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Why You Should Pay Your Maintenance Fees & Sinking Funds

over 2 years ago marina



This article is for general informational purposes only and is not meant to be used or construed as legal advice in any manner whatsoever. All articles have been scrutinized by a practicing lawyer to ensure accuracy.

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If you live in a condominium or apartment, generally you are subject to paying Maintenance Fees and contributing to the Sinking Funds on a monthly basis. Whilst a pain to pay, these monthly payments are to the general benefit of the property and it’s residents, the maintenance fees being utilised for the upkeep of the common areas and facilities whilst the sinking funds are collected and held to be used to refurbish the property as and when needed. This will help maintain the aesthetics, cleanliness and functions of the property which will in turn help to maintain it’s value.

Besides aiding in maintaining the property value, maintenance fees are also a requirement by law listed in The Strata Management Act 2013, compelling developers opting for strata titles to set up a Management Corporation to manage the common areas and facilities of a property (as legally the common areas are owned by the Development Company). The Management Corporation is then required to propose the amount and schedule the collection of the fees to be used for the upkeep of the property, whereupon it’s also meant to eventually set up a Joint Management Body comprised of the developers and owners of the property to jointly manage the the usage of the funds to manage and maintain the property.

Upon it’s resolution, the Management Corporation is meant to elect owners of the property to form a Joint Management Committee which will then take over the responsibilities of the Joint Management Body and manage the property on behalf of its residents. Much like a company’s directors are tasked with the responsibility of managing the affairs of the company on behalf of the shareholders.

Common reasons most owners give for not paying the maintenance fees include not using the facilities, not living in the property or not satisfied with the Management. This in turn leads to the Joint Management Body unable to accomplish their tasks and leads to a spiral of decline in the upkeep of the building, affecting everyone who lives there. Although not widely known though, owners of the property are entitled to question the Joint Management Body, view the accounts, vote on important issues concerning the property’s management and even vote the members of the Joint Management Body out of office if they are unsatisfied with their work.

However, not paying the Maintenance Fees disqualifies owners of these rights and the Joint Management Body will also be eligible to bar residents from using the common areas and facilities, publish their names for other owners to see and impose interests/fines on all unpaid monies owed by the offender. Furthermore, under the Strata Management Regulations 2015 (under the Strata Management Act 2013), the failure to pay the maintenance fees can be considered a criminal offence which could lead to imposed fines, jail time or both.

The idea of paying a monthly fee for living in your property is still a fairly new concept to most Malaysians, and those moving from a landed property into a high-rise would find it even more so. However, as a payee of the maintenance fees, owners also have the rights to know what they are paying for, transparency of the accounts and board decisions need to be open to the owners and the power to question and check the information is also another right. Joint Management Body members are subject to not only furnish all the information requested by the owners, but they are also meant to submit their accounts to the relevant government bodies as well, thus creating a system of check and balances to ensure that the Joint Management Bodies are not abusing their authority.

Should any grievances arise from either party, an Emergency General Meeting could be called to take vote on the best course of action, or if unable to come to a consensus, the parties could seek judgment from the Tribunal for Housing and Strata Management (Tribunal Perumahan dan Pengurusan Strata or TPPS). In an effort to uphold the laws of the Strata Management Act 2013, the Urban Wellbeing, Housing and Local Government Ministry (a.k.a. Kementerian Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan or KPKT) will set up a special taskforce to enforce the Act.

The payment of Maintenance Fees and contribution to Sinking Funds is mandatory and besides being charged interest for late payments by the Joint Management Body, defaulters could also face heavy fines and even jail time by the Government. It is therefore in everyone's best interest to timely pay the fees they owe and go through proper channels should there be discontent or disputes regarding the management of the property. So before buying a property, make sure you know how much you need to commit for the monthly Maintenance Fees and Sinking Funds so you do not end up in a jam.

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