What Is a Strata Development? A Simple Guide for Homeowners in Malaysia

In Malaysia, strata developments have become increasingly common, especially in urban areas. Condominiums, apartments, serviced residences, flats, SOHO units, shop offices and strata commercial complexes are among the common examples of strata developments that we see today.

However, many purchasers and parcel owners still do not fully understand what a strata development actually is. They buy a unit, pay maintenance charges, attend annual general meetings, use lifts, parking bays, swimming pools and shared facilities, but may not clearly understand how the overall system works.

In a strata development, ownership is not only about “my unit”. It also involves shared responsibility over the building, facilities, common areas and the community living or operating within the development.

This article provides a simple explanation of what a strata development is, who the relevant stakeholders are, and the key elements that make up a strata development.

1. Meaning of Strata Development

In simple terms, a strata development is a property development that is divided into individual units which may be separately owned, while also having common areas or shared facilities used by all owners or occupants.

The easiest example is a condominium. In a condominium, each owner owns his or her own unit. For example, Unit A-10-1, Unit B-15-6 or Unit C-20-8. These units are usually individually owned by parcel owners.

At the same time, the owners also share the use of other areas such as lifts, staircases, corridors, lobbies, swimming pools, gymnasiums, surau, guardhouses, access roads, security systems, main pipes, water tanks, rooftops and other shared facilities.

These common areas and shared facilities do not belong exclusively to one owner. They are used and enjoyed collectively by all owners or occupants, subject to the law and the building rules.

This is the basic concept of strata development: individual ownership existing together with collective responsibility.

2. Examples of Strata Developments

Strata developments are not limited to condominiums. Examples of strata developments include condominiums, apartments, flats, serviced residences, SOHO units, SOVO units, strata shop houses, strata shop offices, strata commercial complexes, mixed developments and strata landed developments with gated and guarded features.

In modern developments, a strata scheme may also contain different types of use within the same development. For example, one development may include residential units, commercial spaces, parking areas, recreational facilities and business areas.

Developments of this nature are usually more complex from a management perspective because they involve different types of owners, uses and interests.

3. Parcels, Common Property and Accessory Parcels

To understand strata development, there are a few basic concepts that should be understood.

a. Parcel

A parcel is an individual unit owned by an owner. Examples include a condominium unit, apartment unit, shop unit or office unit.

In simple language, a parcel is the “individually owned unit”.

A parcel owner has rights over the unit, subject to the law, conditions of title, by-laws and applicable rules.

b. Common Property

Common property refers to the parts of the building or areas which are used or enjoyed collectively by the parcel owners.

Examples include lifts, staircases, corridors, lobbies, rooftops, main pipes, main electrical systems, swimming pools, gymnasiums, gardens, guardhouses, fences, internal roads and other shared facilities.

Common property must be maintained, repaired, cleaned, protected and managed. The cost of maintaining the common property usually comes from the maintenance charges paid by parcel owners.

c. Accessory Parcel

In some developments, an owner may also have an accessory parcel. A common example is a car parking bay allocated together with a particular unit.

An accessory parcel is usually connected to the main parcel and does not stand independently like an ordinary parcel.

For example, the owner of Unit A-10-1 may have one or two car parking bays which form the accessory parcels to that unit.

4. Who Are the Stakeholders in a Strata Development?

A strata development involves many parties. Each party has a different role.

The main stakeholders include the developer, parcel owners, occupants, Joint Management Body, Management Corporation, committee, property manager, Commissioner of Buildings, contractors and service providers.

a. Developer

The developer is the party that develops the strata project. At the early stage, the developer usually plays an important role in constructing the building, delivering vacant possession, managing the initial period of the development and assisting with the establishment of the management body.

The developer also has certain responsibilities before the management is taken over by a management body such as the Joint Management Body or the Management Corporation.

b. Parcel Owner

A parcel owner is an individual or entity that owns a unit in a strata development.

A parcel owner has rights over his or her parcel, but at the same time also has responsibilities towards the development. The main responsibilities include paying maintenance charges, complying with the by-laws and not using the parcel or common property in a manner that disturbs other owners.

c. Occupant

An occupant is a person who lives in or uses the unit. An occupant is not necessarily the owner. The occupant may be a tenant, family member, employee, visitor or any person authorised by the owner.

