BACKGROUND OF THE NEW DEVELOPMENT
Prior to the coming into force of the Strata Titles (Amendment) Act 2013 ("STA 2013") and the Strata Management Act 2013 ("SMA 2013"), the Strata Titles Act 1985 ("STA 1985") and the Building and Common Property (Maintenance and Management) Act 2007 ("BCPA 2007") were the laws governing strata management. STA 1985 has been amended a few times over the years since its enactment as a result of criticisms and complaints voiced against its inadequacy and obsolete application. BCPA 2007 was enacted to provide for the proper maintenance and management of buildings and the common property after delivery of vacant possession by the developer to the purchasers and before the management corporation comes into existence.
However STA 1985 and BCPA 2007 have several blind spots and consequently have led to different interpretations and ambiguity in the laws which have resulted in the occurrence of different strata management practices and malpractices.
With effect from 1 June 2015, the long awaited STA 2013 and SMA 2013 came into operation in all the states in Peninsular Malaysia and the Federal Territories (save for the state of Penang where SMA 2013 came into effect on 12 June 2015). As a result of which, BCPA 2007 has been repealed and replaced with SMA 2013. All the provisions relating to management of subdivided buildings and parcels under STA 1985 have been taken out and placed solely under the governance of SMA 2013. The implementation of SMA 2013 is supplemented by the Strata Management (Maintenance & Management) Regulations 2015 and the Strata Management (Strata Management Tribunal) Regulations 2015.
THE IMPACT OF THE STA 2013 AND THE SMA 2013
(1) Expedition of the application for subdivision of a building or land and the issuance of strata titles
Previously under section 8(2) of the STA 1985, application to subdivide a building can be made only after the building is completed i.e. within 6 months from the date of certificate of completion and compliance ("CCC") or within 6 months from the date of the sale (in the event the sale of the building or land parcels is made after the issuance of the CCC).
This section 8(2) was amended by the STA 2013 to provide for application to subdivide a building at super structure stage (i.e. the stage upon the completion of building works. Administratively, it may mean completion of building works up to completion of walls that are necessary for measurement of parcels, accessory parcels and common property) within 3 months from the date of issuance of the document that certifies the super structure stage ("Super Structure Stage Certificate"). The Super Structure Stage Certificate is required to be submitted by the original proprietor of the land in the application for the certificate of proposed strata plan.
The application for subdivision shall be made in 2 stages i.e. (i) to apply for a certificate of proposed strata plan; and (ii) to apply for subdivision within a period of 1 month from the date of issuance of the certificate of proposed strata plan pursuant to the new section 8A.
Section 8A was inserted by the STA 2013 to provide for application for the certificate of proposed strata plan with the Director of Survey by the original proprietor of the land to be made within the time frame in the events specified in the newly amended section 8(2).
Section 9A was also inserted to replace section 10A of the STA 1985 allowing for the issuance of the provisional strata title for a provisional block in respect of land parcels, and not only in respect of buildings.
The duration of the work process of issuance of the strata titles will be shortened and owners of the strata units will be able to receive their strata titles sooner.
(2) Issuance of the strata titles to the parcels upon purchasers taking vacant possession of the parcels and transfer of the strata titles thereafter
The new section 12 of the Housing Development (Control and Licensing) Regulations 1989 as introduced by the Housing Development (Control and Licensing) (Amendment) Regulations 2015 (albeit not having been implemented) provides that the Developer shall as expeditiously as possible, apply for subdivision of the building or land so as to obtain the issue of separate strata titles to the parcels under the STA 1985 before the delivery of vacant possession to the purchasers. The Housing Development (Control and Licensing) (Amendment) Regulations 2015 is consistent with the STA 2013 and its implementation will pave the way for delivery of vacant possession of housing accommodation only when the strata titles have been issued.
Pursuant to the insertion of section 19A of the STA 1985, the time frame for execution of transfer instrument by the landowner is reduced from 12 months to 30 days from the date of issuance of the strata title whereas the time frame for execution of transfer instrument by the purchaser is reduced from 12 months to 30 days from the date of notice of transfer of the strata titles is issued to him or from the date of purchase of the parcel, whichever is the later.
For new projects that are approved after the implementation of the STA 2013 and the SMA 2013, the strata titles to the parcels will be issued upon purchasers taking vacant possession of the parcels upon which there will be no need to establish the joint management body .
(3) Creation of subsidiary management corporations in a two-tier management corporation scheme
Section 17A was introduced by the STA 2013 to permit the designation of limited common property and creation of one or more subsidiary management corporations only for the purpose of representing the different interests of parcel proprietors by way of comprehensive resolution conducted under the SMA 2013.
Such 2-tier management corporation scheme, namely a main management corporation aiming to maintain and manage common property enjoyed by all parcel owners and a subsidiary management corporation aiming to maintain and manage the limited common property that is exclusively enjoyed by the limited parcels owners, is ideal for mixed development projects.
(4) Establishment of the new Strata Management Tribunal
The Strata Titles Board established under Part IXA of the STA 1985 is now deleted and replaced by the Strata Management Tribunal which will be governed by the Strata Management (Strata Management Tribunal) Regulations 2015. The new Strata Management Tribunal is established by the SMA 2013 to hear and determine disputes relating to strata-titled properties.
(5) Compulsory subscription of damage insurance policy
Section 93 of the SMA 2013 provides for a compulsory damage insurance policy to be taken out by the person who has a duty or is responsible to maintain and manage any building.
The liability of the insurer can be limited to an amount specified in the damage insurance policy which shall however be at least the reinstatement value of the building indicated by the last valuation obtained for the building. A reinstatement valuation of the building shall be obtained from a registered valuer at least once every 5 years.
(6) Presumption to be made in respect of any alleged defect in a parcel situated immediately above another parcel
Section 142 of the SMA 2013 provides for presumption to be made, in the absence of proof to the contrary, that the defect is within a parcel situated immediately above another parcel if there is any evidence of dampness, moisture or water penetration on the ceiling or the furnishing material attached to ceiling that forms part of the interior of the parcel immediately below the first-mentioned parcel.
Generally, the implementation of the STA 2013 is aimed to make the strata titles' management "customer-focused" on the needs and interests of the buyers and to improve the delivery system of land administration in the management and issuance of strata titles. With the ever-rising development industry in the country, the implementation of the STA 2013 would undoubtedly bring forward a speedier, clearer and more efficient land and strata titles administration system.
Nevertheless, it is believed that even the best of legislation enacted to resolve problems would remain ornamental pieces until and unless strict enforcement is carried out. Therefore, how far and soon can one truly enjoy the benefits of the newly improved regime of the strata laws would depend on how effective the law is implemented, as the saying goes, "The law is only as good as its enforcement".
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.