Flat Rate for All in Mixed-Use Property

Posted on: 2019-10-15

PETALING JAYA: Residents at high-rise buildings without strata titles, where there are also offices and retail lots, will now pay service or maintenance charges according to a fixed formula following a landmark court decision.

The Court of Appeal held that the Joint Management Body (JMB) committees of high-rise buildings are not allowed to charge different rates on owners in any mixed development projects.

It overturned a High Court decision that JMB had power under the Strata Management Act to determine or fix different rates of service or maintenance charges for different parcels in a mixed development.

Commenting on the Oct 4 ruling by the Court of Appeal, Strata Property Owners Association Selangor (SPOAS) legal advisor Datuk Joy Appukuttan explained that the ruling would affect properties without strata titles and managed through the JMB.

“Mixed development projects usually comprised residential and office units, retail lots and carparks.

“There had been a grave disparity in the maintenance or service charges imposed by the JMB on property owners.

“With this decision, each property owner will pay a single maintenance or service charge rate in proportion with their share of the unit in the property.

“The JMB can only determine and fix one consistent rate of service or maintenance charges for all properties within the strata development, ” he told The Star.

This court judgment, he said, was a welcome decision for those owning properties in mixed development projects, where they are subjected to different rates of maintenance or service charges.

“Dwellers are often at the mercy of those with a larger share of the units. Unreasonable maintenance or service charge rates are imposed on the minority share unit holders, ” he said.

By virtue of their greater share of the units held by retail and carpark owners, Joy said these owners could control the election and decisions of the JMB at the expense of the minority.

He noted that all JMB should now observe charging a flat rate effective immediately provided for under the Strata Management Act and the ruling or risk breaching the law.

JMB that do not comply can be referred to the Commissioner of Buildings (CoB) under the local councils, he added.

Joy said the judgment stemmed from a case between an individual parcel owner and the Menara Rajawali JMB as well as Denflow Sdn Bhd, the carpark owner of Menara Rajawali in Subang Jaya.

“The owner was dissatisfied with the JMB and the company’s decision in allowing lower maintenance charges imposed on owners with a substantial share of the units.

“On Jan 26 last year, we initiated a case against the JMB and the company, ” said Joy, who was one of the counsels representing the owner.

The case was brought to the Court of Appeal in October last year after the High Court dismissed the case in September.

The Court of Appeal unanimously held that the Act does not confer any power to the JMB or joint management committee to fix different rates of service or maintenance charges for different parcels in a mixed development.

It also held that Section 21 of the Act only accords the JMB the power to determine, impose and collect the charges from parcel owners in proportion to the allocated share units of their respective parcels.

When asked if high-rise property owners will pay less maintenance or service fees following the ruling, Joy said it would depend on the cost of maintenance of the common property of the high rise building.

“Property owner will now contribute in proportion to their share of units.

“In other words, the formula should be – the total cost of maintenance of the common property of the high rise property divided by the total amount of share units, multiply the number of share units for each property, ” he said.

Citing the Menara Rajawali case, where condo and retail owners before this paid RM2.80 per share unit while the carpark owner paid only half, Joy said all the property owners would now pay the same rate of RM2.80.

When contacted, SPOAS chairman Law Hock Hua said a majority of high-rise properties in Malaysia were without strata titles.

“Even after the owners of a property have obtained strata titles, less than 25% of them have the titles. So the property is still bound by the Court of Appeal’s ruling.

“This landmark ruling will likely benefit individual residential owners in a mixed development who are paying higher maintenance charges than owners of offices and retail outlets, ” he said.

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Source From: The star

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