Building maintenance and management law


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Building maintenance and management law

  1. 1.  Came into force on 12 April 2007. It is an Act to provide for the proper maintenance and management ofbuildings and common property, and for matters incidental thereto.BUILDING AND COMMONPROPERTY (MAINTENANCE ANDMANAGEMENT) ACT 2007
  2. 2.  The maintenance and management of buildinghousing two or more storeys and commonproperty was governed by the HousingDevelopment (Control and License) Act 1966(Act 118) and Strata Titles 1985 (Act 318). developer is responsible for maintenance andmanagement of common property beforeformation of Management CorporationPOSITION BEFORE ACT
  3. 3. POSITION AFTER ACT Section 4 of Building and CommonProperty (Management & Maintenance)Act 2007 (BCP Act)- A Joint Management Body (JMB)comprises of the developer and thepurchasers are responsible to provide forthe proper maintenance and managementof buildings and common property, andfor related matters
  4. 4. For development completed before 12thApril 2007,JMB must be formed before 12thApril 2008 [Section4(1)(a)]• For development completed on or after 12thApril2007, JMB must be formed not later than 12 monthsfrom the date of delivery of vacant possession[Section 4(1)(b)]FORMING OF JMB
  5. 5.  Section 6(1): The agenda for the first meeting of theBody shall include the followings:a) the election of the office bearers of the Committee;b) to confirm the taking over by the Body of insuranceseffected by the developer;c) to determine the amount to be paid by the purchasersto the Building Maintenance Fund for themaintenance and management of the commonproperty of the building;
  6. 6. Section 6(1):-d) the determination of the rate of interest payable bya purchaser in respect of late payment of charges;ande) any matter connected with the maintenance andmanagement of the common property of thebuilding.JMB
  7. 7.  quorum at first meeting of JMB shall be one-quarter of purchasers who has paid maintenancecharges in respect of their parcels to BuildingMaintenance Account (“members entitled tovote”) of developer [Section 6(2)] If within half hour after the time appointed formeeting, a quorum is not present, the memberentitled to vote who are present shall constitutea quorum [Section 6(3)] Joint purchasers shall not be entitled to voteexcept by way of a jointly appointed proxy[Section 6(5)] In the event of an equality of votes, chairmanshall have a casting vote [Section 6(6)]JMB
  8. 8. JMB Section 8(1) of Building and Common Property(Management & Maintenance) Act 2007. Duties of JMB:a) To properly maintain common property and keep it ina state of good and serviceable repair;b) To determine and impose charges that are necessaryfor the repair and proper maintenance of commonproperty;c) To insure and keep insured the building to thereplacement value of the building against fire andsuch other risks as may be determined by the Body;
  9. 9. • Section 8(1)d) To apply insurance moneys received by the Body in respectof damage to the building for the rebuilding andreinstatement of that building;• e) To comply with any notices or orders given or made bythe local authority or any competent public authorityrequiring the abatement of any nuisance on the commonproperty, or ordering repairs or other work to be done inrespect of the common property or other improvements tothe property;JMB
  10. 10. f) To prepare and maintain a register of all purchasers ofthe building;g) To ensure that the Building Maintenance fund isaudited and to provide audited financial statementsfor the information to the purchasers;h) To enforce house rules for the proper maintenanceand management of the buildings; andi) To do such other things as may be expedient ornecessary for the proper maintenance andmanagement of the building.JMB
  11. 11.  Section 8(2) of the Building and Common Property(Management & Maintenance) Act 2007. The power of the Body shall includea) To collect from the purchasers maintenance andmanagement charges in proportion to the allocatedshare units of their respective parcels;b) To authorize expenditure for the carrying out of themaintenance and management of the commonproperty.JMB
  12. 12. • Section 8(2)c) To recover from any purchaser any sum expended bythe Body in respect of that parcel in complying withany such notices or orders as referred to underparagraph (1)(e);d) To purchase, hire or otherwise acquire movable orimmoveable property for use by the purchasers inconnection with their enjoyment of the commonproperty;e) To arrange and secure the services of any person oragent to undertake the maintenance and managementof the common property of the building;JMB
