BY The National House Buyers Association
Strata management is a big topic. It covers issues ranging from harmonious community living, sharing of common property, power back into the hands of parcel owners, property management to pooling of financial resources to maintain and manage the subdivided building and the common property.
Being a big topic, strata management involves many stakeholders – developers, parcel owners, property managers, service contractors, real estate agents, land surveyors and the government. Each of them has an important function to perform to ensure effective and successful strata management.
Much has been reported about the challenges in strata living – from disgruntled parcel owners who demand transparency in the management of the maintenance accounts to parcel owners being dissatisfied with their elected committee (i.e. Joint Management Body or Management Corporation) who fail to maintain and manage the strata building according to the parcel owners’ demands and expectations.
The present laws governing strata management are the Strata Titles Act 1985 (Act 318) and the Building and Common Property (Maintenance and Management) Act 2007 (Act 663), now repealed and the National Land Code 1965. However, the laws have several blind spots and consequently have lead to different interpretations among the stakeholders.
The ambiguities in the laws have also caused different strata management practices to emerge and even malpractices to happen.
Fortunately, Parliament has in 2012 passed the Strata Management Bill despite much debate in the August House and has now named it the Strata Management Act, 2013 (SMA) Act 757. The SMA has just been implementation effective 1st June, 2015. Its implementation was inordinately delayed because of the governing strata management Regulations that has been fine-tuned and put in place with standardized forms to facilitate its implementation.
With the passing of the SMA means that the Building and Common Property (Maintenance and Management) Act 2007 (Act 663) was repealed. In other words, the current regime and legal framework for strata management will be replaced with a new and comprehensive framework.
Despite the circumstance, it is submitted that JMBs/ MCs may start to apply the provisions of the SMA so as to transit smoothly into the new strata management regime under the SMA. This article discusses about the Joint Management Body (JMB)/ Management Corporation (MC) and management committee under the SMA.
What is JMB/ MC?
The JMB/ MC are statutory bodies that are formed to manage and maintain the sub-divided building and common property in the strata development.
Simply, the JMB is formed if the MC is not formed yet. Then, the MC is formed after the original proprietor of the land on which the strata development stands, who is normally the developer, successfully applies for subdivision of the building and the land office issues the strata titles for the respective parcels in the building.
Thus, the JMB is formed before the land office issues the strata titles for the respective parcels in the building. The MC is formed after the land office issues the strata titles.
The JMB/ MC is a corporate body. Being a corporate body, it can sue and be sued. The corporate body has “perpetual succession” which means the entity exists forever until it is dissolved. However, differences exist in the composition of the JMB and MC.
On the one hand, the JMB comprises the developer and purchasers of the parcels in the building. On the other hand, the MC comprises initially the original proprietor of the land on which the strata development stands, normally, the developer, and subsequently, the purchasers who have received their strata titles from the land office and have registered themselves as parcel owners.
What is a Management Committee?
The JMB/ MC is run by a joint management committee (JMC) and management committee respectively. The committee members are elected at the JMB’s/ MC’s annual general meeting (AGM).
Under the Strata Management Act, 2013 (SMA), the number of committee members elected for the JMC/ management committee is between 3 and 14 parcel owners.
It is to be noted that the committee is to act in the interest and benefit of the parcel owners living together in the strata community. Thus the committee ought to refrain from acting in accordance with its own whim and fancy. More important, it must refrain from mismanaging the moneys collected from parcel owners for the maintenance and management of the strata development.
If the JMC/ Management Committee acts in a manner that is detrimental to the general interest of the parcel owners, it could be personally liable to the JMB/ MC respectively for damages sustained by the JMB/ MC.
A member of the JMC/ Management Committee is required to have a high standard of integrity. The SMA provides a comprehensive list of conditions that a committee member must follow.
First, to be eligible for election as a committee member, the parcel owner must be at least 21 years old and have fully paid his arrears in maintenance charges and sinking fund at least 7 days before the AGM. It is to be noted that a proxy is not eligible for the election of a committee member.
Second, while a parcel owner is a committee member, he must observe the following conditions:
(a) He is not a bankrupt;
(b) He is still a parcel owner;
(c) He is not convicted for an offence of fraud or dishonesty;
(d) His conduct over his duties as committee member must not bring discredit on the JMC/ Management Committee;
(e) He must be of sound mind or is capable of discharging his duties;
(f) If he is the chairman, he must not absent himself from 3 consecutive committee meetings without the leave of the JMC/ MC;
(g) If he is not the chairman, he must not absent himself from 3 consecutive committee meetings without the leave of the chairman;
(h) He must not be in arrears of the maintenance charge and sinking fund (including interests) for 3 consecutive months;
(i) If he commits a serious breach of the by-laws, he must remedy the breach within 14 days of the notice from the JMC/ MC.
If the parcel owner fails to observe the above conditions, he is deemed to have vacated his office as committee member. Consequently, the JMB/ MC may appoint another parcel owner to replace the member and to hold the office.
A committee member may resign from his office at any time by giving written notice to the JMB/ MC.
It is submitted that above provisions are among many other comprehensive provisions in the SMA. Such provisions lessen significantly the number of blind spots in and consequent confusion caused by the present laws.
Indeed, the SMA is like long awaited fresh air blowing across the strata management and maintenance arena. For its worth and use, it is a welcomed new law.
NATIONAL HOUSE BUYERS ASSOCIATION [HBA]
No. 31, Level 3, Jalan Barat, Off Jalan Imbi, 55100, Kuala Lumpur
Tel: 03-2142 2225 | 012- 334 5676 | Fax: 03-22601803
Email: [email protected] | Web Site: www.hba.org.my