LAW & REALTY: Management of a strata titled development (Part 2)
IN Part 1 of this article, which appeared last week, the various duties of a management corporation of a strata development were briefly examined and explained. In Part 2, the writer will attempt to explain the various powers of the management corporation.
Each proprietor is liable to pay the amount lawfully incurred by the management corporation in the course of the exercise of its powers, functions or in the course of carrying out its duties or obligations, in such proportion as the share units of his parcel bear to the aggregate share units. The contribution levied on the proprietors by the management corporation is commonly referred to as the maintenance charges.
If any proprietor fails to discharge his liability to pay the maintenance charges, the management corporation is empowered to initiate a legal suit against the defaulting proprietor to claim for such outstanding as a debt due to it. To recover such sum due to it, the management corporation is further empowered to apply to the Land Administrator to issue a warrant of attachment authorising the attachment of any moveable property belonging to the defaulting proprietor which may be found in the building or elsewhere in the State.
It is also important to note that any proprietor who fails to pay the contribution lawfully demanded by the management corporation shall be guilty of an offence and be liable on conviction to a fine not exceeding RM5,000 and to a further fine not exceeding RM50 for every day during which the contribution remains unpaid after conviction.
The mutual duties, responsibilities and functions of the management corporation and the proprietor, and in certain instances, vis-à-vis other proprietors, are found in the Third Schedule of the Strata Titles Act 1985 (the Act). For example, a proprietor is restricted from using the common property in such a manner that may unreasonably interfere with the use and enjoyment of the common property by other proprietors or their families or visitors. An illustration of such an instance would be, a proprietor conducting swimming lessons in the swimming pool, thus preventing free and unlimited access to the pool by other proprietors during the time such lessons are conducted.
Any amendment of the By-Laws by the management corporation must be effected by a special resolution and such amendment must be consistent with the provisions in the Act. Non-compliance with such a requirement will render any such addition or amendment of the By-Laws invalid.
A special resolution means a resolution which is passed at a duly convened general meeting of the management corporation of which at least 14 days’ notice specifying the proposed resolution has been given by proprietors, who together are entitled to not less than one-quarter of the aggregate share units, and who together constitute not less than one-quarter of the membership of the management corporation. The passing of a special resolution by a management corporation is therefore no easy feat.
A purchaser of a parcel for which strata title has been issued must obtain a certificate from the management company, certifying amount of contribution of the seller, time and manner of payment, extent to which the contribution has been paid, the amount then recoverable by the management corporation, the sum standing to the credit of the management fund and the amount reserved for expenses already incurred, and the estimated amount of any expenditure likely to be incurred. Such a certificate can be obtained from the management corporation either by the parcel proprietor, or a prospective purchaser or a prospective lender. If the amount certified as due to the management corporation is not paid by the seller, the purchaser who subsequently becomes a parcel proprietor will be liable for the amount due to the management corporation.
If the management corporation fails to function satisfactorily, a proprietor or any other person having a registered interest in a parcel may make a complain to the Director of Lands and Mines for the State, and the Director may, if he is satisfied that it is in the interest of the parcel proprietors, to appoint a managing agent to exercise the powers and discharge the duties and functions of the management corporation. Depending on the nature of scope of appointment made by the Director, the managing agent may be appointed to exercise all the powers, duties and functions of the management corporation or any one or more of those powers, duties or functions.
In conclusion, it is pertinent to note that there will be significant changes to the duties and powers of the management corporation when the Strata Titles (Amendment) Act, 2006 comes into force. First and foremost, the authority of the Director to regulate management corporations will be transferred to a Commissioner of Buildings. Other changes include the right given to a proprietor who is not satisfied with the amount of contribution determined by the management corporation to apply for a review, and that the management fund account must be audited by a registered auditor and presented to the Commissioner. The full effect of the amendments will require a separate and an exclusive examination.
Parcel proprietors will also benefit substantially when the Building and Common Property (Maintenance and Management) Act 2006 comes into force. Proprietors will be able take an active part in the management of the strata development prior to the formation of the management corporation by the setting up of the Joint Management Body. It is contemplated that this will constitute an efficient platform to address the continuing and growing grouses by parcel proprietors relating to the management by the developer before the formation of the management corporation. The full effect of these significant changes made in the management of a strata titled development before the formation of a management corporation will, again, require a separate and exclusive examination.