UNDERSTANDING THE RULES REGULATIONS BYLAWS OF THE STRATA

UNDERSTANDING THE RULES & REGULATIONS & BY-LAWS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] Presented by: SR MOHD FAIZAL BIN FUAD

Objectives To provide an overview of the changes brought by the new Strata Management Regulations 2015 which will have impact on Property Management Practitioners 2

Topic 2 Strata Management (Maintenance and Management) Regulations 2015 & By-laws SMR 2015 UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 3

SMR 2015 • Effectively enforced on 2 nd June 2015. • Regulations on maintenance and management of strata titled property under JMB and MC. • The contents: – 19 parts – 72 regulations – 3 schedules Developer Managing A gent JMB MC Parcel Own er Tenant PTG/Land O ffice Land survey ors valuers UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 4

Arrangement of Regulations Parts 1. Preliminary 2. Dealings in building or land intended for subdivision into parcels 3. Assignment of share units where no share units have been assigned 4. Management by developer before existence of MC and before establishment of JMB 5. Management by JMB before establishment of MC 6. Miscellaneous provisions applicable before establishment of MC 7. Management by developer before FAGM of MC 8. Management after FAGM of MC 9. Subsidiary MC and limited common property 10. Miscellaneous provisions applicable to MC and Subsidiary MC 11. Provisions for JMB, MC and subsidiary MC 12. Recovery of sums by attachment of movable property 13. Managing Agent appointed by COB 14. Deposit by developer to rectify defects on common property 15. Inter-floor leakage 16. Damage to party wall 17. Enforcement 18. Offences 19. Miscellaneous UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 5

The schedules Schedule Details of schedule First Prescribed fees Second Third The forms By-Laws Remarks Fees payable to COB (10 type of fees) There about 32 forms Regulation 5 and 28 UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 6

2 nd schedules : The forms No The Regula Forms tions Subject Remarks 1 1 6[1] Form to be filed with schedule of parcels Developer to COB 2 1 A 6[3] Form to be filed with revised schedule Developer to COB of parcels 3 2 7[1] Form to be filed with revised schedule Developer to COB of parcels 4 2 A 7[2] Form to be filed with revised amended schedule of parcels Developer to COB 5 3 9 Assignment of allocated share units Developer/JMB/MC/ Managing agent to COB 6 4 11 Handing over by developer to JMB Developer to JMB 7 5 12 Notice of FAGM of JMB Developer to all purchasers 7

2 nd schedules : The forms No The Regula Forms tions Subject Remarks 8 5 A 13 Notice of resolution confirming JMB to all purchasers charges, contribution to the Sinking Fund and rate of interest determined by JMB 9 6 14 Certificate of establishment of the JMB Issued by COB 10 7 15 Handing over by JMB to MC 11 8 16 Submission of Audited account of moneys collected by developer prior to establishment of JMB Developer to COB 12 9 18 Register of parcel owners Prepared by developer/JMB 13 10 19 Certificate of amount payable by parcel owner or prospective purchaser Prepared by developer/JMB To person applying for certificate 8

2 nd schedules : The forms No The Regula Forms tions 14 11 20 15 12 21[2] & 32[2] 16 13 22 17 14 23[1] 18 15 24 Subject Remarks Notice to demand payment of sum due by purchaser or parcel owner Prepared by developer/JMB to default purchaser/parcel owner Bond to be given by bank/financial institution/insurer to JMB/MC/Subsidiary MC if property manager is not a registered Property Manager Prepared by bank/financial institution/insurer to JMB/MC Handing over by developer to MC Developer to MC Notice of FAGM of MC MC to all proprietors (parcel owners) Notice of resolution confirming charges, contribution to the Sinking Fund and rate of interest determined by MC MC to all parcel owners 9

2 nd schedules : The forms No The Regula Forms tions Subject Remarks 19 17 27 Notice of resolution confirming charges, contribution to the Sinking Fund and rate of interest determined by Subsidiary MC to all parcel owners 20 18 29 Strata roll Prepared by MC 21 19 30[1] Certificate of amount payable by parcel owner or prospective proprietor Prepared by MC to person applying for certificate 22 20 31 Notice to demand payment of sum due by purchaser or parcel owner Prepared by MC to default parcel owner 23 21 35[1] Sworn application for warrant attachment Developer/JMB/MC/Ma naging agent/Subsidiary MC before Commissioner for Oath. Submit to COB 10

