EDBFM4 Building & Common Property Act 2007

7/28/2019 EDBFM4 Building & Common Property Act 2007

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ON April 12,2007 the Building & Common Property (Maintenance & Management) Act 2002 (,,theAet") came into force in all Staies within Peninsular Malaysia. The main purpose of the Act is toprovide for the proper maintenance and management of buildings and the.common property,AFTER delivery of vacant possession by the developer to the purchasers and BiFORE theManagement corporation ("MC") comes into existence ("the applicable period,,).

Scope of the Act

The Act is intended to apply to any building or land intended for subdivlsion into parcels, andwhich have been developed for the purpose of accommodaiion, including accommodation forcommercial and industrial use. Do not be misled by the word "accommodation". All stratifiedproperties, including low-cost flats, apartments, condominiums, town houses, shoppingcomplexes, industrial buildings, shop offices and gated communities, fall under the BCpMM Act.

The Act defines common property, more exhaustively than the Strata Tifles Act (STA) and theSchedule H agreement under the Housing Development (Control & Licensing) Regulations 1989(Scheduie H). In the STA, common property rneans so much of the lot as is not comprised in anyparcel. 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 ail purchasers.Common property in the Act is now extended to include all structural elementsstairs, stairways, fire escapes, entrances and exits, corridors, Iobbies, exteriorparts of the building, playing fields and recreational areas, walls and fences.

of the building,of all common

Under the Act, for ihe stratified properties, besides the developers, buyers (parcel owners) andmanagement corporations (MC) three new bodies were introduced to implement proper buildingmaintenance, namelv

the joint management body (JMB),the commissioner of buildings (COB) andmanaging agent (MA).

The role and responsibilities of developers of stratified properties are limited to only one year.After that a JMB must be formed to manage and maintain the common property until the issuanceof strata titles and formation of the MC.


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f{ofe'" It would appear that the developer is not to be included in the determination of the quorumand is also not a person entitted to vote. It is not crear whether:(a) a purchaser is entitled to vote if he had previously paid maintenance charges to the BMA ('E;tctt^,but is at the time of the first meeting in arrears; or il*l.trio.,,,

/{...'...n I )(b) a purchaser who has not paid maintenance charges to the BMA is entitled to attend themeeting or be elected to the JMC, even though he is not entitled to vote.

Duties of the JMB [section 8(1) of the Act]a) To properly maintain the common property and keep it in a state of good andserviceable repair;b) To determine and impose charges that are necessary for the repair and propermaintenance of the common property;c) To insure and keep insured the building to the replacement value of the buildingagainst fire and such other risks as may be determined by the Body;d) To apply-insurance moneys received by the Body in respect of damage to thebuilding for the rebuirding and reinstatement of that buirding;e) To comply with any notices or orders given or made by thJlocal authority or anycompetent public authority requiring the abatement of any nuisance on thecommon property, or ordering repairs or other work to be done in respect of thecommon property or other improvements to the property;0 To prepare and maintain a register of all purchasers of ihe buildino:g) To ensure that the Building Maintenance fund is audiied and to pioviOe auditedfinancial statements for the information to the purchasers:h) To enforce house rules for the proper maintenance and management of thebuildings; andi) To do such other things as may be expedient or necessary for the propermaintenance and management of the building.Power of JMB shalt include [Section 8(2)]a) To collect from the purchasers maintenance and management charges inproportion to the allocated share units of their respective parcels:b) To authorize expenditure for the carrying out of tire maintenance andmanagement of the common property.

c) To recover from any purchaser any sum expended by the Body in respect of thatparcel in complying with any such notices or orders as referred to underparagraph (1Xe);d) To purchase, hire or othen,rise acquire movable or immoveable property for use bythe purehasers in connection wiih their enjoyment of the common property;e) To arrange and secure the services of any person or agent to undertake themaintenance and management of the common property of the building;0 To make house rules for the proper maintenance and management oithebuitding; andg) To do alt things reasonably necessary for the performance of its duiies under thisA^+nut.


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Anr:ual General MeetingThe AGM of the JMB shall be held once a year and not more than '15 months shall elapsebetween date of one AGM and the next AGM. The agenda is to consider the BMF and transacrsuch other businesses as mav arise.

