As an owner of strata property, one must be aware that the overall management of the building is one of the key factors in determining the value of your strata property. A building with good level of security and its facilities that is well maintained will no doubt enjoy a higher capital appreciation as compared to building which is poorly maintained. As such, it is important for strata owners to contribute to the management of their building, whether by joining the Joint Management Body (“JMB”) or the Management Corporation (“MC”) or by participating in the annual decision-making process of the management at annual general meeting (“AGM”).
The Strata Management Act 2013 (“the Act”) governs the maintenance and management of buildings and common property of multi-storey buildings and sub-divided land. The Act[i] stipulates that it is the duty of the developer to convene the first AGM (i) for JMB, within twelve (12) months from the date of delivery of vacant possession[ii]; or (ii) for MC, within one (1) month after the expiry of the initial period which is when there are proprietors who are registered as the proprietor of a parcel a sum of whose share units is at least 1/4 of the aggregate share units[iii].
Voting Rights of Proprietor at AGM
Each proprietor, who is not a co-proprietor, shall have one vote in respect of each parcel on a show of hands, and on a poll, shall have such number of votes as that corresponding with the number of share units or provisional share units attached to his parcel or provisional block[iv]. Proprietor shall not be entitled to vote if he owes the JMB or MC any charges, or contribution to the sinking fund, or any other money due and payable to the JMB or MC in respect of his parcel seven (7) days before the AGM[v]. In brief, only proprietors who have diligently paid up their dues under the Act are allowed to exercise their voting rights in AGM.
One may ask, who is the proprietor in the eyes of the Act? “Proprietor” refers to a parcel proprietor, that is to say, a person or body for the time being registered as the proprietor of a parcel unless expressly provided otherwise[vi]. Many may not be aware that being a purchaser or a beneficial owner of the strata property, it does not automatically qualify you within the definition of proprietor under the Act. A purchaser/owner must be registered with the land office/registry as the parcel owner to be entitled to vote in the AGM.
Flaws in the Definition of “Proprietor”
As mentioned above, the Act does not allow proprietors which are in default of their dues under the Act to vote in AGM. However, the Act does not seem to recognise strata owners who have been diligently paying their maintenance charges and sinking funds but have yet to register themselves as the parcel owners with the land office/registry.
On the contrary, the obligation to pay charges and contribution to the sinking fund to the management corporation for the maintenance and management of the subdivided building or land and the common property in a development area[vii] are not limited to those proprietors who have registered themselves as the parcel owners in land office/registry. The Act extended the definition of “proprietor” to include the person for the time being receiving the rent of the parcel, whether as an agent or a trustee or a receiver or a purchaser to be duly registered as a proprietor[viii].
Why Can’t the Strata Owner Vote in AGM?
The definition of “proprietor” seems to be punitive towards strata owners who have failed to perfect the transfer by depriving their rights to vote at AGM. Many strata owners may not be aware of such narrow interpretation and the lack of awareness may result in strata owners unable to voice their grievance, concerns and suggestions in respect of the building management which may directly affect the value of their property.
Is It an Offence Not to Perfect the Title?
Between the year of 2013 to 2016, the Strata Titles Act 1985 made it a criminal offence for any purchaser who fails to execute complete documents of transfer of strata title within thirty (30) days from the date of notice of transfer of strata title being served to the purchaser by the original proprietor or from the date of purchase of the parcel, whichever is the later. If found guilty and on conviction, the purchaser shall be liable to a fine of not less than RM1,000.00 but not more than RM10,000.00 per parcel[ix].
This draconian provision has subsequently been removed from the Act effective 9 September 2016 pursuant to the Strata Titles (Amendment) Act 2016.
Perfect the Strata Title and Let Your Voice Heard in AGM
Notwithstanding the change in law, it is important for strata owners to register the title in their name as soon as possible upon receiving the notice of issuance of title from the developer. This is to ensure that the rights of strata owner is protected under the laws as registration of title confers indefeasible title under the National Land Code[x].
Upon receiving notice from the developer notifying that the strata title has been issued under the land proprietor/developer’s name, strata owners are encouraged to consult and engage a lawyer of his/her choice to attend to the perfection of title in the name of the strata owner.
[i] Strata Management Act 2013 (“SMA”) [ii] Section 18(1) of SMA 2013 [iii] Section 57(1) of SMA 2013 [iv] Schedule 2, Paragraph 21(1) of SMA 2013 [v] Schedule 2, Paragraph 21(2) of SMA 2013 [vi] Section 4 of Strata Titles Act 1985 [vii] Section 52(1) of SMA 2013 [viii] Section 52(8) of SMA 2013 [ix] Section 22 Strata Titles (Amendment) Act 2013 [x] Section 340 of National Land Code