  13. 13. • Section 8(2)f) To make house rules for the proper maintenanceand management of the building; andg) To do all things reasonably necessary for theperformance of its duties under this Act.JMB
  14. 14.  The Body shall be dissolved 3 months fromthe date of the first meeting of themanagement corporation for the building[Section 15(1)]DISSOLUTION OF JMB
  15. 15.  Section 41 (Strata Titles Act 1985) Duty of original proprietor to convene first annualgeneral meeting.1) It shall be the duty of the original proprietor to convenethe first annual general meeting of the managementcorporation within 1 month after the expiration of theinitial period.2) If the original proprietor fails to comply with subsection(1), he shall be guilty of an offence and shall be liable onconviction to a fine not exceeding RM25,000.00 and to afurther fine not exceeding RM2000 for each day theoffence continue to be committed.DISSOLUTION OF JMB
  16. 16.  Section 2 (Strata Titles Act 1985) “initial period”- the period commencing on the day on whichthe management corporation comes into existence and endingon the day on which there are proprietors, excluding theoriginal proprietor of the lot of land or the developer who isregistered as the proprietor of a parcel or parcels or aprovisional block or blocks, the sum of whose share units is atleast one-quarter of the aggregate share units. the period commencingon the day on which the management corporation comes into existence and endingon the day on which there are proprietors, excluding the original proprietor of thelot of land or the developer who is registered as the proprietor of a parcel orparcels or a provisional block or blocks, the sum of whose share units is at leastone-quarter of the aggregate share units.DISSOLUTION OF JMB
  17. 17.  Section 15(2) The Body shall-a) Not later than 1 month from the date of the firstmeeting of the management corporation, handover to management corporation-i. the house rules;ii. the audited accounts of the BMF or, if such accountshave not been audited, the unaudited accounts;iii. all assets and liabilities of the Body;iv. records related to and necessary for the maintenanceof the building and its common property; and
  18. 18.  Section 15(2)b) if only unaudited accounts have been handed overunder subparagraph (a) (ii); not later than 3 monthsfrom the date of the first meeting of the managementcorporation, hand over to the managementcorporation the audited accounts of the Body.DISSOLUTION OF JMB
  19. 19.  If the Body fails to comply with this section, everymember of the Body commits an offence and onconviction, be liable to a fine not exceeding RM10000; AND Liable to a further fine not exceeding RM1000 forevery day during which offence is continued afterconviction [Section 15(3)]OFFENCE
  20. 20.  Section 15(4) - EXCEPTION: Where an offence under this section has beencommitted by the Body, every member of theBody shall be deemed to have also committedthat offence unless, having regard to all thecircumstances, he proves-a) that the offence was committed without hisknowledge, consent or connivance; andb) that he had taken all reasonable precautions andhad exercised due diligence to prevent thecommission of the offence.
  21. 21.  Section 11(1)Joint Management Committee may perform theBody’s duties and conduct the Body’s business onits behalf, and may for that purpose exercise anyof the Body’s power.
  22. 22.  Section 11(2): Committee shall consist of: the developer not less than 5 and not more than 12 purchasers whoshall be elected at the annual general meeting of theBody and shall hold office for a period notexceeding 3 years or until the dissolution of theBody in accordance with Section 15, whicheverearlier. Section 11(3) - From among the members of theCommittee elected under subsection (2), there shall beelected a chairman, a secretary and a treasurer. Section 11(4) - provision of the Schedule shall apply tothe Committee.
  23. 23.  FIRST SCHEDULE - [subsection 11(4)] Times and places of meetings.- The Committee is to hold as many meetings as arenecessary for the efficient performance of itsfunctions.- The meetings are to be held at such places andtimes as the chairman may decide.- BUT, the chairman shall not allow more than 2months to lapse between meetings.- The chairman shall call for a meeting if requestedto do so in writing by the Commissioner/ by atleast 2 members of the Committee.
