Condo conundrums - Pt 4

Strata owners rights and responsibilities

LAST month we ran a series of articles on issues and problems faced by owners and residents of strata-titled residences.

We covered the dilemmas of those living in apartments, condominiums, serviced apartments, studios, duplex units and such.

Having received many queries and much feedback, we feature today an informative article by Chur Associates founder and managing director Chris Tan (via an iProperty.com online piece) highlighting strata owner's rights and responsibilities.

Burgeoning of strata

Strata living is fast becoming a way of life in Malaysia. Currently, about 30% of the country's population is reported to be residing in strata-titled buildings.

The term "strata" was legally introduced in 1985 in response to the growing number of multi-storey structures as a result of urbanisation in major cities such as Kuala Lumpur, Penang and Johor Baru. 

Strata-titled buildings were put under the spotlight when the Strata Management Act 2013 (SMA 2013) was implemented in June 2015. It replaced the Building and Common Property (Maintenance and Management) Act 2007 (BCPA 2007).

The new enactment stood to correct the limitations of its predecessors, providing clearer and more stringent provisions on the management of stratified-titled buildings in Malaysia, covering residential, commercial and mixed-use development.
 
Strata in brief

Many owners of strata properties however, are still unaware of the meaning of strata and the rights the SMA 2013 provides them with.

Dispelling the common misconception that strata properties refer only to high-rise units, Tan clears the air, informing that strata properties are not limited to condominiums and apartments.

"Gated and guarded landed developments are in fact, also known as 'horizontal strata' and fall under this category as well."

As Tan once mentioned during a Malaysian Property Expo (Mapex) fair where he delivered a talk and made an analogy between strata owners and shareholders of a public listed company. He said that both were no different.

"This is because the value of their residence (strata property) is dependent on its upkeep and condition. Similar to how a well-run company will see climbing share prices, a well maintained and properly managed residence will see appreciation in value," he said.

And how the maintenance is supported is by the service charge (SC) and sinking fund (SF) collected from residents.

Strata in the spotlight

SC is explained as the monthly payment owners of strata properties need to provide towards maintaining common facilities and common property in the development such as swimming pools, elevators, security services, etc.

The SF has nothing to do with one's property sinking, instead, it covers future capital expenses, which are not as frequent, such as the painting of the facade and refurbishment or replacement of fixtures.

These funds must be sufficient to cover all the development's expenses and are usually collected in advance. A charge of 10% of the service charge is customarily applied.

However, in Malaysia, strata residents have yet to adopt the "community living" concept as Tan shares that many shirk from their duties in settling their SC on time.

He even provided statistics informing that only 50% of strata residents in Malaysia pay SC on time and pointed out that there are some property owners who, at times, cannot afford to pay their SC, which causes the strata management to fail to perform the necessary repairs and other facelifts due to lack of funds.  

With the SMA 2013 enforced, Tan says that the Joint Management Bodies (JMB) and the other group of strata owners can rejoice.

"Errant strata owners can no longer get away scot-free as the SMA 2013 saw to the establishment of the Strata Management Tribunal (SMT), which states that any strata owner who fails to pay their SC can be brought before the SMT for an order to pay up."

As the SMA 2013 presents a clear outline of the responsibilities and limits of authority among developers, local governments and residents, Tan feels that strata owners should be made aware of their rights and responsibilities, now more than ever.

"As developers will not be managing the strata property forever, the onus lies with the owners who will need to take full responsibility for the entire building, eventually."

With the responsibility in the hands of the owners, follow our article next week where Tan shares the 10 basic rights and obligations of a strata-titled property owner.