2 nd schedules : The forms No The Forms Regul ations Subject Remarks 24 22 40[2] Record and statement of sale Prepared by auctioneer to defaulting parcel owner/proprietor 25 23 43[4] Management agreement with Managing agent appointed by COB Agreement between developer/JMB/MC/Subsid iary MC with managing agent 26 24 44 Bond to be given by bank/financial institution/insurer (bond by Managing Agent appointed by COB) Prepared by bank/financial institution/insurer to COB 27 25 46[1] Notice by developer of intention to deliver vacant possession Developer to COB 28 26 47 Notice of amount of deposit to rectify defects in common property COB to developer 29 27 50[4] Notice of claim against common property defect account Parcel owner/ proprietor/JMB/MC/ 11 Subsidiary MC to developer

2 nd schedules : The forms No The Regula Forms tions Subject Remarks 30 28 59 Certificate of inspection of Interdeveloper/JMB/MC/Sub floor leakage/damage to a party wall sidiary MC with managing agent 31 29 68 Order requiring attendance of any person COB to any person required by COB 32 30 69 Order to provide translation COB to any person required by COB to furnish translation of documents UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 12

Third Schedule By-Laws UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 13

Schedule of parcels • Before developer sale the unit, the developer shall prepare a schedule of parcel (SP). • SP can be revised if building plans was amended by Local Authority. • SP plan also applies to phased development (provisional block). UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 14

Assignment of share unit where no share units have been assigned • For any building sold by developer before SMA and no share unit has been assigned, COB will require any person that manage the building to assign share unit to every each parcel (R: 6 -7). UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 15

Management by developer before JMB and MC • Handing over from developer to JMB shall be done properly. • Follow the regulations stated in form 4 (R: 11). • The checklist: – – – – Balance in maintenance account Balance in sinking fund The keys Audited account Details of asset Maintenance records All invoices, receipt, bank statement and etc. Copy of approved plan Copy of contract documents Copy of schedule of parcels Details of contractors, services contractors and etc. Manuals, warranties, schematic drawings Insurance policies UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 16

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Management by JMB before establishment of MC • Developer is obliged to convene FAGM of JMB (R: 12). 19

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Certificate of JMB (R: 14) 21

Notice of resolution confirming charges, contribution to the Sinking Fund and rate of interest determined by JMB • Each time after AGM, a decision on charges/sinking fund/interest has been made, within 28 days after the AGM, JMB has to issue a notice to confirm the decision to all proprietor/parcel owners. 22

Handing over JMB to MC • Handing over JMB to MC (R: 15). 23

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Miscellaneous provisions applicable before establishment of MC • For cases building completed before SMA and MC has not been established, the JMB has to submit audited account not later than 6 months from date JMB is established (R: 16). • By-Laws is only bind between purchaser and developer only during developer’s management period (R: 17). • The JMB and all parcel owners constituting JMB are set out in the 3 rd Schedule (R: 17). UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 25

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Certificate of amount payable by parcel owner or prospective purchaser 28

Notice to demand payment of sum due by purchaser or parcel owner 29

Services of any person or agent to maintain and manage common property • Appointment of managing agent shall be with an agreement (R: 21). • Any person can be managing agent provided he lodged with JMB/MC a bond to be given by a bank/finance company or insurer. • Amount of the bond is a sum equivalent to the remuneration or management fees for a period of 12 months or a sum of R 50, 000 whichever is higher. • The bond is not applicable if the managing agent is a registered property manager. • Fails to comply: – No management agreement – Fail to lodge bond – Insufficient bond amount – Fail to filed to COB copy of agreement and the bond. Liable to a fine not exceeding RM 50, 000 or imprisonment for a term not exceeding 3 years or to both. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 30

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Management by developer before FAGM of MC • Handing over from developer to MC shall be done properly. • Follow the regulations stated in form 13 (R: 22). • The checklist: – – – – Balance in maintenance account Balance in sinking fund The keys Audited account Details of asset Maintenance records All invoices, receipt, bank statement and etc. Copy of approved plan Copy of contract documents Copy of schedule of parcels Details of contractors, services contractors and etc. Manuals, warranties, schematic drawings Insurance policies UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 32

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Management after FAGM of MC • If property upon HOVP, strata title is issued; • Developer is obliged to convene FAGM of MC (R: 23). 35

