Ultimate Guide to the Strata Management Act 2013 (Malaysia): Everything You Need to Know
Table of Contents
- Introduction to the Strata Management Act 2013
- Objectives of the Strata Management Act 2013
- Key Definitions Under the SM Act 2013
- The Role of the Developer (Original Proprietor)
- Establishment and Functions of the Joint Management Body (JMB)
- Management Corporation (MC): Formation and Functions
- The Role of Subsidiary Management Corporations (Sub-MC)
- Duties and Responsibilities of Managing Agents
- Strata Management Tribunal: Dispute Resolution Mechanism
- By-laws under the Strata Management Act
- Maintenance Charges and Sinking Funds
- Recovery of Outstanding Charges
- Insurance Requirements for Strata Properties
- AGM and EGM Procedures under the Act
- Financial Reporting and Auditing
- Strata Roll, House Rules, and Notices
- Common Disputes and How the Act Addresses Them
- Key Amendments and Regulatory Updates
- Penalties for Non-Compliance
1. Introduction to the Strata Management Act 2013
The Strata Management Act 2013 (Act 757) is a landmark piece of legislation in Malaysia, enacted to address the unique needs of high-rise and strata-titled property developments. With urban living on the rise, managing multi-unit dwellings—such as condominiums, apartments, and stratified commercial properties—requires clear legal structures.
This Act came into force on 1 June 2015, repealing several provisions of earlier laws like the Building and Common Property (Maintenance and Management) Act 2007. The SM Act 2013 consolidates and streamlines the management and maintenance of strata developments in Peninsular Malaysia and the Federal Territory of Labuan.
2. Objectives of the Strata Management Act 2013
The Strata Management Act 2013 aims to:
- Provide a uniform legal framework for strata property management.
- Ensure proper maintenance and upkeep of common property.
- Define rights and responsibilities of stakeholders (developers, owners, JMBs, MCs).
- Establish a dispute resolution mechanism via the Strata Management Tribunal.
- Protect the interests of strata owners through transparency and accountability.
3. Key Definitions Under the SM Act 2013
Understanding the Act requires familiarity with core legal definitions:
- Strata Title: A property title that grants ownership of a unit within a multi-unit building.
- Common Property: Areas shared by all owners, including corridors, lifts, gardens, and lobbies.
- Parcel: A defined unit owned by an individual (e.g., a condo unit or shop lot).
- JMB (Joint Management Body): A body formed jointly by developers and purchasers before strata titles are issued.
- MC (Management Corporation): A corporate body formed upon issuance of individual strata titles.
- Sub-MC: A subsidiary corporation formed within a larger MC to manage specific components of a mixed development.
4. The Role of the Developer (Original Proprietor)
Under the SM Act 2013, developers have several legal obligations before and after vacant possession:
- Maintain the common property until the formation of the JMB.
- Open and maintain a maintenance account for the development.
- Convene the first AGM for the formation of the JMB within 12 months of vacant possession or when 1/3 of units are sold, whichever is earlier.
- Hand over documents (including building plans and financial records) to the JMB or MC within 30 days of formation.
Non-compliance with these duties can result in penalties, including fines and imprisonment.
5. Establishment and Functions of the Joint Management Body (JMB)
The JMB is a crucial entity in the early phase of strata property management. It is established before the issuance of strata titles and is composed of the developer and purchasers.
Responsibilities of the JMB:
- Maintain and manage common property.
- Determine maintenance charges and sinking fund contributions.
- Enforce by-laws and house rules.
- Appoint managing agents or contractors.
- Prepare and submit annual financial statements.
Tenure of the JMB:
The JMB exists until the MC is formed, after which all responsibilities are transferred.
6. Management Corporation (MC): Formation and Functions
The MC is formed upon the registration of strata titles. It is made up exclusively of parcel owners, unlike the JMB which includes the developer.
Key Duties of the MC:
- Manage and maintain the common property.
- Collect charges and contributions.
- Hold annual general meetings (AGMs).
- Enforce by-laws through legal means.
- Maintain insurance and financial records.
- Apply for the formation of sub-MCs if needed.
The MC has perpetual succession and can sue or be sued.
7. The Role of Subsidiary Management Corporations (Sub-MC)
In mixed-use developments, Sub-MCs can be formed to manage specific areas (e.g., residential, commercial, retail) independently.
Benefits of Sub-MCs:
- Tailored management of diverse components.
- Fairer distribution of maintenance costs.
- Better governance within complex developments.
A Sub-MC must be approved by the Commissioner of Buildings (COB) and operate under the parent MC.