  24. 24.  FIRST SCHEDULE - [subsection 11(4)] Quorum - - The chairman and at least half of themembers of the Committee shall form a quorum at anymeeting of the Committee. Continuation of office.- A person shall continue to be a member of theCommittee until that person:a) resigns;b) dies;c) becomes a bankrupt;d) is no longer a purchaser
  25. 25.  FIRST SCHEDULE - [subsection 11(4)] Casting vote - If on any question to be determined bythe Committee there is an equality of votes, thechairman shall have a vote in addition to hisdeliberative vote.
  26. 26.  FIRST SCHEDULE- [subsection 11(4)] Committee may invite others to meetings.- The Committee may invite any person toattend any meeting or deliberation of theCommittee for the purpose of advising orassisting the Committee on any matter underdiscussion, BUT any person so attendingshall have no right to vote at the meeting ordeliberation.- Person invited shall be paid allowances.
  27. 27.  FIRST SCHEDULE - [subsection 11(4)] Resolution of Committee.- A resolution is taken to have been passedat a meeting of the Committee if:a) all members of the Committee have beeninformed of the proposed resolution inwriting, or reasonable efforts have beenmade to inform all members of theCommittee of the proposed resolution; and
  28. 28.  FIRST SCHEDULE [subsection 11(4)] b) the resolution in writing is signed by everymember of the Committee indication agreementwith the resolution, and in the absence of suchagreement by every member of the Committee, ameeting has to be held.
  29. 29.  FIRST SCHEDULE- [subsection 11(4)] Minutes.- The secretary of the Committee shall causeminutes of all their meetings to be maintainedand kept in a proper form.- Minutes of meetings of the Committee, ifduly signed, shall be admissible in any legalproceedings as a prima facie evidence of thefacts stated in them without proof.JMC
  30. 30.  FIRST SCHEDULE - [subsection 11(4)] Minutes.- Every meeting of the Committee in respect ofthe proceedings of which minutes have been somade shall be deemed to have been dulyconvened and held and all members at themeeting to have been duly qualified to act.- A Committee shall cause copies of the minutesof all its meetings to be submitted to theCommissioner as soon as practicable.JMC
  31. 31.  FIRST SCHEDULE [subsection 11(4)] Procedure - The Committee may regulate its ownprocedure.
  32. 32.  FIRST SCHEDULE[subsection 11(4)] Disclosure of interest.- A member of the Committee having any interest in anymatter under discussion by the Committee shall discloseto the Committee the facts of his interest and its nature.- A disclosure shall be recorded in the minutes of theCommittee and, after the disclosure, the member havingan interest in the matter shall not take part nor present inany deliberation or decision of the Committee.
