A new strata regime

Introduction The Strata Management Act 2013 (the Act) which came into force on June 1, 2015 repeals the Building and Common Property (Maintenance and Management) Act 2007. The implementation of the Act is complemented by two by-laws, namely, the Strata Management (Maintenance and Management) Regulations 2015 and the Strata Management (Strata Management Tribunal) Regulations 2015. Further change includes the amendment to the Strata Titles Act 1985, whereby provisions for management of subdivided buildings as well as the Strata Title Board have been moved to the purview of the Act.

Developers’ duties The developers’ duties are clarified. These include their responsibilities to maintain and manage the buildings and the common property from the date of delivery of vacant possession to a purchaser, to a month after the establishment of the Joint Management Body (JMB) and Management Corporation (MC). The Act also imposes statutory obligations on the developers to establish and manage the maintenance account and sinking fund account before the establishment of JMB and MC.

The defects account Section 92 of the Act requires the developers to deposit a sum of money with the Commissioner of Buildings for the purpose of rectifying defects in the common property of the development area after completion of the common property. The amount of deposit to rectify defects is set at the rate of not less than 0.5 percent of the estimated cost of construction, or MYR50,000, whichever is higher.

Inter-floor leakage and damage to party wall New provisions covering inter-floor leakage and damage to party wall¹ are also introduced via the Strata Management (Management and Maintenance) Regulations 2015.

Strata Management Tribunal The Strata Management Tribunal (the Tribunal) is established under the Act to hear and determine claims specified in Part 1 of the Fourth Schedule. The total amount that may be awarded by the Tribunal is limited to MYR250,000.

Subdivision of building or land The Strata Titles Act 1985 is now amended, requiring developers to obtain a certificate of proposed strata plan (CPSP) before applying to subdivide a building or land. The timeline to apply for the CPSP is summarised below:

• Where the sale of the parcel has taken place and the document certifying the super structure stage is issued after June 1, 2015, the timeline to apply for the CPSP is three months from the date of the document certifying the super structure stage;
• Where the building is completed after June 1, 2015 and the sale of the parcel has taken place before June 1, 2015, the developers are required to apply for the CPSP three months from the date of issuance of the certificate of completion and compliance (CCC);
• Where the building is completed, and the sale of the parcel has taken place after June 1, 2015, the CPSP’s application is three months from the date of issuance of the CCC, or the date of the first sale, whichever is later;
• Where the building is completed before June 1, 2015, but the first sale has taken place after June 1, 2015, the period for the CPSP application is three months from the date of the first sale of
  the parcel;

• Where the building is completed, and the sale of the parcel has taken place before June 1, 2015, the period to apply for the CPSP is three months from June 1, 2015;

After obtaining the CPSP, the developers shall apply for subdivision within a month from the date of issuance of the CPSP, accompanied with the schedule of parcels and other documents.

In the event that the timeline stated above is not complied with, the developer concerned is guilty of an offence and shall be liable to a fine between MYR10,000 and MYR100,000, or imprisonment for a term of not more than three years or both. The Act also provides for the applications for subdivision involving the issuance of provisional strata title for a provisional block and the subdivision of low-cost buildings.

Transfer of strata titles to the purchaser The developer is required to transfer the strata title to the purchaser within 30 days of the date of issue of the strata title by the Land Administrator, while the purchaser is required to execute the complete documents of transfer of the strata title within 30 days of the date of notice of transfer of the strata title being served to the purchaser, or 30 days of the date of purchase of the parcel, whichever is later.

Conclusion The changes led by the new strata regime are welcomed as they address the inadequacies and shortcomings faced by the old strata laws, and provide adequate protection to the owner of a stratified property.

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Endnote
1.‘Party wall’ is defined as a wall that is located between separate parcels.

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