners of the parcels but rather beneficial owners. Furthermore, they would need to obtain the consent of the developer if they wish to sell their houses.
Homeowners who have been notified to collect their strata titles would need to set up an appointment with the lawyer who handled the purchase of their properties to initiate the title transfer process.
Along with completing the transfer of ownership, all owners of the parcels would have to come together and form a management corporation (MC) to take over management of the common facilities from the developer.
Can I sell my property if I have not received the Strata Title?
In such cases, although the ex-homeowner (now seller) does not yet have the title registered under his name, he can prepare and sign a Deed of Assignment (DOA) made between him and the new owner. This document assigns all the rights of beneficial ownership from the seller to the new owner and when the title is issued, the new owner will have his name registered as the owner of the parcel.
Aside from the Deed of Assignment (DOA), the new owner must give to the developer a notice of assignment under Section 22D of the Housing Development (Control and Licensing) Act, 1966. This notice informs the developer that the rights of the seller have now been assigned to the new owner.
The DOA is different from the Deed of Mutual Covenants (DMC). The DMC is a legal document that lays out all the rules and regulations that all parcel owners agree to adhere to. This document is usually signed by the developer and the original homeowner, and is part of the set of documents all homeowners must keep with them aside from the strata title. However, with the introduction of the Strata Management (Maintenance & Management) Regulations 2015 (SMR 2015), the DMC is now redundant as all parties are now bound by the by-laws in the 3rd schedule of the SMR 2015.
So now you know what the big deal with strata titles! To know more about your rights and obligations as a strata property owner, check out this beginners guide to strata property living. If you want to know more about the differences between an individual title and a strata title, read this guide.
Edited by G.Zizan
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