Although an occupant may not be the owner, the occupant must still comply with the building rules and applicable by-laws.

d. Joint Management Body

The Joint Management Body, often referred to as the JMB, is the management body that usually exists before the Management Corporation is established.

The JMB manages and maintains the building and common property during the transitional period after vacant possession has been delivered but before the establishment of the Management Corporation.

e. Management Corporation

The Management Corporation, often referred to as the MC, is the management body that exists after the strata titles have been issued and registered.

The MC is responsible for managing and maintaining the strata development on a more permanent basis after the JMB stage.

f. Committee

The committee is a group of individuals elected to carry out management duties on behalf of the JMB or MC.

The committee does not own the building absolutely. The committee carries out its duties as a matter of trust and responsibility for the collective interest of the parcel owners.

g. Property Manager

A property manager is usually appointed to assist with the daily management of the building. The duties may include handling complaints, monitoring contractors, preparing reports, assisting with collection of charges, coordinating maintenance works and carrying out the instructions of the management body.

However, the property manager is not the management body. The main authority remains with the JMB or MC, subject to the law and valid meeting decisions.

h. Commissioner of Buildings

The Commissioner of Buildings, often referred to as the COB, is the authority that has certain functions in supervising the administration of strata buildings.

The COB is usually involved in matters such as filing of documents, monitoring annual general meetings, and certain management and administrative issues relating to strata developments.

i. Contractors and Service Providers

Contractors and service providers are parties appointed to provide services to the strata development. Examples include security companies, cleaning companies, lift contractors, swimming pool contractors, landscape contractors, auditors, lawyers, engineers, technicians and access system providers.

They help ensure that the building functions properly from an operational perspective.

5. Key Elements in a Strata Development

Every strata development usually has several key elements.

a. Individual Units

These are the parcels owned by the respective owners. Examples include residential units, shop units or office units.

b. Common Property

These are the areas and facilities used collectively by the owners and occupants.

c. Management Body

A strata development requires a management body such as the JMB or MC to administer the building and common property.

d. Maintenance Charges

Maintenance charges are paid by owners to fund the management and maintenance of the building. These costs may include payments for security services, cleaning services, electricity for common areas, water, lifts, insurance, repairs, management and other services.

e. Sinking Fund

The sinking fund is usually used for major or long-term expenses, such as major repairs, replacement of key systems, repainting works or repairs to important building components.

f. By-Laws

By-laws are rules that regulate how owners and occupants use their parcels and the common property. By-laws are important to ensure that life within a strata community is properly organised.

g. General Meetings

General meetings such as annual general meetings and extraordinary general meetings are platforms for owners to make important decisions concerning the management of the building.

Matters that may be discussed include accounts, budgets, election of committee members, rates of charges, management issues and specific proposals relating to the development.

6. Why Does a Strata Development Need Rules?

A strata development needs rules because many people share the same building, facilities and systems.

Without rules, many problems may arise. For example, owners may fail to pay maintenance charges, occupants may use the common property as they wish, renovation works may be carried out without control, parking areas may be used improperly, noise may disturb other occupants, shared facilities may be damaged without sufficient funds for repair, the committee may make decisions without proper procedure, owners may dispute management decisions, contractors may not be properly monitored and annual general meetings may not be properly conducted.

In an individual landed house, the owner usually only needs to take care of his or her own house. In a strata development, however, an owner does not only take care of his or her own unit. The owner also shares responsibility over the entire building.

That is why strata law is important. It provides the framework to manage the relationship between owners, occupants, developers, the JMB, the MC, the committee, the property manager and the relevant authorities.

7. Conclusion

A strata development is a form of property ownership that combines individual rights and shared responsibility. Owners have their respective units, but at the same time share common property such as lifts, corridors, lobbies, swimming pools, internal roads, security systems and other facilities.

For this reason, a strata development requires a proper management system. Parties such as the developer, JMB, MC, committee, property manager, owners, occupants and the COB each play their respective roles in ensuring that the building is properly managed.

Understanding the basics of strata development is the first step before understanding other issues such as maintenance charges, sinking fund, annual general meetings, by-laws, access cards, renovation works, common property and the Strata Management Tribunal.

Prepared by:

Khairul Shahrizan bin Hamizi

Advocate and Solicitor

High Court of Malaya

Brief Note

This article is prepared for general information only and should not be treated as specific legal advice. Each strata issue must be considered based on its own facts, documents, development status, by-laws, minutes of meetings and the applicable laws.