A JMB Facing Arrears, a Short Sinking Fund, Leaking Podium Waterproofing and Overdue Governance
The Joint Management Body of a 480-unit mixed development in Selangor (360 apartments, 96 shop-lots and 24 offices) was formed 22 months ago. The service charge is RM0.28 per sq ft; 78% of owners pay, leaving arrears of RM312,000. The sinking fund has been collected at 4% instead of 10% because the developer-controlled council wanted to keep charges low. The last annual general meeting was held 19 months ago. Two of the four passenger lifts in Block B have been out of service for six weeks; the lift contractor blames water ingress from a defective podium waterproofing membrane installed by the developer, who says the 24-month defect liability period for common property expired three months ago. The fire alarm panel in Block C shows a permanent fault and the Fire Department has issued a notice. Sixteen units are being advertised as nightly stays. The building manager engaged by the JMB is not registered with the Board.
1. Advise the JMB on the lawful steps to recover the RM312,000 in arrears, including the correct forum and its limits.
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Step 1: verify before you chase. Reconcile the ledger parcel by parcel, separating maintenance charges from sinking fund contributions, and confirm the arrears figure for each of the 480 parcels. Errors in the ledger lose Tribunal cases and hand the defaulters a defence.
Step 2: demand in writing. Serve a written demand on each defaulting proprietor stating the amount, the period and the interest. Under the Strata Management Act 2013, service charge and sinking fund contributions are a debt due to the JMB from the date of delivery of vacant possession, and late payment attracts interest at the prescribed rate (10% per annum) under the Act and the by-laws. Interest is not a matter of discretion - levy it.
Step 3: the forum. File claims with the Strata Management Tribunal. Its monetary jurisdiction is capped (currently RM250,000 per claim), so individual parcels fall comfortably within it. Each parcel is a separate claim; do not artificially split one debt to fit the limit, as that is an abuse of process.
Step 4: enforcement. A Tribunal award may be enforced in the Sessions Court. In parallel, notify the Commissioner of Buildings, who supervises the JMB's management and can act where a council fails in its duty.
Step 5: prevention. Offer instalment plans with interest waived on prompt performance, tighten the billing and reminder cycle, and publish the arrears position at the AGM (carefully, to avoid defamation). Target the habitual 22% first: recovering 60% of RM312,000 restores cash flow without litigation.
2. The lifts and the leaking podium: who bears the cost, and how should the JMB fund the work given the sinking fund shortfall?
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Who pays depends first on facts, then on the defect liability period.
- Diagnosis. Commission an independent building surveyor's report within days. The lift contractor attributes the failures to water ingress from defective podium waterproofing, which is a construction defect, not a maintenance failure. A written report is the leverage for everything that follows.
- The defect liability period. The developer must make good defects in common property notified within the defect liability period (24 months from the relevant handover or certification of the common property). The developer's assertion that the period expired three months ago is not decisive. What matters is whether the JMB notified the defect in writing within the period and can prove it. If the waterproofing failure was reported in time, the developer must rectify at its own cost even if the works are carried out later.
- Interim safety. The JMB cannot wait for the dispute. It must restore lift service, keep the fire lift operable, post notices, and if two lifts still work, designate one for emergency use. Mitigation costs may be claimed from the developer if the defect is proved.
- Funding. Routine servicing, repairs and insurance come from the maintenance account. Replacing major components comes from the sinking fund, which must be 10% of the service charge. At 4% the fund is short. Call a general meeting, table a condition survey and a capital works plan, and pass the resolution needed for an additional charge or special levy. Do not pay capital works from the maintenance account - that is how the next crisis is created.
3. Advise on the governance and compliance failures: the overdue AGM, the 4% sinking fund collection, the unregistered building manager and the short-stay lets.
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Four issues, four deadlines.
1. Overdue AGM. The last AGM was 19 months ago. The Strata Management Act 2013 requires the JMB to convene an annual general meeting within the statutory cycle, which is not more than 15 months after the previous AGM. The JMB is in breach. Convene within 30 days with proper notice, audited accounts and a budget for the coming year. Failure exposes the council to action by the Commissioner of Buildings and undermines the validity of later resolutions, including the special levy needed for the lifts.
2. Sinking fund at 4%. The 10% contribution is statutory, not a matter of taste. The council cannot resolve to under-collect, and the earlier decision is not a defence. Correct the rate from the next billing cycle, and take advice on whether past under-collection can be recovered - usually it cannot be recovered retrospectively, which is a loss the council must explain to owners.
3. Unregistered building manager. Property management for a fee is a regulated activity under Act 242, and the person holding the post must be registered with the Board. An unregistered manager cannot lawfully discharge the function; the JMB should appoint a registered firm and document the handover.
4. Short-stay lets. Sixteen units trading nightly is a change of use, may breach the by-laws and the building's approved use, and affects insurance and security. Pass house rules under the by-laws, require registration of tenants with the management office, and refer persistent cases to the Commissioner; check the local authority's rules on short-term accommodation.
Sequence. Safety first (lifts, fire panel), then money, then governance - but the AGM is the forum that legitimises the money decisions, so it is not optional.