LAW & REALTY: Management of a strata titled development (Part 1)
THE management corporation is the medium in which the proprietors of strata parcels in a strata development would eventually control the management of the strata scheme. Pursuant to the Strata Titles Act 1985 (the Act), the management corporation of a strata development would come into existence upon the opening of the strata register which would to the man in the street mean when the strata titles of a strata development are issued. The management corporation is a statutorily-created body corporate having perpetual succession and a common seal. Being a body corporate, the management corporation may sue or be sued. The management corporation will be known by the name appearing in the book of strata register of the strata development.
Upon coming into existence, the management corporation would be constituted by all parcel proprietors of the strata development. This means that initially and upon its coming into existence, the management corporation would be inevitably made up of the original proprietor of the land upon which the strata development is erected.
The importance and relevance of the management corporation is that upon coming into existence, the management corporation would become the proprietor of the common property of the strata development and the custodian of the issue of document of title of the lot. The management corporation, being the registered proprietor of the common property of the strata development, would be conferred all the powers of a proprietor under the National Land Code 1965. However, this does not mean that the management corporation would be endowed with all the rights of a registered proprietor of a land. The rights of the management corporation in relation to the common property are restricted under the Act.
So, the perennial question would be when will the purchasers, being beneficial proprietors of strata parcels of a strata development, be entitled to gain control of the management corporation. It is the duty of the original proprietor to convene the first annual general meeting of the management corporation within one month after the expiration of the initial period. The initial period in relation to a management corporation of a strata development means that the period commencing on the day on which the management corporation is formed and ending the day on which there are proprietors excluding the original proprietor of the lot who is registered as proprietor or proprietors of a parcel or parcels or a provisional block or blocks the sum whose share units is at least one-third of the aggregate share units.
If the original proprietor should fail to comply with its statutory duty to convene the first annual general meeting within the period specified by the Act, the original proprietor shall be guilty of an offence and shall be liable on conviction to a fine not exceeding RM1,000. A registered proprietor of a strata parcel of a subject strata development may, upon the failure of the original proprietor to comply with the Act pertaining to the convening of the first annual general meeting of the management corporation, apply to the Director of Lands and Mines for the State (which shall include the Deputy Director of Lands and Mines), and in the case of the Federal Territory, the Land Administrator, to appoint a person to convene the first annual general meeting of the management corporation within such time as is specified.
In the interim period, before the parcel proprietors take over effective control of the management corporation, the latter is under the control of the developer, and the law imposes certain restrictions on the powers of the management corporation. During this interim period, the management corporation may not amend, add to or repeal its by-laws in such a manner that a right is conferred or an obligation is imposed on one or more but not all proprietors or in respect of one or more but not all or provisional blocks, to borrow monies or give securities or enter into maintenance or service contracts for any period extending beyond the expiration of the initial period.
The primary duties of the management corporation of a strata development are found in the Act, and the most popularly-perceived duties of a management corporation are the control, management and administration of the common property of the strata development for the benefit of all the proprietors. The management corporation is entrusted with the responsibility to ensure that, on the whole, the management of the common property would be for the benefit of all the proprietors and not only to some of the proprietors and to the detriment of some proprietors.
To achieve the above objectives and duties, the management corporation is empowered to collect a management fund from the proprietors of the strata development. The management corporation may invest any monies in the management fund but only in such investment or in such manner as may be approved at a general meeting. In contemplation of repair works to the common property of a strata development, the management corporation would collect what is popularly known as a “sinking fund” from the proprietors. The sinking fund shall be maintained in a special account in accordance with the Act, and may be utilised, by special resolution, to meet the actual expenses or expected liabilities in respect of the painting or repainting of the common property, to acquire any moveable property for the use of the common property, to renew or replace any fixture or fixtures or fittings comprised in any common property vested in the management corporation.