Understanding the Legal Aspects of Condos in Malaysia

In Malaysia, a condominium or “condo” is defined as a residential building where individual units are owned by separate individuals, while common property such as hallways, lifts, and facilities like swimming pools and gyms, are shared. With the rise of urban living, condos have become increasingly popular, particularly in cities like Kuala Lumpur, where space is at a premium and the demand for secure, community living is high.

The framework for managing the legal aspects of condos in Malaysia is relatively young, with substantial reforms introduced in the past two decades. Understanding these legalities has become significantly important as more people opt to live in condos, either as owner-occupiers or investors. In 2007, the Malaysian government enacted the Building and Common Property (Maintenance and Management) Act (BCP Act), which laid the groundwork for the management of buildings and common property until it was replaced by the Strata Management Act (SMA) in 2013. The SMA further refined the processes of maintaining and managing building and common property for condos and other stratified properties.

A key element of condo life is the management body, known as the Joint Management Body (JMB), which is typically established within 12 months of the building’s completion. This body includes the developer and the purchasers and is responsible for the maintenance and management of the building and common property. Upon the formation of the Management Corporation (MC), which happens when the individual titles are transferred to the owners and the requisite share units have been issued, the JMB transfers its duties to the MC. According to a compelling statistic, as of 2018, there are over 17,000 registered high-rise residential buildings in Malaysia, indicating the extensive reach and influence of such management bodies.

Each individual unit owner automatically becomes a member of the condo’s Management Corporation, which means they have a say in the management of the shared property. It’s the MC’s responsibility to manage, maintain, and administer the common property, determine and collect maintenance fees, and enforce by-laws. Apartment owners in Malaysia are legally required to pay these fees, which are used for the upkeep of the property, such as security services, maintenance of shared facilities, and insurance.

For an individual considering purchasing a condo in Malaysia, it’s imperative to be aware of the Strata Titles Act, which provides for the proper division of buildings into parcels, the issuance of title deeds for individual units, and the makeup of common property. The Act also states that the parcel owners must follow certain by-laws set by the MC. These by-laws cover various aspects, from the permitted use of the units to procedures for renovation and resolving disputes among the residents.

Overview of Condo Legal Framework

Condominiums, commonly referred to as condos, are prevalent in urban areas of Malaysia and are governed by various laws and regulations. Key among these are the Housing Development (Control and Licensing) Act 1966 (HDA), Strata Titles Act 1985, and the Strata Management Act 2013 (SMA). These acts serve as the foundation for the condo legal aspects in Malaysia, setting standards for building, selling, and managing condos.

Strata Title and Ownership

The Strata Titles Act 1985 defines the ownership arrangement for condo units. This legislation facilitates the proper subdivision of building space into individual units for which owners can hold titles. Upon purchasing a condo, the owner receives a strata title, which grants them full ownership of their unit as well as an undivided share in the common property, such as the lobby, stairs, and pool.

The Role of the Joint Management Body (JMB)

Under the Strata Management Act 2013, a Joint Management Body (JMB) is established once the condo development is partially completed. This body comprises the developer and the purchasers. The primary role of the JMB is to manage the building and common property before the establishment of the Management Corporation (MC), which happens after all the units are sold and the strata titles are issued.

Formation and Powers of the Management Corporation (MC)

The Management Corporation (MC) becomes the principal body responsible for the maintenance and management of the condominium. Owners automatically become a part of the MC once the strata titles are issued. The MC has the authority to make decisions regarding the upkeep of the building, collection of maintenance fees, and setting of by-laws that govern the conduct of residents within the condo complex.

Service Charges and Sinking Fund

Condo owners are obliged to pay service charges for the maintenance of common areas and a contribution to the sinking fund. The SMA stipulates how these fees should be calculated, used, and managed. The service charge covers the day-to-day expenses, while the sinking fund is for long-term capital expenditure such as repainting the building or major repairs.

Dispute Resolution

In case of disagreements between stakeholders, there are mechanisms in place for dispute resolution. The Strata Management Tribunal, established under the SMA, provides a platform for resolving disputes related to the management of strata schemes, including those involving condo management, without having to go through the conventional court system.

Rights and Responsibilities of Condo Residents

Condo residents have both rights and responsibilities. They are entitled to the use and enjoyment of their private property and common facilities, as long as they adhere to the rules established by the Management Corporation. Owners must also ensure that their activities do not infringe on the rights of other residents.

Impact of the Strata Management (Amendment) Act 2020

The legal landscape for condos in Malaysia was further refined with the Strata Management (Amendment) Act 2020. This amendment introduced several changes, including the enhancement of management transparency, stricter financial management protocols, and improved measures for the recovery of outstanding charges from defaulting property owners.

According to the National Property Information Centre (NAPIC), the number of residential strata properties, including condos, increased by approximately 10 percent in the fourth quarter of 2020, indicating the growing popularity and relevance of understanding condo legal aspects in Malaysia.