8. Duties and Responsibilities of Managing Agents
Managing agents (MA) are appointed professionals or companies that assist JMBs or MCs. Managing Agents may be appointed by the Commissioner of Buildings (COB).
Legal obligations:
- Act in accordance with the SM Act and by-laws.
- Maintain proper accounts.
- Provide transparent reporting.
- Avoid conflict of interest.
An MA can be terminated by resolution in a general meeting or by the COB in cases of misconduct.
9. Strata Management Tribunal: Dispute Resolution Mechanism
The Strata Management Tribunal (SMT) was established under the Act to handle strata-related disputes quickly and affordably.
Types of disputes handled:
- Recovery of maintenance fees.
- Interpretation of by-laws.
- Management misconduct.
- Issues between owners, developers, and managing bodies.
Features of the Tribunal:
- No legal representation unless permitted.
- Decisions are final and binding.
- Claims are capped at RM250,000.
10. By-laws under the Strata Management Act
By-laws regulate conduct within strata schemes. They are automatically imposed under the Act and can be amended by a 2/3 majority in a general meeting.
Common by-laws cover:
- Use of common property.
- Noise levels.
- Parking regulations.
- Renovation guidelines.
- Keeping of pets.
Enforcement can include warnings, fines, and legal action.
11. Maintenance Charges and Sinking Funds
JMBs and MCs must determine and collect monthly contributions from owners for:
- Maintenance Account: For operational expenses (e.g., cleaning, security).
- Sinking Fund: For long-term capital works (e.g., repainting, major repairs).
Contribution rate:
Must be fair and proportional to the share units.
Failure to contribute can result in legal recovery through the Tribunal.
12. Recovery of Outstanding Charges
To recover arrears, JMBs/MCs may:
- Issue Form 11 Notice of Demand.
- File a claim with the Strata Management Tribunal.
- Apply for a warrant of attachment to seize movable property.
Interest may be charged up to 10% per annum on unpaid amounts.
13. Insurance Requirements for Strata Properties
Under Section 93 of the SM Act, it is mandatory for the JMB/MC to insure the building against:
- Fire and perils.
- Damage to common property.
- Public liability.
Insurance value must be not less than reinstatement cost.
Failure to comply can attract penalties and expose the body to civil liability.
14. AGM and EGM Procedures under the Act
The Act mandates regular meetings:
- AGM: Held annually within 15 months of the last AGM.
- EGM: Called for urgent or specific matters, upon request by 25% of owners or the COB.
Notice must be served at least 14 days in advance, and minutes must be kept.
15. Financial Reporting and Auditing
Transparency is key. JMBs and MCs must:
- Maintain proper books of accounts.
- Prepare annual financial statements.
- Conduct external audits.
- Make accounts available for owner inspection.
Non-compliance can lead to investigation by the COB or legal sanctions.
16. Strata Roll, House Rules, and Notices
Strata Roll:
A register of parcel owners, maintained by the JMB or MC, including contact details and voting rights.
House Rules:
Internal rules adopted for daily management. Must not contradict the Act or by-laws.
Notices:
All important notices must be served via written communication, typically posted on notice boards or delivered personally.
17. Common Disputes and How the Act Addresses Them
Typical strata disputes include:
- Noise complaints.
- Unpaid charges.
- Misuse of common property.
- Management misconduct.
Resolution Mechanisms:
- Mediation at AGM/EGM.
- Enforcement of by-laws.
- Filing a claim at the Tribunal.
- Legal action in court (for issues above RM250,000).
The Strata Management Act 2013 emphasizes peaceful, cost-effective resolution.
18. Key Amendments and Regulatory Updates
Over time, the Act has seen updates to:
- Tighten enforcement mechanisms.
- Clarify insurance requirements.
- Enhance transparency in developer-JMB handovers.
- Increase powers of the Commissioner of Buildings (COB).
Always refer to the latest regulations and circulars issued by the Ministry of Local Government Development (KPKT).
19. Penalties for Non-Compliance
Failure to comply with the Strata Management Act 2013 can result in:
- Fines up to RM250,000.
- Imprisonment (for certain offences).
- Disqualification of committee members.
- Suspension or removal of managing agents.
The COB has powers to investigate, issue directives, and enforce compliance.
Consult Us For More Information!
🌐 Call us: 03-2202 1021 / 017-6965 966 (WhatsApp)
📩 Email Us: nick@jykolaw.com
Or fill in the contact form CLICK HERE
Disclaimer: The above proposition is subject to actual facts and circumstances and shall never be referred as the actual law without seeking legal advice. Consult us for more information!