Banks in Malaysia should correlate with home buyers for the issuance of strata titles for high-rise residential units so that they become the rightful legal owners of the property which they have paid for.
The Real Estate and Housing Developers’ Association president, Datuk Soam Heng Choon said banks and homebuyers must play a role to make sure the title is transferred.
Soam said, when the title is out, the banks must “perfect the charge” over the legal document, that is, make the transfer to the rightful owner.
"By doing this, nobody can play around with the title. Otherwise, there is a piece of title which is free from encumbrances running all over the place," said Soam.
Soam told NST Property that Rehda has been in discussions with banks to force it upon the buyer to get the strata title.
"If the buyer can't afford to come out with that bulk of the money to pay the stamp duty, what the bank can do is add that amount on to the loan and defray it over the loan payment. We understand that it is disbursement and banks don't give loans for disbursement. But in this instant, it is very important because it is part of the legal document. If you have been a good paymaster or customer of the bank, then RM10,000 to RM15,000 over a 20 years loan is a very small amount. This is one of the solutions to solve this problem if the buyer doesn't have the money to pay that amount for the stamp duty instead of leaving the strata title in the developer's office.
"Without the title, how confident are you that the developer won't take the title and do anything about it? There was a case whereby someone bought a landed property with cash but did not collect the title. Years later, a certain individual from the developer's office took advantage of the situation. He took the title and used it as an instrument of charge to the bank to get a loan without the buyer's knowledge. When the buyer started asking for the title, that individual said no title has been issued for the property. The buyer got his lawyer to do a search at the land office and discovered that the title had been charged to a bank. So if you don't get the strata title, somebody at the developer's office can misuse it. To get the title, you have to show the Sales and Purchase agreement to prove that you have paid for the property," said Soam.
Soam said homeowners should consider claiming their strata titles and realise its significance.
He said there are two issues regarding strata titles in Malaysia - developers not getting the strata titles, or strata titles have been issued but buyers are not taking it.
Soam said the new law has a section that compels the developer to get the strata title, a failure in which the buyer can retain 2.5 per cent of the selling price, but there is no compulsion on the buyer to transfer the title.
"It should be somewhere in the act to force the buyer to do it. The developer's role is compelled by law but there is nothing to compel the buyer and the bank to come and take the title. By compelling the buyer and the bank to do it, the government can get revenue," he said.
Soam said the government may stand to lose revenue from stamp duty payments and registration fees that could run into millions of ringgit if owners do not collect their strata titles.
Homeowners have to pay stamp duty to the Inland Revenue Department according to a scale. For the first RM100,000 it is one per cent or RM1,000 per parcel. For every RM200,000 and RM300,000 it is two per cent and three per cent respectively. For a property that is worth more than RM1 million, it is four per cent or RM40,000.
"When owners do not claim their strata title, the government will lose in terms of stamp duty collection. The tax is based on the purchase price as stated in the sales and purchase agreement. On top of the stamp duty, owners have to pay the legal fees and perhaps this is why many of them refuse to collect their strata title as it involves a big sum."
What is a strata title?
A strata title is different from an individual title.
Strata titles are issued for properties in a multi-storey building where the land usually belongs to the owners or developers of the property. Strata titles are divided into separate individual titles issued to units of apartments, condominiums or offices within a development that share common facilities like the swimming pool, gym, elevators, and lounge.
Developers are required to apply for the strata titles on behalf of home buyers.
Individual titles are normally issued for landed properties like semi-detached homes, terraced houses, bungalows, villas and townhouses, and owners of the land.
Having a strata title can safeguard you should the developer come under liquidation or become insolvent.
To check on your strata title, you can either call the local land authority or conduct a quick search on the e-Tanah system using the master title details in your Sale and Purchase Agreement. Alternatively, you can call the developer to ask if they have applied for the strata title and what is the next stage.
Upon issuance of strata titles by the land authority, the developer shall transfer the titles to the purchasers within 30 days of the date of issuance.
Your rights as a strata property owner include:
A) The right to request for an Extraordinary General Meeting (EGM) if owners feel there is the misuse of funds by the management office or they are unhappy with the maintenance work, or decisions made by some members to award contracts for maintenance work to family members/friends. The Chairman of the committee should convene for an EGM within six weeks of receiving the requisition in writing from strata owners who are together entitled to at least 25 per cent of the aggregate share units. Should the management ignore the request for an EGM, owners can take the matter up with the Commissioner of Building (COB).
B) Right to vote during AGM and EGM: To exercise this right, owners will have to settle all of their outstanding services and sinking fund fees prior to the AGM or EGM. Those who fail to do so will not be allowed to cast a vote for any resolution. Each parcel of the unit will be entitled to one vote. A co-strata owner may vote by means of a jointly appointed proxy.
C) Owners have the right to request for the review of service charges and sinking fund if they are unsatisfied with the fees charged by the management, especially if there is a sudden increase in charges. They can bring up the matter with the COB, who will then determine the right amount that should be charged.
(D) Owners have the right to file a claim under the Strata Management Tribunal (SMT). The SMT was formed to provide feasible solutions for disputes regarding the failure to perform a function, duty or power imposed by SMA 2013. Disputes under the SMT can be handled at a minimum cost as no legal representation is allowed. However, the SMT has a pecuniary jurisdiction not exceeding RM250,000.
Strata title means better management of the property?
The issuance of the strata title will initiate the formation of the management corporation (MC) by owners of an apartment or condominium so there is better management of the property.
Due to the delay in the issuance of strata titles, about 90 per cent of new strata properties in Malaysia are still being managed by an interim body called Joint Management Bodies (JMB) while only 10 per cent have formed an MC.
A JMB is set up to run things, starting from the delivery of vacant possession by the developer to the purchasers.
An MC consists of unit owners who are voted in by other residents who attend the Annual General Meeting (AGM) of a strata development. They represent all strata unit owners and decide how to best manage the strata development.
The main responsibilities of the MC include enforcing rules and regulations, managing and maintaining common properties, paying quit rent, obtaining insurance, and complying with relevant laws and policies. However, an MC can only be established after strata titles have been issued, and at least 25 per cent of the aggregate share units have been transferred to unit owners.
Can you sell your property without a strata title?
Yes, you can! If you have found a buyer for your property, and you do not have the title registered to your name, you can prepare and sign a Deed of Assignment (DOA) made between yourself and the new owner.
The DOA is different from the Deed of Mutual Covenants (DMC), which is a legal document that lays out all the rules and regulations for parcel owners. The DMC is usually signed by the developer and the original homeowner.
The DOA assigns all the rights of beneficial ownership from the seller to the new owner and when the title is issued, the new owner will have his name registered as the owner of the parcel. The new owner, however, must give notice of assignment under Section 22D of the Housing Development (Control and Licensing) Act, 1966 to the developer. This notice informs the developer that the rights of the seller have now been assigned to the new owner.
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