  33. 33.  FIRST SCHEDULE- [subsection 11(4)] Validity of acts and proceedings.- No act done or proceeding taken under this Actshall be questioned on the ground of:a. any vacancy in the membership of, or any defectin the constitution of, the Committee;b. contravention by any member of the Committee;orc. any omission, defect or irregularity not affectingthe merits of the case.JMC
  34. 34.  FIRST SCHEDULE - [subsection 11(4)] Members to devote time to business of Committee.- The members of the Committee shall devote suchtime to the business of the Committee as is necessaryto discharge their duties effectively.JMC
  35. 35.  Section 13 - On application by or on behalfof a person who is a purchaser, or by or onbehalf of a person who is a prospectivepurchaser, the Body shall issue to thatperson a certificate certifying-a) the amount of charges payable by a purchaser;b) the time and manner of payment of the amountof charges;c) the extent, if any, to which the charges havebeen paid;RIGHT OF PURCHASER
  36. 36. d) the amount, if any, then recoverable by the Body inrespect of the parcel;e) the sum standing to the credit of the BMF and the sumin the account that has been committed or reserved forexpenses already incurred by the Body;f) the nature of the repairs and estimated expenditure, ifany, where the Body has incurred any expenditure oris about to perform any repairs, work or act in respectof which a liability is likely to be incurred by thepurchaser of the parcel under any provision of thisAct; andg) the amount paid and to be paid by the developer forunsold parcel.PURCHASERS’ RIGHTS
  37. 37.  Section 16(1) - Developer to open and maintainBuilding Maintenance Account. The Building Maintenance Account shall beopened in the name of the development area witha bank or financial institution licensed underBanking and Financial Institutions Act 1989 orregulated by the Central Bank under any otherwritten law.BUILDING MAINTENANCEACCOUNT
  38. 38.  One Building Maintenance Account shall beopened for each development area [Section 16(2)] The Account shall be maintained by developeruntil the establishment of the Body for the building[Section 16(3)] developer shall not open and maintain a BuildingMaintenance Account together with any otherbuilding outside the development area.[S.16(4)] The Commissioner may resolve the dispute arisein respect of the Account as he deem fit and just[Section 16(5)] developer shall not open and maintain a BuildingMaintenance Account together with any otherbuilding outside the development area.[S.16(4)]
  39. 39.  Section 17 - Duties of developer as to BuildingMaintenance Account. Section 17(1) - A developer shall deposit into theBuilding Maintenance Account-a) all charges received by him from the purchasers in thedevelopment area for the maintenance andmanagement of the common property of thedevelopment area; andb) all charges for the maintenance and management of thecommon property to be paid by the developer inrespect of those parcels in the development area whichhas not been sold, being a sum equivalent to themaintenance charges payable by the purchasers to thedeveloper had the parcels been sold.BUILDING MAINTENANCE ACCOUNT
  40. 40.  Section 17(2) - The developershall-a) cause proper accounts of theBuilding Maintenance Account to bekept in respect of all sums of moneyreceived from and all paymentsmade out of the Account;b) appoint a professional auditor toaudit the Account annually or in thecase of where money to betransferred under subsection 19(3), 1month before the date of actualtransfer;
  41. 41. • Section 17(2)c) file with the Commissioner a copy of the statement ofaccounts certified by the auditors and a copy of theauditor’s report within 14 days of the accounts beingaudited; andd) permit the Commissioner or any person authorizedby the Commissioner in writing to act on its behalffull and free access to the accounting and otherrecords of the Building Maintenance Account and tomake copies or extracts of those accounting or otherrecords.
  42. 42.  Section 17(7) - A developer whofails to comply with this sectioncommits an offence and shall, onconviction, be liable to be fine ofnot less than RM10 000 but notmore than RM100 000; AND Shall also be liable to a fine notexceeding RM1000 for every dayduring which the offence iscontinued after conviction.
  43. 43.  Section 19 – The Building maintenance fund mustnot form part of the property of the developer. Section 19(1) - ll money in Building MaintenanceAccount shall not be deemed to for part of theproperty of the developer in the event-a) the developer enters into any composition orarrangement with his creditors or has a receiving orderor an adjudication order made against him; orb) The developer, being a company, goes into voluntaryor compulsory liquidation.
  44. 44.  S 16(1) - Development that is completed after April 12,2007 the developer must open a BMA in the name of thedevelopment area, before delivery of vacant possession tothe purchasers. each development area shall have a separate BMA. Thedeveloper shall deposit into the BMA, all charges receivedfrom purchasers, and all charges for unsold units.BMA to be opened
  45. 45.  Development completed before April 12, 2007; the developer has immediately before that day beencollecting charges for maintenance from purchasers,the developer may continue to do so until the JMB isformed. It would appear that a BMA has to be openedforthwith.Opening of BMA
  46. 46. BUILDING MAINTENANCE FUND Section 22(1) - Any surplus moneys in the BuildingMaintenance Account after payment of allexpenditure which have been properly charged tothe Building Maintenance Account shall betransferred to the Body by the developer. Section 22(1) - It must be transferred not later than1 month from the date of the establishment of theBody, and such moneys shall constitute a fund tobe known as the “Building Maintenance Fund”which shall be maintained by the Body.
