Who Manages Strata Developments in Malaysia?

In a strata development, the management of the building cannot operate on its own or in an unstructured manner.

A condominium, apartment, serviced residence or strata commercial complex usually involves many owners, occupants, tenants, visitors, contractors and service providers. They share lifts, corridors, lobbies, car parking areas, security systems, shared facilities and other common property areas.

For this reason, there must be parties responsible for managing the building, maintaining the common property, collecting maintenance charges, paying for services, appointing contractors, handling complaints and ensuring that the development functions properly.

However, many owners remain uncertain about who actually has authority in strata management.

Does the developer still have authority?

What is the difference between the Joint Management Body and the Management Corporation?

Can the property manager make decisions on its own?

Can the committee decide everything?

This article provides a simple explanation of the roles of the key parties in strata management, particularly the developer, Joint Management Body, Management Corporation, committee and property manager.

1. Strata Management Takes Place in Stages

The management of a strata development usually takes place in stages.

In simple terms, the usual management flow may be understood as follows:

Developer → Joint Management Body → Management Corporation

At the early stage, the development is usually managed by the developer. Thereafter, the Joint Management Body, often referred to as the JMB, will take over management during the transitional period. Once the strata titles have been issued and the Management Corporation, often referred to as the MC, is established, the MC will then take over the management of the development.

Each stage has different roles and responsibilities. For this reason, it is important to know the stage at which a particular development is currently situated.

Otherwise, owners may misunderstand who should be referred to, who may make decisions and who is responsible for a particular issue.

2. The Role of the Developer at the Early Stage

The developer is the party that develops the strata project.

At the early stage, the developer is usually responsible for constructing the development, delivering vacant possession to purchasers, managing the building during the initial period and assisting with the establishment of the relevant management body.

Before the Joint Management Body is established, the developer commonly plays an important role in the initial management of the building. This includes managing the common property, collecting maintenance charges, paying for services and appointing parties to assist with the operation of the building.

However, the role of the developer should not continue without limit. In the strata system, management should eventually move from the developer to a management body involving the parcel owners.

This transition is important because once purchasers begin occupying their respective units, they have a direct interest in how the building is managed.

3. What Is the Joint Management Body?

The Joint Management Body, or JMB, is the management body that usually exists after the early developer stage and before the Management Corporation is established.

The JMB consists of the developer and the parcel owners. It exists so that the strata development has a body capable of managing the building and common property before the MC comes into existence.

The main roles of the JMB include:

a. managing and maintaining the common property;

b. collecting maintenance charges from parcel owners;

c. managing the maintenance account and sinking fund;

d. appointing property managers, contractors and service providers;

e. holding annual general meetings;

f. implementing valid meeting decisions;

g. monitoring maintenance and repair works; and

h. taking necessary steps against owners who fail to comply with their responsibilities.

In simple language, the JMB is the transitional management body before the MC is established.

Although the JMB is transitional in nature, its role remains important. Many important decisions in a development are made during the JMB stage, including decisions on finance, maintenance, contractors, security and rules relating to the use of common property.

4. What Is the Management Corporation?

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

Once the MC is established, it takes over the management role from the JMB. The MC is responsible for managing and maintaining the building and common property on behalf of the parcel owners.

The main roles of the MC include:

a. managing and maintaining the common property;

b. collecting maintenance charges and sinking fund contributions;

c. enforcing the by-laws;

d. managing the accounts and finances of the development;

e. appointing and monitoring contractors and service providers;

f. holding annual general meetings and extraordinary general meetings;

g. implementing valid meeting decisions;

h. managing building insurance; and

i. taking necessary action to protect the collective interests of the parcel owners.

Compared to the JMB, the MC has a more permanent position in strata management because it exists after the strata titles have been issued.

In simple language, if the JMB is the transitional management body, the MC is the main management body after the strata titles have been issued.

5. Key Differences Between the JMB and MC

Although the JMB and MC may appear similar in terms of daily functions, there are important differences between them.

The JMB usually exists before the MC is established.

The MC exists after the strata titles have been issued and registered.

The JMB involves the developer and parcel owners.

The MC involves parcel owners as proprietors after the strata titles have been issued.

The JMB is transitional in nature.

The MC is more permanent in nature.

However, from a daily management perspective, both play important roles in ensuring that the building and common property are maintained, charges are collected, contractors are monitored and meeting decisions are implemented.

This distinction is important because the status of the development determines which management body has authority at the relevant time.

6. The Role of the Committee

The JMB or MC usually acts through an elected committee.

The committee is a group of individuals given responsibility to carry out management duties on behalf of the management body.

However, the committee does not own the building absolutely.

The committee is also not free to make any decision without limits.

The committee must act in accordance with the law, by-laws, valid meeting decisions and the collective interest of the parcel owners.

