What Is Strata Property Management Act 2013 Malaysia And How Does It Affect You?
If you live in a strata property like a condominium, an apartment or a home within a gated-and-guarded community, below are the things you need to know about management fees.
What Are Management Fees?
Based on the Strata Management Act 2013 that came into effect on June 1, 2015, otherwise known as the Strata Management Act 2013 Third Schedule, owners of strata properties need to pay a project’s Joint Management Body (JMB) so that the body can take care of the common properties in a development.
What Do You Mean By Common Property?
Common property refers to the areas in a project that benefit all residents or unit owners. These include public amenities and facilities, green spaces, drainage, corridors and rooftop.
Who Are Required To Pay Management Fees?
1. The unit owner
2. If the owner is not around, it can be an appointed agent, trustee or an entity that receives the rental income from the unit or receives money from the owner
3. If the unit has not been sold, it is the property developer’s duty to pay this fee
Who Manages The Funds?
The JMB is the official steward of a development, as they have been granted the power to collect management fees. The money can only be used for the upkeep of a project’s common property.
The monies collected from the developer of the property, tenants or strata owners will be deposited into the maintenance account of sinking fund account under the name of the Joint Management Body within 3 days of collection.
What Are The JMB’s Duties And Obligations?
The JMB is a corporate entity consisting of the property developers and the unit owners. Its main duties include:
1. Determining the amount of management fee to be collected
2. Collecting the monthly management fees
3. Properly maintain, oversee and repair the development’s common property so that it can be enjoyed by all residents and unit owners
4. Safeguard the development by insuring it in accordance with the Strata Management Act 2013
5. Follow lawful orders and instruction from the local authorities
6. Create and keep a record of the names of all unit owners
7. Make sure the collected management fees and its usage are audited, as well as provide a copy of the audited financial statements to all unit owners
8. Enforce the development’s rules and by-laws
How Are The Management Fees And Maintenance Expenses Calculated?
The individual management fee is initially determined by the property developer. Generally, the overall amount is divided among unit owners depending on the value of their property or area.
In particular, the cost of painting common premises, purchase of movable properties and renewing fixtures or fittings at common areas is equivalent to 10 percent of the total collected management fees.
The property developer also needs to determine a sufficient annual maintenance budget prior to the first annual general meeting called for the creation of the JMB. During the first annual general meeting, the elected Management Committee (MC) can opt to stick with the developer’s annual maintenance budget or change it.
What If I Don’t Agree With The Amount Of Management Fees To Be Collected?
If a unit owner doesn’t approve of the amount of fees to be collected, as set by the developer or JMB, they can submit a letter to the Commissioner of Buildings (COB) and ask for a review. The COB may affirm the amount, or command the developer or JMB to engage a registered property manager to determine the amount of management fees.
How Is The Vote Of The Developer Counted?
During any general meeting, including the first one, the developer shall be counted as one person when determining the quorum, regardless of the number of unsold units.
But for determining voting rights, each unsold unit is equivalent to one vote for the developer.
Where Does The JMB Spend The Maintenance Fees?
This is solely utilised for maintaining common property in good condition on a daily basis including:
1. Payment for cleaning and security services
2. Purchasing public amenities for the project’s owners and residents
3. Payment for insurance premiums
4. Minor painting works for common areas
5. Purchase of movable properties
6. Replacing fixtures and fittings in common areas
7. Expenses necessary to comply with orders from local authorities
8. Building inspection costs
9. Replacement or repair of faulty wiring systems
10. Road and drainage upkeep
11. Maintenance and repair of water tanks
12. Upgrade and refurbishment of common property
13. Paying rent and other necessary costs
14. Payment for auditing financial statements
15. Administration cost or payment for managing agent
What Happens If I Don’t Pay The Management Fees?
Unit owners need to pay the fees within 2 weeks of getting a written notice from their Joint Management Body. Otherwise, they will face penalties. For instance, those who make late payments will face a 10 percent interest rate charge per annum.
The Commissioner of Buildings also has the power to confiscate any movable property like TV, furniture and appliances owned by unit owners in arrears. The seizure can be carried out by the developer or Joint Management Committee (JMC) member in the presence of the Commissioner during the daytime.
The developer and JMC is allowed to keep such movable items until the outstanding management fees are paid within 14 days. But if the debt is not paid within the said period of 14 days, the belongings can be auctioned off by the JMC or developer under the Commissioner’s supervision, with the proceed paying for the management fees.
Can I Go To Prison For Not Paying Management Fees?
Unit owners who default on their management fees can face a fine of not more than RM5k and/or imprisoned for up to three years. If this issue still persists after being convicted, he is liable for an additional daily fine of not more than RM50.
Other Reasons Why I Need To Pay Management Fees?
Strata properties, suffering from poor maintenance due to unit owners not paying their fees, are likely to see a drop in their market value. On the other hand, a well-maintained property can be resold for a higher price.