  47. 47.  Section 22(2) - The Building Maintenance Fundshall be administered and controlled by theBody and shall consist of-a) all or any part of the maintenance charges for thebuilding imposed by or payable to the Body underthis Act;b) All moneys derived from the sale, disposal, lease orhire of, or any other dealing with, any property,mortgages, charges or debentures vested in oracquired by the Body;c)all other moneys and property which may in anymanner become payable to or vested in the Body inrespect of any matter incidental to its functions andpowers; andd) all other moneys lawfully receiver by the Body,including interest, donation and trust.
  48. 48.  Section 22(3) - The Building Maintenance Fund shall beused solely for the purposes of-a) ensuring the common property of the building is in a stateof good repair and maintaining the common property;b) paying for the expenses incurred in providing cleaningservices for the common property, security services andamenities for the occupiers of the building;c) paying any premiums for the insurance of the buildingagainst damage by fire and other risks;
  49. 49.  Section 22(3)d) carrying out periodical inspection on thesafety of the building in the manner asspecified in and under the Street, Drainageand Building Act 1974;e) cleaning premises including white-washing, colour washing or painting of thecommon property;f) carrying out inspection of all electricalwiring systems of the common property andreplacing any faulty wiring systems, if any;
  50. 50.  Section 22(3)g) carrying out inspection, maintenance and repair of themain water tank;h) paying rent and rates, if any;i) paying any fee incurred for the auditing of the BuildingMaintenance Fund;j) paying all charges reasonably incurred for theadministration of the Building Maintenance Fund as maybe determined by the Commissioner;
  51. 51.  Section 22(3)k) paying the remuneration or fees of themanaging agent appointed under section 25;l) paying any expenditure lawfully incurred by theBody;m) paying for the allowances and other expensesof the members of the Body and member of theCommittee according to such rates as may beapproved by the Commissioner;
  52. 52.  Section 22(3)n) paying any expenses, costs or expenditure inrelation to the procurement of goods orservices;o) purchasing or hiring equipment, machineryand any other material, acquiring land and anyassets, and erecting buildings, and carrying outany other works and undertaking in theperformance of the Body’s functions and theexercise of its powers under this Act;
  53. 53.  Section 22(3)p) paying any expenses for carrying into effect theprovisions of this Act; andq) doing generally all things necessary for themaintenance and management of the commonproperty.
  54. 54.  The BMA is an account operated for the maintenanceof a building by the developer before the JMB isformed. When JMB is formed, surplus moneys in the BMAmust be transferred to the BMF which shall bemaintained, administered and controlled by the JMB.Difference btw BMA & BMF
  55. 55.  The purchaser shall pay the charges for the maintenanceand management of the common property [Section 23(1)] The apportionment of the charges to be paid by thepurchaser shall be determined by the Body in proportionto the allocated share units [Section 23(2)] Any written notice served on the purchaser requesting forthe payment of the charges shall be supported by astatement of the charges issued by the developer or Body[Section 23(3)]MAINTENANCE CHARGES
  56. 56.  The purchaser shall, within 14 days of receiving anotice , pay the charges requested for [Section 23(4)] If the charges remain unpaid by the purchaser at theexpiration of the period of 14 days, the purchasershall pay interest at the rate to be determined by theBody but such interest shall not exceed 10% perannum [Section 23(5)]
  57. 57.  Schedule H of the Housing Development (Control andLicensing) Regulations. Regulation 19(1) - The Purchaser shall be liable for andshall pay the service charges for the maintenance andmanagement of the common property and for the servicesprovided by the Vendor prior to the establishment of amanagement corporation under the Strata Titles Act 1985.
