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Single Rate of Maintenance Charges Applies to Management Corporations in Malaysia

by | Jun 19, 2023 | Featured, Law, Strata Management

The Strata Management Act 2013 (Act 757) strictly provides that a joint management body during its management period shall only impose and collect maintenance charges and sinking fund contributions from the parcel owners in proportion to the share units of each parcel.  Simply said, a joint management body must determine one single and consistent maintenance charges rate for all parcels. This rule applies to developers and management corporations during their management period as well. The exception to this rule stated in Section 60(3) does not give a management corporation absolute discretion to determine different rates of maintenance charges for different parcels.

 

In 2020, the Federal Court dismissed JMB Menara Rajawali & Anor’s application for leave to appeal to the Federal Court against the Court of Appeal’s decision in favour of Muhamad Nazri.

 

In 2019, the Court of Appeal in the case of Muhamad Nazri Bin Muhamad v JMB Menara Rajawali & Anor delivered a landmark decision on the laws of strata management. The Court of Appeal held, that Section 21 and 25 of Act 757 require a joint management body to determine one single and consistent maintenance charges for all parcels in a strata project. The Court of Appeal’s judgment is clear that the words “in proportion” found in Section 21 and 25 of Act 757 mean tha a joint management body is required to determine and fix only one single and consistent maintenance charged rate to be applied to all categories of parcels.

 

In conclusion, according to Act 757, maintenance charges must be charged “in proportion” to each parcel’s share units. The courts have confirmed that this rule requires a developer, joint management body and management corporation to determine and impose only a single rate of maintenance charges per share unit for all parcels during their management periods. It is advisable for developers, joint management bodies, management corporations and parcel owners a like to seek legal advice when dealing with the issue of different or multiple rates of maintenance charges for different parcels in their strata schemes.

 

NORAZALINA HAIRUDDIN Partner Messrs Amir Khusyairi & Associates

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