Read more: STRATA TITLES: Look at draft bill again -
Letters to the Editor - New Straits Times http://www.nst.com.my/opinion/letters-to-the-editor/strata-titles-look-at-draft-bill-again-1.134960#ixzz25rJj0B7y
THE National Land Council recently announced it would go ahead
and prepare a Strata Management Bill to be tabled at the next session of
Parliament. This bill will supersede the existing Buildings and Common
Properties Act (Act 663) and come together with amendments to the Strata Title
Act.
A lot of thought and effort seems to have been put into this
bill. Kudos to those involved. Nevertheless, good intentions may produce
undesirable results and we must be aware of such pitfalls in this new bill.
But first, what is the fuss over strata titles?
Strata living or living in vertical multi-level structures like
apartments, flats and condominiums, and to a lesser degree, horizontal stratas
such as gated landed communities, is the fastest growing real estate
development in Malaysia. Since the introduction of the Strata Titles Act in
1985, an estimated 25 to 30 per cent of residential holdings are in strata
form.
However, with the rapid growth of strata development comes a
crisis in strata administration rights.
A report by the Housing and Local Government Ministry says that
500,000 dwellings have yet to obtain strata titles and this number is
increasing with new applications for strata development.
Among the proposals to be tabled is one which makes it compulsory
for real estate developers to procure a strata title upon issuance of vacant
possession.
This is to ensure that when you buy a newly-constructed
apartment, the developer has a duty to deliver an apartment with its strata
title issued or the developer risks penalties, including jail time.
The onus on making developers responsible rests on the
assumption that it's in their interest to ensure that all administrative
documentation and processes to procure a strata title be given equal priority
should the developer wish to sell the unit.
However, the assumption ignores the fact that issuance of strata
titles is the responsibility of each director of the state Land and Mines
Department. If the amendments are passed in this form, technically, it shifts
the burden of procuring strata tiles to the developer.
The logic, which seems to be missed by those drafting the bill,
is that should the developer be unable to deliver the property because of
strata title issuance, then the buyer also suffers because:
THE buyer has already entered into a sale and purchase agreement
and would have incurred cost; and,
MOST buyers need loans. Regardless of the fact that the
developers may be subject to liquidated ascertainable damages for late
delivery, the burden still falls on the buyer should the developer become
insolvent and, directly or indirectly, these amendments may promote project
abandonment.
The other implication is more speculative: the practice of
developers chasing for strata titles may promote a culture of corruption in the
civil service or create an avenue for rent-seeking services.
So, should the amendments be shelved? The answer is no, the
focus on delivering title right to buyers should remain as priority, it's just
that the methodology or approach should be tweaked.
For those familiar with the draft Strata Management Bill, it is
known that there will be provisions that developers are required to notify and
submit plans to the commissioner of buildings at their local authorities prior
to initiating any sale of strata units.
Herein lies the best way to put the onus on real estate
developers to procure a strata title before any sale of strata units is made.
Since the proposed act recognises that there be a point where a
developer should identify its intention for stratified development, the
proposed bill together with proposed amendments to the Strata Title Act, may
then create an approval in principle for "stratified titled
development", wherein the relevant authorities provide approval services
for administrative issuance of a strata title prior to the built strata plan,
which may then be submitted at a fixed minimum time, for example, six months
before vacant possession.
In effect, a developer must ensure that all administrative
issues, especially those connected to the National Land Code, are cleared,
prior to embarking on any development towards the sale of strata parcels.