  58. 58.  Regulation 19(2) From the date the Purchaser takes vacant possession ofthe said Parcel, the Purchaser shall pay a fair andjustifiable proportion of the costs and expenses for themaintenance and management of the common propertyand for the services provided. Such amount payableshall be determined according to the provisional shareunits assigned to the said Parcel by the Vendor’slicensed land surveyors The amount determined shall be the amount sufficientfor the actual maintenance and management of thecommon property. The Purchaser shall pay one (1)month’s deposit and three (3) months’ advance inrespect of the service charges and any paymentthereafter shall be payable monthly in advance.
  59. 59.  Regulation 19(3) - Every written notice to the Purchaserrequesting for the payment of service charges from theVendor shall be supported by a service charge statementissued by the Vendor Regulation 19(4) - The service charge payable shall bepaid within seven (7) days of the receipt by the Purchaserof the Vendor’s written notice requesting the same. If theservice charge shall remain unpaid by the Purchaser at theexpiration of the said period of seven (7) days, interest onthe service charge shall commence immediately thereafterand be payable by the Purchaser, such interest to becalculated from day to day at the rate of ten per centum(10%) per annum.
  60. 60.  Under the new Act, owners must pay their charges within14 days of the first notice and if they fail to do so even afterthe second notice, they can be taken to court. Both the owner and tenant must also make sure they areregistered with their respective management bodies. A warrant of attachment will only be served as a lastresort. These amendments are made to ensure that the entirehousing industry functions effectively without any hiccupson the part of the developer or dwellers.Failure to pay Maintenance Charges
  61. 61.  Section 2 - “sinking fund” means aspecial fund opened and maintainedunder section 24.SINKING FUND
  62. 62.  Section 24 - Joint management Body to open andmaintain sinking fund. The Body shall open and maintain a sinking fund intowhich shall be paid such portion of the contribution tothe BMF as may, from time to time, be determined bythe Body for the purposes of meeting its actual orexpected liabilities in respect of the following:a) the painting or repainting of any part of the commonproperty;b) the acquisition of any movable property for use in relationto the common property;c) the renewal or replacement of any fixture or fittingcomprised in any common property; ord) any other expenditure as the Committee deems necessary.
  63. 63.  Schedule H of the Housing Development (Controland Licensing) Regulations. Regulation 20(1) The Vendor shall, upon the date the Purchaser takesvacant possession of the said Parcel, open and maintainseparate sinking fund for the purposes of meeting theactual or expected liabilities in respect of the followingmatters-a) The painting and repainting of any part of the commonproperty;b) the acquisition of any movable property for use inrelation with the common property; orc) the renewal or replacement of any fixture or fittingcomprised in the common property.SINKING FUND
  64. 64.  Schedule H of the Housing Development (Controland Licensing) Regulations. Regulation 20(2) The Purchaser shall, upon the date he takes vacantpossession of the said Parcel contribute to the sinkingfund an amount equivalent to ten per centum (10%) ofthe service charges. The contribution shall be payable monthly in advance. All funds accumulated in the sinking fund shall be heldby the Vendor in trust for the Purchaser.SINKING FUND
  65. 65.  Section 44 - On the coming into operation of thisAct, in a local authority area or part of a localauthority area or in any other area, the provisionsof any written law, contracts and deeds relatingto the maintenance and management of buildingsand common property in as far as they arecontrary to the provisions of this Act shall ceaseto have effect within the local authority area orthat other area.Non- application of otherwritten laws, contracts & deeds
  66. 66.  BCP Act objective is aimed at plugging loopholesand grey areas not covered by Strata Titles Act1985 and the Housing Development (Control andLicensing) Act 1966. BCP Act, the roles of developers and purchasersare more clearly defined and three new bodies areintroduced to implement proper buildingmaintenance and management, namely Commissioner of Buildings (COB) Joint Management Body (JMB) Joint Management Committee (JMC) CONCLUSION