Why strata titles are important

By Chang Kim Loong

Strata title is one of the title structure of ownership and control over property. It is usually applied to subdivided buildings or complexes such as high-rise buildings, town houses, duplexes, flats, apartments, condominiums and commercial buildings.

This form of title gives individual unit holders title over the space they occupy while the land and common property are controlled by the Management Corporation (MC), which is owners’ committee.

Strata schemes are designed to give property owners more control over the space they occupy. The structure of strata titles designates the MC as the owner of the land.

In the eyes of the law, the MC is solely responsible for matters involving legal obligations in its dealings.

For the owners, the MC generally takes responsibility for maintenance of the common area, insurance and/or informal mediator between residents.

Unfortunately, for many residents and owners of strata titled properties in Malaysia, many of them have not reached the stage where MC is formed.

It is not uncommon that many buyers of this type of property are not aware of the need for strata titles too.

Why is having the titles to your property important?

House buyers are advised to “get, keep and preserve” the strata titles to their high-rise condominium/ apartment units for the following reasons:

  • As ultimate proof of their property ownership. When you say you own a car, you have the registration card to prove it and there is no need for you to get the consent of the carmaker when you need to refinance or to sell the car.
  • As a dealing instrument for instances of charging to banks for loans.
  • One need not obtain the consent of the developer, land proprietor or liquidators who may imposed administrative charges of between 1% to 3% as their ‘consent fees or verification charges’ or call it by whatever name, if and when you should decide to sell your property.
  • To form a MC by owners of the subdivided building to maintain and manage the building and to have their own by laws, usage or restrictions. In the interim period, a Joint Management Body (JMB) do have a say in the way the building is managed or maintained, the monies collected from maintenance charges, sinking funds etc.
  • As final proof of the built-up area of your unit and ultimately your apportionment of the share in the total aggregate units.
  • As long as the strata titles have not been transferred, the land and the common property are still owned by the developer. Should the developer company goes under liquidation or becomes insolvent before strata titles have been obtained, the unit owners will have to go through a lot of trouble or might eventually have to pay for the application of the strata titles themselves.

Are we moving towards the correct direction?

The Strata Titles Act, 1985 (STA) is the existing legislation governing stratified properties. The Malaysian strata titles legislation owes its origin to the Conveyancing (Strata Titles) Act (Cap. 277, 1970) which itself was modeled on the New South Wales Legislation.

STA has been in existence for nearly 35 years. Strata properties (especially residential) have become common, so the basis of the strata title arrangement have been well-tested. It has become clear that specific problems need to be addressed in many areas.

We note that the recent amendments to the Act was purportedly to streamline the existing Act as well as to serve as a deterrent to developers who have deliberately flouted the law by taking advantage of unsuspecting house buyers.

Only time will tell on the effectiveness of the amendments.

However, HBA is of the opinion that it would be best to start a new Enactment that is far-sighted to reform the entire laws governing stratified properties instead of a short-sighted and unsatisfactory “piece-meal” approach.

“Piece-meal” meaning making cosmetic changes and bits and pieces changes as and when a situation arises, in other words patch-work job.

Reforms are necessary as this concerns the people’s ownership of their own homes.

Whose responsibility is it to apply for strata titles and who is watching to see if they do?

Strata schemes are meant for owners to take charge of the maintenance and management of the common properties, and if so, due care should be given to expedite the transfer of titles to the owners for them to start learning the process.

Relevant authorities should help to give detailed guidelines on the process from: before transition from developer, during transition and the actual running of the MC.

Pursuant to Section 8 of the STA, the developers are required by law to apply for the titles within six months from the date of the issue of Certificate of Fitness by the local council or such other compulsory circumstances as facilitated in the same Section of this Act.

Under Clause 10 of the then sale and purchase agreement (Schedule H), the developers are statutorily bound to apply for strata titles ‘expediently’ at their own cost and expenses. How often has this been dealt with efficiently by the developers? 

We read of warnings from all sources of charging developers in Court for not applying for the strata titles, but in reality and honestly speaking, how many developers have been charged for breaching this provision of the STA?

One can think of the various reasons on why developers do not see the urgency in applying for strata titles:

  1. Enforcement is slacking, and threats of charges in Court has so far remain threats;
  2. Unless purchasers make a complaint, nobody would know if strata titles have not been applied or transferred to the owners; and etc

The Ministry of Energy and Natural Resources is the Ministry that administers this STA that was passed by Parliament.

A check with the Ministry reveals that unless an owner made complaints on the strata titles issues, no action will be taken. We are taken aback that there is no system to monitor the compliance of strata titles application.

The onus, it seems, is on the strata property owners to do the checking. On the same issue, no one knows exactly how many strata properties owners are still waiting for their titles.

Closing the flood gates

HBA has made several suggestions to ‘close the flood gate’ of housing developers refusing/ neglecting/ failed to apply for strata titles and it has now become law. In our next article, we will write on the safety measures and ‘casting the nets wide’ enough to circumvent the issues of non-application of strata titles.

These suggestions would give more protection to the purchasers and a sense of urgency to spur the developers to expediently transfer the titles to the unit owners will then be created.

This article is written by Datuk Chang Kim Loong, Hon. Sec-Gen of the National House Buyers Association (HBA), a non-political, not-for-profit organisation.

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