...before management corporation is formed – Part 1
ON April 12, the Building & Common Property (Maintenance & Management) Act 2007 (“the Act”) came into force in all States within Peninsular Malaysia. The main purpose of the Act is 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 (“MC”) comes into existence (“the applicable period”).
In line with the recent amendments made to the Strata Titles Act, 1985 (STA), which now allows land to be subdivided into land parcels to be held under separate strata titles, the Act will also apply to prescribed buildings on such land.
Each State Authority will appoint a Commissioner of Buildings to administer and carry out the provisions of the Act.
The Act empowers the Minister to make regulations for the better carrying out of the provisions of the Act (“the Regulations”), although at the time of writing this article, no regulations have been made or have come into force.
Scope
The Act is intended to apply to any building or land intended for subdivision into parcels, and which have been developed for the purpose of accommodation, including accommodation for commercial and industrial use. The choice of the word “accommodation” is certainly misleading, as accommodation usually denotes housing, lodging or quarters. Perhaps the Regulations can make it clear that the Act is intended to apply to any building or land intended for subdivision into parcels and developed for the purpose of housing accommodation, commercial use or industrial use.
It is pertinent to note that the Act defines common property, more exhaustively than the STA and the Schedule H agreement under the Housing Development (Control & Licensing) Regulations 1989 (Schedule H). In the STA, common property means so much of the lot as is not comprised in any parcel. Schedule H extended this definition to include lifts, refuse chutes, drains, sewers, pipes, wires, cables, ducts and all facilities and installations used in common by all purchasers.
Common property in the Act is now extended to include all structural elements of the building, stairs, stairways, fire escapes, entrances and exits, corridors, lobbies, exterior of all common parts of the building, playing fields and recreational areas, walls and fences.
Joint Management Body (JMB)
During the applicable period, the common property of any building or land intended for subdivision shall be in the hands of a JMB, which shall comprise the developer and the purchasers. Up until now, the maintenance and management of a building intended to be subdivided and the common property (“the maintenance works”) have always been the responsibility of the developer until the MC is formed.
The JMB is a body corporate, having a common seal, and therefore can sue and be sued in its name. The JMB shall be deemed to be dissolved three months from date of the first meeting of the MC.
Duties of JMB
The duties of the JMB are, among others, to:
· maintain the common property and keep it in good serviceable repair;
· fix and impose charges for the maintenance works;
· insure the building and apply insurance moneys received for rebuilding and reinstatement;
· prepare and maintain a register of all purchasers;
· ensure that the Building Maintenance Fund (BMF) is audited and provide financial statements to purchasers; and
· enforce house rules.
Powers of JMB
The JMB is empowered to:
· collect maintenance charges from purchasers;
· authorise expenditure for carrying out the maintenance works;
· recover monies due from purchasers;
· acquire property for use by purchasers in connection with the common property;
· secure the services of a person to undertake the maintenance works; and
· make house rules.
When must JMB be formed?
If the development is completed before April 12, 2007, and vacant possession has been delivered to the purchasers and the MC is not in existence, the JMB must be established not later than April 11, 2008.
However, if the development is completed on or after April 12, 2007 then the JMB shall be formed not later than 12 months from the date of delivery of vacant possession of the parcels to the purchasers.
There are no provisions in the Act to define when a development is completed. In line with the recent amendment to the Street, Drainage and Building Act, 1974, completion should mean the issue of the relevant certificate of completion and compliance.
How to form the JMB?
It is the duty of the developer to convene the first meeting of all purchasers within the time frame set out above. If the developer fails to convene this first meeting, the developer shall be liable to a fine not exceeding RM25,000, or imprisonment for a term not exceeding three months or both. Further, if the developer fails to convene this first meeting, the Commissioner may appoint a person to convene the first meeting.
Until the JMB is established, the developer is responsible for the maintenance works and this includes the responsibility to insure the building against fire and other risks.
First meeting of JMB
At its first meeting, the JMB shall elect a Joint Management Committee (JMC), and then confirm the taking over of insurances effected by developer, determine the amount to be paid by purchasers to the BMF for the maintenance works, determine the rate of interest for late payment of charges and make decisions on any other matter connected with the maintenance works.