Extraordinary General Meeting (EGM)An EGI\ll may be convened by the JMB, upon:-

' requisition in writing made by persons who are registered as purchasers of at leasr one-quarter of the total number of parcels, or' when the JMB receives a direction from the Commissioner to transact a particular

business, or

o on such other occasion as the JMB thinks fit.The Commissioner may himself, authorise any purchaser to convene an EGM if he is satisfiedthat the JMB was not properly constituted.

lrlofe: The Act made provisions for rules to regulate the first meeting of the JMB, thereare no provisions on how an AGM or EGM is fo be conducted and it is nof clear whetherfhe ru/es on quorum and voting rights for the first meeting of the JMB wiil appty to an AGMor EGM"

House rules

The JMB is required to keep a record of house rules in force and to furnish to a purchaser a copyof such rules or make the rules available for inspection to any person who has a proper interest.A eopy of the rules and amendments thereto must be lodged with the Commissioner.

Joint Management Committee (JMC)It performs the Body's duties and conduct the Body's business on its behalf, and may for thatpurpose exercise any of the Body's power.


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The committee shallconsist of;the developernot less than 5 and not more than 12 purchaserswho shall hold office for a period not exceeding 3 years or untilthe dissolution ofthe Body, (when the MC comes into existence) whichever earrierA chairman, a secretary and a treasurer shall be elected from members of theJMC.

Sinee the developer is a member of the JMC, its representative can be elected to anv of theabove three positions.

Proceedings of the JMC are regulated by the First Schedule of the Act and a member electedshall continue to be a member of the JMC until he resigns, dies, becomes a bankrupt or is noIonger a purchaser.

lrfofe"' The developer has a vote in the JMC even though the developer has no right tovote at the first meeting of the JMB.

Dissolution of JMB. deemed dissolved 3 months from the 1"' meeiing of Management Corporation (section15). JMB to hand over to the Management CorporationSection 41 (Strata Titles Act 1985)1) lt shall be the duty of the original proprietor to convene the first annual general meeting ofthe management corporation within 1 month after the expiration of the initial period.2) lf the original proprietor fails to comply with subsection (1), he shall be guilty of an offenceand shall be liable on conviciion to a fine not exceeding RM25,000.0C ind io a furtherfine not exceeding RM2000 for each day the offence continue to be committed.Seetion 2 (Strata Titles Act 198S). "initial period"in relation to a management corporation, means the period commencing on theday on which the management corporation is formed and ending on the day onwhich there are proprietors, excluding the proprietor of the lot who is registeredas a proprietor of a parcel or parcels or a provisional block or blocks the sum ofwhose share units is at least one-quarter of the aggregate share units.


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Seetion 15(2) the Act" The Body shall-(a) Not later than 1 month from the date of the first meeting of the management"""''"ili :;}=H::L:, ;T" -. ;:::;"*",",s have no, beenaudited, the unaudited accounts;. all assets and liabilities of the Body;' records related to and necessary for the maintenance of the buildinq andits common property; and- (b) if only unaudited accounts have been handed over under subparagraph (a)(ii); not later than 3 months from the date of the first meeting of the mJnagementcorporation, hand over to the management corporation the audited accounts ofthe Bodv.

' lf the Body fails to comply with this section, every member of the Body commits anoffence and shall, on conviction, be liable to a fine not exceeding RMi0 000;AND' Shall also be liable to a furiher fine not exceeding RMl000 for every day during which theoffence is continued after conviction [Section 15(3)]Section 15(4) the Act

FXCEPTION:a) Where an offence under this section has been committed by the JMB, everymember of the JMB shall be deemed to have also committed that offence unless,having regard to all the circumstances, he proves-b) that the offence was committed without his knowtedge, consent or connivance;andc) that he had taken all reasonable precautions and had exercised due diligence toprevent the commission of the offence.

Building Maintenance account" Section 16(1)Developer to open and maintain Building Mainienance Account. (BMA)

' The BMA shall be opened in the name of the development area with a bank or financialinstitution licensed under Banking and Financial lnstitutions Act 1g8g or regulated by theCentral Bank under any other written law.

