Condominiums and high-rise residential homes are the trend for modern living today. A glance through the KL skyline would show you just how developers today prefer to build condominiums instead of traditional townships. Owning a parcel in a residential building is entirely different from owning a conventional landed house. Before purchasing your first residential strata unit, here are 5 things you need to know about strata homes:
1. Protected under the Strata Management Act 2013 & Strata Titles Act 1985
We would go as far as saying that residents in a strata building should have their own copy of the Strata Management Act 2013 (“SMA”) and Strata Titles Act 1985. These two statutes protect the rights of both residents and the Management Corporation of the strata building and deal with issues such as the composition of the management committee to provisions involving dispute resolutions between proprietors.
2. Maintenance Fees / Service Charges Must be Paid
Perhaps the most fundamental difference in owning a strata residential parcel compared to a landed property is the need to pay / contribute to the maintenance fund. The SMA provides that a “maintenance account” must be opened and maintained by a developer or a management corporation for purposes of administering and maintaining the strata building. The maintenance charges are to cover expenses on the building’s every day utilities and amenities such as security, lift maintenance etc. If the maintenance charges are not paid, a management corporation is allowed to take legal action against proprietors for recovery of the same.
3. Different Limitation Periods May Apply for Strata Management Maintenance Accounts
A strata management maintenance account is a running account. It is always because from the day that the Purchaser is delivered possession of the Premises, his obligation to pay the maintenance fees would start to run. The maintenance fees would be a running account for which the proprietor is liable to pay for all current and outstanding maintenance fees. As such, the statutory limitation of 6 years does not apply to actions in recovering unpaid maintenance fees and management corporations are always open to recover maintenance fees that are in arrears even if they are more than 6 years old.
4. Maintenance Fees Must Be Charged on a Share Unit Basis
Previously, many high-rise buildings and residential condominiums charged maintenance fees on a “square feet” basis. As such, the bigger the property in terms of square feet, the more maintenance fees you have to pay. This is a misconception. Through the amendments of the SMA and a recent decision in Ekuiti Setegap Sdn Bhd v Plaza 393 Management Corporation  3 CLJ 812, the Court held that the calculation method of “square feet” is incorrect, since the legislation requires the rate to be on a “share unit” basis.
“Share units” means the share units determined for that parcel as shown in the schedule of share units. Each parcel has a share value as approved by local authority, and the share units of a parcel shall determine among other things, the voting rights of the proprietors, and the quantum of undivided share of each proprietary in the common property. It is not always the case that the “share unit” of a parcel will proportionately represent the “square feet” size of the parcel.
5. The Management Corporation Has the Authority to Create By-laws
The SMA allows for certain flexibility for a Management Corporation to create and fix certain by-laws for proprietors or residents. By-laws are a set of rules / regulations that are crafted by the management corporation to regulate certain issues. Pursuant to the SMA, by-laws can be made to cover the following issues:
i) safety and security measures;
ii) details of any common property of which the use is restricted;
iii) the keeping of pets (not all strata residential buildings allow this);
v) floor coverings;
vi) refuse control;
viii) architectural and landscaping guidelines; and
ix) imposition of fine not exceeding RM 200 against any parcel owner, occupant or invitee who is in breach of any of the by-laws.
About the author: Zi-Han Lim is an associate in the dispute resolution practice group at Donovan & Ho. He is experienced in dispute resolution, focusing on employment and industrial relations, administrative law and commercial litigation.
Donovan & Ho is a law firm in Kuala Lumpur, Malaysia. Our practice areas include employment law, dispute resolution (litigation and arbitration), corporate and tax advisory, and real estate/conveyancing. Have a query? Contact us.
This article was written by Shawn Ho (Partner) and Adryenne Lim (Legal Executive). Shawn has been named as a recommended lawyer by the Legal 500 Asia Pacific 2018 for Corporate and M&A. He leads the corporate and commercial practice group of Donovan & Ho.
Donovan & Ho is a law firm in Malaysia. Our practice areas include employment law, dispute resolution, corporate advisory and tax advisory. If you have any queries, please contact us.