The quorum for the first meeting shall be one quarter of the purchasers who have paid maintenance charges to a Building Maintenance Account (BMA). Only purchasers who have paid maintenance charges to the BMA are entitled to vote.
It would appear that the developer is not to be included in the determination of the quorum and is also not a person entitled to vote.
It is not clear whether:
(a) a purchaser is entitled to vote if he had previously paid maintenance charges to the BMA but is at the time of the first meeting in arrears; or
(b) a purchaser who has not paid maintenance charges to the BMA is entitled to attend the meeting or be elected to the JMC, even though he is not entitled to vote.
If within half an hour of the time fixed for the first meeting, no quorum is present, then the members entitled to vote who are present shall form the quorum. Further, if after one hour, no member entitled to vote turns up or all members present refuse to be members of the JMC, the meeting cannot take place, and the developer must inform the Commissioner within the next seven days of the ill–fated meeting.
The Commissioner may then appoint a new date for the first meeting or appoint a managing agent to maintain the common property.
All resolutions at the first meeting shall be decided by a show of hands. Joint purchasers (e.g. husband and wife) are not entitled to vote except by a jointly appointed proxy. However there are no express provisions for a purchaser who is a corporation, to appoint a proxy or a representative, to attend the first meeting and to vote.
If the first meeting is successful, then within 28 days thereafter the JMB must inform the Commissioner of the name of the JMB, and register its name with the Commissioner.
Annual General Meeting (AGM)
The AGM of the JMB shall be held once a year and not more than 15 months shall elapse between date of one AGM and the next AGM. The agenda is to consider the BMF and transact such other businesses as may arise.
Extraordinary General Meeting (EGM)
An EGM may be convened by the JMB, upon requisition in writing made by persons who are registered as purchasers of at least one–quarter of the total number of parcels, or when the JMB receives a direction from the Commissioner to transact a particular business, or on such other occasion as the JMB thinks fit.
The Commissioner may himself, authorise any purchaser to convene an EGM if he is satisfied that the JMB was not properly constituted.
It is pertinent to note that although the Act made provisions for rules to regulate the first meeting of the JMB, there are no provisions on how an AGM or EGM is to be conducted and it is not clear whether the rules on quorum and voting rights for the first meeting of the JMB will apply to an AGM or EGM. Perhaps such rules and other rules to clear up the uncertainties mentioned above will be contained in the Regulations or perhaps the Regulations will empower the JMB to regulate its meetings as they deem fit and proper.
Joint Management Committee (JMC)
The duties and powers of the JMB are to be performed and exercised by a JMC, which shall be elected by the JMB at its first meeting, and thereafter at the annual general meeting.
The JMC shall consist of the developer and not less than five and not more than 12 purchasers. A purchaser who is elected to the JMC can only hold office for a period not exceeding three years or until the dissolution of the JMB when the MC comes into existence.
A chairman, a secretary and a treasurer shall be elected from members of the JMC. Since the developer is a member of the JMC, its representative can be elected to any of the above three positions.
Proceedings of the JMC are regulated by the First Schedule of the Act and it is pertinent to note that the developer has a vote in the JMC even though the developer has no right to vote at the first meeting of the JMB. A member elected shall continue to be a member of the JMC until he resigns, dies, becomes a bankrupt or is no longer a purchaser. Once elected, a member of the JMC is expected to devote as much time as is necessary to discharge his duty effectively.
In a forthcoming continuation of this article, the writer will examine provisions in the Act relating to the Building Maintenance Account, the Building Management Fund, the payment of maintenance charges, the managing agent, and other features of the Act.
Click here for Part 2.
The writer is the Deputy Chairman of the Conveyancing
Practice Committee, Bar Council, Malaysia
www.malaysianbar.org.my
Part 2 of this article will appear next week.
Note: This column is brought to you by the Malaysian Bar Council for your information only. It does not constitute legal advice. You should therefore seek professional legal advice for your specific needs. Neither the Malaysian Bar nor the Sun Media Corporation Sdn Bhd shall be liable to any reader who suffers losses as a result of relying on this column.