Thursday 28 Mar 2024
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PETALING JAYA (Nov 21): Property developers handing over their debts and liabilities mainly in the form of water and electricity arrears to joint management bodies (JMBs) will evidently jeopardise proper maintenance by the JMBs, said the Malaysian Institute of Professional Property Managers (MIPPM).

In a statement, MIPPM said Sections 15 and 16 of the Strata Management Act 2013 (SMA 2013) explicitly state that the property developer shall transfer and hand over all balance of monies in both the maintenance and sinking fund accounts (after all payments of expenditures have been charged to the accounts) as well as all assets with no mention of liabilities to be transferred.

Citing SMA 2013, MIPPM said the balance or surplus of monies in both accounts is deemed as unutilised sum and not profit.

“Therefore, the developer is required to transfer all the balances to JMBs and shall not keep it or treat it as profit during its (developer’s) management period.

“Moving forward, JMBs are advised to undertake due diligence exercise to examine all of the accounts and documents to ensure there are no such liabilities prior to the handover by the developers.

“This way, JMBs can safeguard their interest and ensure effective management of the buildings and common property,” said MIPPM.

“There are numerous dilemmas currently faced by JMBs and one of the genuine examples is where a developer has charged the bonuses of its staff to the maintenance account and has handed over the account to the JMB, leaving it in the red as a result. This is a clear misconduct by the developer,” said its president Sarkunan Subramaniam.

According to SMA 2013, two types of accounts shall be established by the developer during its management period for instance, a maintenance account and a sinking fund account.

The maintenance account is basically for regular expenditures such as maintenance of the common property on day-to-day basis, payments for insurance and other related services for the common property such as cleaning, security and others.

Meanwhile, the sinking fund is generally used for capital expenditure such as painting and repainting works, acquisition of any moveable property and renewal or replacement of fixtures and fittings all in relation to the common property.

“Sinking funds collected (should not be less than 10% of maintenance charge) may not be used in the period of 12 months from the date of vacant possession (VP) and shall be deemed as unutilised monies and not profit.

“An example on the misuse of the sinking fund account is where the developer uses the allocation to purchase an expensive software which may not be a necessity to the managing of the common property and charged it to the account.

“This action has resulted in the depletion of the sinking fund account and has left the unhealthy state of account to the JMB.

“Hence, proper management of both accounts by the developer is crucial until the formation of JMB, which is not more than 12 months from the date of VP, and shall hand over the management of the common property including both maintenance and sinking fund accounts to the JMB in a month from the date of the annual general meeting”, added MIPPM.

 

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