1. Home
  2. Insights
  3. Alerts
  4. November 2021

Developer’s Key Obligations under the Strata Management Act 2013

09 November 2021

The Strata Management Act 2013 (“SMA”) sets out the duties, obligations and powers of developer on strata management, and the Strata Management (Maintenance and Management) Regulations 2015 (“SMR”) sets out the relevant procedures and prescribed forms to be used. This article is intended to highlight the key obligations of developer under the SMA.
 
I.    PRE-VACANT POSSESSION
 
1.    Deposit to Rectify Common Property Defects 

  • A developer shall, within 21 days prior to the delivery of vacant possession, give a written notice to the Commissioner of Buildings (“COB”) of his intention to deliver vacant possession in Form 25 of the SMR accompanied by a certificate of the estimated construction costs (excludes land cost) from the developer's architect or engineer. 

  • The COB shall determine the amount of deposit which shall not be less than 0.5% of the estimated construction costs or RM50,000, whichever is higher. 

  • The deposit shall be paid by the developer to the COB in cash or bank guarantee upon handing over of vacant possession. 

  • The deposit may be utilised by the COB to recover expenses incurred for carrying out rectification works in relation to defects in the common property. 

  • The persons entitled to claim from the deposit in respect of defects in the common property during the defect liability period of the common property includes a proprietor, the joint management body (“JMB”), the management corporation (“MC”) and any other interested person with the permission of the COB. 

  • Upon receipt of a claim, the COB shall notify the developer. If the developer is unable to rectify the defects within the specified period, the COB may appoint a consultant to carry out the rectification works and recover the expenses from the deposit. 

  • Any unexpended deposit shall be refunded to the developer on the expiry of the defects liability of the common property, or completion of the rectification works, whichever is later. 
2.   Charges & Sinking Fund 

  • To determine and impose charges to be deposited into the maintenance account and sinking fund contribution to be deposited into the sinking fund account. 

  • To open a maintenance account and sinking fund account before the charges and sinking fund contribution are collected from the purchasers. 

  • Before MC: The developer shall open the maintenance and sinking fund accounts in their name. 

  • Upon MC: The developer shall open the maintenance and sinking fund accounts in the MC’s name. 

  • The developer shall pay charges and sinking fund contribution for all unsold parcels and parcels owned by it.   
3.   Building Insurance
 
To insure the building under a damage policy against fire, lightning, explosion, bursting or overflowing of water tanks/pipes and windstorms, with a licensed insurer for at least the reinstatement value of the building according to the last valuation of the building.

II.   UPON VACANT POSSESSION
 
1.    Developer’s Management Period
 
Before MC    :  from delivery of vacant possession until one month after JMB establishment.
 
Upon MC      :  from delivery of vacant possession until one month after the first annual general meeting (“AGM”) of the MC.

2.   Several Key Obligations 

  • To convene the JMB 1st AGM not later than 12 months from the date of delivery of vacant possession (if MC exists before the 1st JMB AGM, JMB need not be established)
    To convene the MC 1st AGM within one month after the expiration of the initial period (i.e. the period from which the MC comes into existence until the day on which there are proprietors (excluding the original proprietor or the developer), who are registered as parcel proprietors, whose share units is at least 1/4 of the aggregate share units)
  • To use the monies in the maintenance account and sinking fund account only for the purposes set out in section 10(4)(c) (e.g. maintaining the common property in good condition on a day-to-day basis, and paying the expenses incurred in providing cleaning services for the common property, security services and amenities for the occupiers of the building), and section 11(4)(c) (e.g. acquiring movable property for use in relation to the common property, or replacing any fixture or fitting in the common property) respectively of the SMA. 

  • Before the JMB / MC 1st AGM, to prepare an annual budget to maintain and manage the development for a period of 12 months starting on the 1st day of the month following the 1st AGM date. 

  • To prepare audited accounts of maintenance and sinking fund accounts, and file a certified true copy with the COB within 14 days of the accounts being audited. 

  • To allocate a separate area out of the common property for administration office to carry out developer’s duties. 

  • Before MC :  Prepare and maintain a register of all parcel owners in Form 9 SMR.
     
    Upon MC   :  Prepare and maintain a strata roll in Form 18 SMR.
3.   Handing Over to JMB / MC 

  • Handover to JMB:
-   Form 4 SMR;
-   Transfer balance in maintenance and sinking fund accounts, after payment of all expenditure properly charged; and
-   No handing over of liabilities by developer. 

  • Handover to MC: 
-   Form 13 SMR;
-   Transfer control of balance in maintenance and sinking fund accounts; and
-   No handing over of liabilities by developer.

OFFENCE BY CORPORATE BODY
 
If a body corporate commits an offence, a person who at the time of the commission of the offence was a director, member of the management committee, chief executive officer, manager, secretary or other similar officer responsible for the management of the body corporate or was assisting in such management: 

  1. may be charged with the body corporate; and 

  2. if the body corporate is found guilty, shall be deemed to be guilty of that offence unless, having regard to the nature of his functions in that capacity and to all circumstances, he proves:
  1. that the offence was committed without his knowledge, consent or connivance; and 

  2. that he had taken all reasonable precautions and exercised due diligence to prevent the commission of the offence.
Article by Jesy Ooi (Partner) of the Real Estate Practice of Skrine.
 

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

  • Proud to be a member of
  • connect with us
  •  
  •