By The National House Buyers Association (HBA)
Case 1: For 15 years, more than 50 owners of 90 condominium units diligently contributed their share of quit rent, apportioned by the developer’s surveyor, to their developer. They were shocked when they made checks at the Wilayah Land Office and discovered that their developer had used it to offset the “tunggakan cukai” (arrears of rent) for the period between 2005 to 2013, which had accumulated to RM114,432.00. This figure did not include the quit rents for the current year and the late penalty imposed. More shocking was that the penalty levied was quite a hefty sum over and above the arrears.
Note: It is the policy of every land office that quit rent (land rent) has to be paid yearly not later than May 31, failing which a penalty of 10 per cent will be levied.
To add salt to their wound, the developer (now defunct), when approached by the owners, informed them that they have not pursued recovery through legal means against those recalcitrant unit owners who have not paid their quit rent. Will those law-abiding owners then have to pay the apportioned penalties against their defaulting developer, for failure to effectively collect from those recalcitrant owners? It is only fair that the penalty should be borne by the developer! Perhaps, it allows the developer the very excuse that it is, thus, unable to apply for strata titles.
Case 2: Mr A has paid his apportioned quit rent of RM55 to the Joint Manangement Body (JMB)/Management Corporation (MC) but other co-owners have not. His transfer of strata title to his son cannot be registered by the related land office because the total quit rent payable of RM19,500 on the master title is outstanding. The failure of others to pay have thwarted his transfer of strata title. Is it fair?
Strata title application
As per Section 9(e) of the Strata Titles Act, 1985, it is the prerequisite of every land office throughout Peninsular Malaysia that quit rent must be paid up-to-date at the time of application for strata titles.
As long as quit rent is not fully paid, subdivision of any building into strata titles cannot be processed. It is therefore pertinent that parcel owners should galvanise their representative group under JMB to have periodical dialogues with their developers or their appointed managing agents and to make independent checks at the related land office. The land office, which have often been blamed for inordinate delays, will not issue strata titles without any application from developers.
In situations where separate strata titles are available for distribution, the lawyer appointed by the owners will undertake the said transmission through the requisite Memorandum of Transfer (MOT) prescribed under the National Land Code, 1965 for effectual transfer from the developer to the buyer. Similarly, it is the policy of every land office that quit rent receipts must be produced at the registration counter evidencing that quit rent has been paid up to the current year before they are able to accept the MOT for registration. A registration fee is also payable at the time of presentation.
Often, lawyers are caught in a catch-22 situation which thwarts registration of the MOT, where some stubborn developers will be uncooperative and refuse to heed their complaints for an expeditious settlement of quit rent so as to facilitate transfer of their strata titles. Among them:
- i) that some parcel owners have not paid up their quit rents;
- ii) that the developer is purportedly appealing against the re-adjustment of those rates;
iii) that the penalties imposed by the land office, on the delayed payment of quit rent, are unjust as they have to apportion the penalties to those parcel owners who paid after the cut-off date of May 31; and
- iv) since the last day to pay the quit rent is May 31, why pay early when developers can utilise those collected funds for other purposes? There is no benefit for them to facilitate the MOT registration.
The phenomenal growth of stratified buildings in recent years has posed new challenges in law and in practice. Legislations have to be amended and re-amended to keep pace with such developments.
Amendments were made to the Strata Titles Act 1985 in 2007 which, among others, brought into operation the computerisation system for strata titles. With it came provisions that relate to the forms, the procedures for preparation and registration of the title, dealing in parcel and entry or endorsement, memorial and modification. The said amendments have been in force since Apr 12, 2007 for Peninsular Malaysia. One of the pertinent amendments is the deletion of Section 43 (1)(j) of the Strata Titles Act, 1985 that relates to “Duties and power of the Managing Corporation” to “pay the rent of the lot”. The “lot” here refers to the master title prior to subdivision.
All the foregoing translates to the fact that it is possible to have separate billing of quit rent (land revenue) on the individual parcel instead of the lot. Why then is separate quit rent billing not done by the land offices? Is there a lacuna in the law? If so, why hasn’t something been done? What have the authorities done for the past eight to nine years to give it clarity?
Let’s get practical
For many years, the National House Buyers Association (HBA) has expressed its frustration at the failure to effect separate quit rent billings despite having separate strata titles. It doesn’t make sense to have one without the other. If there is a “mistake”, why don’t the authorities do something about it instead of letting the rakyat suffer? Surely, eight or nine years is more than enough to attend to something as simple as “one quit rent bill for one parcel property”!
The HBA has had several dialogues with PEMUDAH – Focus Group on Registration of Property (FGRP) committee helmed by YBhg Dato Dr Ir Andy Seo and co-chaired by YBhg Dato Dr Sallehuddin bin Ishak (the newly appointed Director-General of JKPTG) and the outcome of the meetings look positive and forward-looking. The major obstacle, which is the mindset of the government agency, is now behind us because of the encouragement from the top civil servant in YBhg Tan Sri Dr Ali Hamsa, the Chief Secretary to the Government.
It is envisaged that the following positive actions will be conceived from these efforts:
- i) that there will, henceforth, be separate billings of quit rents to individual parcel owners similar to the assessment rates (to ratepayers) billed by local councils;
- ii) to allow for the payment of annual quit rents on individual parcels and not on the entire lot;
iii) that quit rents on the common property too will be apportioned by the land office and incorporated into separate quit rent bills;
- iv) that the system change for separate billings will be made effective beginning next year, 2017 on a clean slate (“zero account”);
- v) that those arrears of quit rents, prior to the year ending 2016, will have to be the burden of the developer or JMB or MC, as the case may be, to procure collection from those delinquent parcel owners; and
- vi) billings will be to the nearest ringgit.
We fervently hope there will be no change of heart or some smart fool at the registration counters (at the land office) who comes up with any “brilliant idea” to frustrate, derail or thwart such dealings on strata titles.