. Section 17(1)A developer shall deposit into the BMA-a) all charges received by him from the purchasers in the development area for the

maintenance and management of the common property of the development area;and


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b) all charges for the maintenance and management of the common property to bepaid by the developer in respect of those parcels in the development area whichhas not been sold, being a sum equivalent to the maintenance charges payableby the purchasers to the developer had the parcels been sold.

. Section 17(2)The developer shall-a) cause proper accounts of the BMA to be kept in respect of all sums of moneyreceived from and all payments made out of the Account;b) appoint a professional auditor to audit the Account annually or in the case ofwhere money to be transferred undersubsection 19(3), 1 month before the dateof actual transfer:

Building Maintenance Fund (section 22)o Developer shall within one month from the establishment of JMB transfer all surplus

money in the BMA to a fund known as Building Maintenance Fund to be maintained bvJMBo BMF to be used for purpose solely set out in 522(3)o Purchaser to pay maintenance charges within 14 days of noticeo Unpaid charges shall be subject to inierest at such rate but not exceeding 10% perannum.

o JMB to maintain a sinking fund to be determined from time to time bv the JMB for actualor expected liabilities(a) the painting or repainting of any part of the common propefi;(b) the acquisition of any movable property for use in relation to the common property;(c) the renewal or replacement of any fixture or fitting comprised in any common propeny;OT(d) any other expenditure as the Committee deems necessary

Managing Agent (section 25)o To be appointed by the Commissioner ifilnNo JMB or. Jd'C is established {,Commissioner sbtisfied that maintenance andmanagement is not carried out by Developer orthe JMB properlyo Agent shall enier into management agreement with the Developer or JMBo Agent shall be paid remuneration / fees as agreed in the managementagreement with the concurrence of the Commissioner and the remuneration shallbe charged to the Building Maintenance Account or Building Maintenance Fund(as the case may be)


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o rndepend elffi ::f :#ii ,il: fffJ|[?:3:,H:i ". pec u niary i nte rest i nany building or land intended for subdivision into parcels.JI. Responsible for the design or consiluction of the building. He or his nominee has material interest in the building' He is a partner or in employment of a person who has material interest in thebuilding or land' He or his family holds any interest in the building or land whether directly or astrustee or othenruise.

[Agent to lodge a bank bond with the Commissioner to make good any loss caused by theagentl (section 27)J

Powers and duties of the Managing Agent - section 2g. control over the moneys in the Building Maintenance Account or Building

Maintenance Fund. Exercise the duties and powers of maintenance and management as if he wasacting as the Developer or the JMB. Deposit money into BMFund within 2 days of receipt. Submit statement to Commissioner not later than 1 monih from appointment

moneys standing in the credit of the BM account / FUndamount due & owing from Purchaserincome derived from common property to be paid to the BMA/BMFundany sums accrued for maintenance & management and payable butremains unoaid

[Appointment of the Managing Agent does not relieve the Developer of his obligationtowards the Purchaser to carry out repairs to the common property, to make good anydefects, shrinkage or faults in the common property during the deiect liability-periodl


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Miscellaneous (Section 3546)- Power of Entry by Commissioner to inspect and investigate- Service of Notice or order lsection 371- Notice may be served or deemed to have been served by servrng a copy personally , byregistered post to the last known address of business, pircel or residence of the personor attaching the notice at the a prominent part of the last known address of business,parcel or residence of the person to be served- lf aggrieved by the act or decision of the COB, appeal to the State Authority within 14days of notice of the decision or action and ihereafier the decision of State Authority shallbe final and not to be questioned in any court [Section 41]- Further Regulations to be made under this ActAct shall prevail over contracts, deeds and written law

On the coming into force of the Act in the respectivecontracts or deed existing which are contrary to thehave effect.

Contracting out prohibited (section 45)- CANNOT CONTRACT OUT OF THIS ACT AND THE

(section 44)local authority area any written law,provision of this Act shall cease to

PROVISIONS OF THIS ACT

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EDBFM4 Building & Common Property Act 2007

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Transcript of EDBFM4 Building & Common Property Act 2007