In practice, the committee is usually involved in matters such as:

a. monitoring the daily management of the building;

b. giving instructions to the property manager;

c. reviewing financial and management reports;

d. considering complaints from owners or occupants;

e. assessing contractor performance;

f. proposing repair or improvement works;

g. preparing matters to be brought to meetings; and

h. ensuring that meeting decisions are implemented.

However, there are matters that cannot be decided by the committee alone. Certain decisions must be brought to an annual general meeting or extraordinary general meeting, depending on the type of decision and the requirements of the law.

This is why the committee must be careful. Good intentions are not necessarily sufficient if the proper procedure is not followed.

7. The Role of the Property Manager

A property manager is usually appointed to assist with the daily management of the building.

In many strata developments, the property manager is the party that most frequently deals with owners, occupants, contractors and service providers.

The usual duties of a property manager include:

a. receiving and recording complaints;

b. monitoring contractor works;

c. assisting with the collection of maintenance charges;

d. preparing management reports;

e. coordinating repair works;

f. managing daily communication with owners and occupants;

g. assisting with meeting preparations; and

h. carrying out the instructions of the management body.

However, the property manager is not the management body.

The property manager also does not have absolute authority to make major decisions concerning the development.

The main authority remains with the JMB or MC, subject to the law and valid meeting decisions. The property manager assists with daily management based on instructions and the scope of its appointment.

If there is a management problem, it is important to identify whether the issue arises from a decision of the management body, an action of the committee, implementation by the property manager or the failure of a particular contractor.

8. The Role of Contractors and Service Providers

A strata development usually requires various contractors and service providers.

Examples include:

a. security companies;

b. cleaning companies;

c. lift contractors;

d. swimming pool contractors;

e. landscape contractors;

f. auditors;

g. lawyers;

h. engineers;

i. technicians;

j. access system providers; and

k. other equipment or service providers.

These parties assist with the daily operation of the development. Without them, it would be difficult to ensure that lifts operate properly, common areas remain clean, security is maintained, accounts are audited and maintenance works are carried out.

However, contractors and service providers are not the main decision-makers in strata management.

They are subject to their contracts, work instructions, service scope and monitoring by the management body or property manager.

If a contractor fails to perform its work properly, the issue should be handled based on the contract, work records, complaints, performance reports and decisions of the management body.

9. What Is the Position of the Commissioner of Buildings?

The Commissioner of Buildings, often referred to as the COB, has certain functions in the administration and supervision of strata developments.

The COB is usually involved in matters such as the filing of documents, certain administrative supervision, matters relating to general meetings and strata management issues within its jurisdiction.

However, the COB is not the daily manager of the building.

The COB is also not a higher committee that takes over all the powers of the JMB or MC.

In many situations, owners or occupants assume that all disputes can be resolved simply by making a complaint to the COB. In reality, that is not necessarily the position.

Some issues must be resolved through the management body.

Some issues must be brought to a meeting.

Some issues must be referred to the Strata Management Tribunal.

Some issues may also need to be brought to court, depending on the facts and the nature of the dispute.

Therefore, the role of the COB must be properly understood so that parties do not place incorrect expectations on the powers of the COB.

10. Why Should Owners Understand This Management Structure?

Owners should understand the strata management structure so that they know who to refer an issue to and how a decision should be made.

For example, if a lift is faulty, the issue may involve the property manager, the lift contractor and the management body.

If the rate of maintenance charges is disputed, the issue may need to be considered based on meeting decisions, the budget and the financial needs of the building.

If car parking areas or common property are used improperly, the issue may involve the by-laws and action by the management body.

If a committee decision is disputed, it is necessary to consider whether the committee had the authority to make that decision or whether it should have been brought to a general meeting.

If a dispute cannot be resolved internally, only then should the parties consider the appropriate dispute resolution channel such as the COB, the Strata Management Tribunal or the court, depending on the issue involved.

Many strata conflicts do not arise simply because people refuse to cooperate. Many conflicts arise because parties do not understand their respective roles.

11. Conclusion

Strata management involves a clear division of roles between several parties.

The developer usually plays a role at the early stage. The JMB takes over management during the transitional period before the MC is established. The MC then becomes the main management body after the strata titles have been issued and registered.

The committee assists in carrying out duties on behalf of the JMB or MC. The property manager assists with daily management. Contractors and service providers carry out works according to their respective scopes. The COB has certain supervisory and administrative functions within its jurisdiction.

Each party has its own role, authority and limits.

When this structure is understood, the management of a strata development can operate in a more orderly manner. Owners will also be better able to understand the correct channel for making complaints, raising issues or challenging decisions.

In strata management, problems usually begin when a party assumes that it has more authority than it actually has, or when a party that should act fails to carry out its responsibilities.

For this reason, understanding who manages a strata development is an important foundation for a more organised, fair and functional strata community.

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, minutes of meetings, by-laws, contracts, meeting decisions and the applicable laws.