Notice of resolution confirming charges, contribution to the Sinking Fund and rate of interest determined by MC • Each time after AGM, a decision on charges/sinking fund/interest has been made, within 28 days after the AGM, MC has to issue a notice to confirm the decision to all proprietor/parcel owners. 36

Subsidiary MC (SMC) and limited common property • FAGM of SMC shall be convened within 1 month after the SMC established. • If fail to convene the FAGM, person/body is liable a fine not exceeding RM 50, 000 or imprisonment for a term not exceeding 3 years or to both. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 37

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By-Laws • By-Laws effect to every building/parcel and common property and to bind the MC/SMC and to bind also all the proprietors constituting the MC/SMC are set out in the 3 rd Schedule. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 39

Strata Roll • Strata roll is a register name of all parcel owner which constituting the MC. 40

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Certificate of amount payable by proprietor or prospective purchaser 42

Notice to demand payment of sum due by proprietor 43

Provisions for JMB, MC and SMC • For certain reason the immediate family of parcel owner shall be eligible for election of member of management committee provided he is at least 21 years old. • FAGM shall be hell 1 month after the expiry of the initial period. • Subsequent AGM shall be held one in each year, provided not more than 15 months shall lapse between the date of AGM and the next. • Fail to hold any AGM, commits an offence and liable to a fine not exceeding RM 50, 000 or imprisonment for a term not exceeding 3 years or to both. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 44

Recovery of sums by attachment of movable property The steps (R: 35 -42): • Any authorized person submit a sworn application to COB together with a fee. • Person who execute the warrant attachment will prepare an inventory of movable property. • Auctioneer will be appointed. • Notification of auction will be served by the appointed auctioneer. • Auctioneer will record all sums of money received at the auction. • If there is a surplus, a defaulting parcel owner is required to collect the surplus. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 45

Managing agent appointed by COB • Any appointment made by COB, shall specify the following – Period of appointment. – The fees agree upon the developer/JMB/MC/SMC. – Details of bond. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 46

Deposit by developer to rectify defects on common property • 25 days before HOVP, issue a notice to COB of his intention to deliver VP. • Developer has to submit estimated cost of construction. • COB upon received the notice will determine the amount of deposit. • The deposit shall not less than 0. 5% of estimated cost or RM 50, 000 whichever is higher. • Developer shall pay the deposit to COB in cash/bank guarantee upon HOVP. • The deposit will be placed into Common Property Defects Account (CPDA) for each of development. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 47

• Who can claim from CPDA: – Purchaser – JMB – MC – SMC – Managing agent • COB upon received complaint, will give a notice to developer requiring to rectify the defects. • If notice given to developer not complied, COB may appoint registered architect and etc to evaluate the rectification cost. • Any expenses incurred will be recovered from CPDA. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 48

Inter-floor leakage • Refers to any evidence of dampness, moisture or water penetration. • The steps: – Serve notice by JMB/MC to affected owner – Inspection of affected area. – Determine the cause. – Determine the party responsible. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 49

Damage to a party wall • Refers to wall that is located between separate parcels. • Refers to any dampness, moisture on the wall. • Provisions relating to interfloor leakage applies. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 50

OFFENCES Offence Penalty Regulations Non compliance of schedule of parcels requirements Fine not exceeding RM 50, 000 or imprisonment not exceeding 3 years or both 6[5] Non compliance to request for certificate of amount schedule of parcels requirements Fine not exceeding RM 50, 000 or imprisonment not exceeding 3 years or both 19[5] Non compliance to regulation on appointment of managing agent Fine not exceeding RM 50, 000 or imprisonment not exceeding 3 years or both 21[5] Fail to convene FAGM of Subsidiary MC Fine not exceeding RM 50, 000 or imprisonment not exceeding 3 years or both 25[3] Fail to hold any AGM Fine not exceeding RM 50, 000 or imprisonment for a term not exceeding 3 years or to both. 34[2] UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 51

Conclusions • Set a best practice of property maintenance and management. • All parties are protected by the law. • Any non compliance shall be penalised by the COB. • Concern on unresolved dispute ie. Inter-floor leakage and damage to a party wall. UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 52

Thank you UNDERSTANDING THE RULES & REGULATIONS OF THE STRATA MANAGEMENT ACT 2013 [ACT 757] 53