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Strata Management Act at a glance

by NG PAU LING | pauline@thestar.com.my

Things you should know about management fees.

VERTICAL living has become a norm in the urban areas. More Malaysians are moving into condominiums, apartments and stratified gated-and-guarded communities, with about 30% of the urban population currently living in stratified buildings.

If you are a strata owner or occupier, you are the individual owner of your unit. Also, you play a role as the co-owner to all common property shared inside the development.

You are subjected to pay a monthly management fees to Joint Management Body (JMB). The maintenance and management charges for taking care of your common property under the Strata Management Act 2013 came into effect on June 1, 2015.

How well do you know the management fees? Do you understand your rights and the possible problem under this Act?
Here are the things you need to know about management fees as a strata owner or occupier.

What are management fees?

Management fees is an amount of money that strata owner pays to Joint Management Body (JMB) of the condo, apartment, gated-and-guarded community or any stratified property to properly manage and maintain the common property in the development.

What is common property?

Common property is the development areas used or capable of being used or enjoyed by occupier or owner of a strata property.

It normally includes green areas, public amenities and facilities, as well as common areas such as corridors, drainages and the roofs inside one development.

Who should pay the management fees?

Every proprietor or strata owner shall pay the management fees to the JMB for the maintenance and management of common property.

Strata owners include:

  • The buyer of the property
  • A person who eligible to receive rental from the unit, whether as an agent, trustee or receiver
  • Developer of those unsold units in the development

Who manage the management funds?

JMB is established to be the steward of your property. They were being granted the power to collect and control the management fees. However, the funds can only be used for maintaining common property.

All fees collected from strata owners, occupiers, tenants or developer of the property will be deposited into the maintenance account of sinking fund account under the name of the JMB within three working days of receiving such money.

The things JMB do:

The Joint Management Body (JMB) is a corporate body comprised of developer and strata owners, a party responsible for the management and maintenance of the common property of one development project. The major duties include:

  • Determine and impose the management fees
  • Properly maintain and manage the common property in a state of good and serviceable repair
  • Insure the property and effect the insurance according to the Strata Management Act
  • Comply with notices or orders given by local authorities
  • Prepare and maintain register for the property of all owners
  • Ensure the management fund accounts are audited and provide audited financial statement for all members
  • Enforce the rules or by-laws

How is the management fees determined?

The amount of the fees to be paid by strata owners is initially determined by developer in proportion to the share units assigned to each parcel.

While the contribution of sinking fund used for painting of common premises, acquisition of movable properties and renewal of fixtures or fittings in common property shall be set at 10% of the sum of management fees.

A maintenance budget should be prepared by the developer before the first annual general meeting for the establishment of JMB, under consideration of annual budget that sufficiently paying for expected and estimated expenditure required to properly maintain and manage the common property.

In the first annual general meeting, the elected management committee (MC) can decide whether to confirm or vary the amount budgeted by the developer.

What if I am unhappy with the amount determined?

If any strata owner is not satisfied with the amount of the management fees determined by the developer or JMB, you may request a review from Commissioner. They may re-determine it or instruct the developer or JMB to appoint a registered property manager to recommend an amount for the management fees.

Who pays the management fees on unsold units?

For the unsold units, the management fees will be paid by developer as the strata owner of the development.

However, at any general meeting, the developer shall be considered as one person, regardless the number of the unsold units.

Where does my money go?

The maintenance fees collected from strata owners are solely for the purpose of maintaining the common property in good condition on day-to-day basis.

  • Paying the expenses for cleaning and security services
  • Acquisition of public amenities for occupiers of the building
  • Paying insurance premiums
  • Minor painting works on common premises
  • Acquisition of movable properties
  • Renewal or replacement of fixtures and fittings in common property
  • Complying with notices and orders from local authorities
  • Carrying out periodical inspection for buildings
  • Replacing or repairing faulty wiring systems
  • Maintaining roads and drainages
  • Maintain and repair main water tanks
  • Upgrading and refurbishing of common property
  • Paying rent and rates
  • Audit services for the accounts
  • Paying for administration or managing agent services

What happens if I withheld my payment?

The strata owner shall pay the management fees within 14 days of receiving a written notice from the JMB of their property. If the fees remain unpaid at the expiry or the end of the period of 14 days, the enforcement can take place without a minimum amount of outstanding fees.

Late fees: A late payment interest of 10% per annum on a daily basis based on the amount owes could be imposed on strata owners who failed to paid up.

Seizure of movable property: The commissioner has the authority to seize any movable property including TV, smart phone even home appliance such as rice cooker which could be found in the building or elsewhere in the state belongs to the defaulting strata owner.

The attachment will be executed by the developer or a member of Joint Management Committee (JMC) in the presence of the Commissioner during daytime.

In the case, developer or JMC has the right to retain possession of such property until the debt is paid within 14 days.

If the debt due is not paid within 14 days from the date of attachment, the property attached will be sold by auction conducted by the developer or JMC under the supervision of the Commissioner.

Fine and imprisonment: Strata owners failed to keep up with their management fees obligation could be a criminal offence. They may be liable to a fine not exceeding RM5,000 or to imprisonment for maximum three years or to both. In case of a continuing offence, a further fine not exceeding RM50 per day could be imposed, during which the offence continues after conviction.

Decreasing in property value: When it comes to management fees, it’s more than just a term of cost. The quality of management and maintenance of a property can seriously impact its value.

Generally, a well-maintained property could fetch a higher home price in long run.

If you repeatedly failure to contribute to management fees, it may adversely affected the value of property as it creates difficulties for timely maintenance and efficient management, ultimately resulting in bad living environment and decrease in the value of the property.

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