I&T Penang Properties Blogs

The importance of strata titles and Penang Scenario on strata titles for high rise buildings.

Although modern high rise residential units are gaining popularity amongst urban dwellers in KL and Penang, many buyers lacked awareness on high rise strata units and the importance of obtaining strata titles;

a) As ultimate proof of their property ownership. When you say you own a car, you have the registration card to prove it and there is no need for you to get the consent of the carmaker when you need to refinance or to sell the car.

b) As a dealing instrument for instances of charging to banks for loans.

c) One need not obtain the consent of a third party (the developer) who imposed administrative charges as their consent fees if and when you should decide to sell your property.

d) To form a management corporation (MC) by owners of the subdivided building to maintain and manage the building and to have their own by laws, usage or restrictions. Until then, owners usually do not have a say in the way the building is managed or maintained, the monies collected from maintenance charges, building funds etc.

e) As final proof of the built-up area of your unit and ultimately your apportionment of the share in the total aggregate units.

Recommended links at Why strata titles are important? and Title woes still a fact.

In the absence of strata titles, any dealings involving high rise strata units have to rely on the principal sale and purchase agreement together with deed of mutual covenant and in the case whereby bank financing is required, strata unit buyers would be required to sign or execute assignment documents in favour of the bank as assignee. As strata titles are not issued, there will not be any registration of such dealings and records in the respective land registry. Any subsequent dealings of the strata property is subject to developer’s consent and imposition of consent fees of RM500 per unit.

Upon issuance of strata titles, the owner of the high rise units will be notified by the developer company and subject to payment of survey fees for strata titles and stamping charges for transfer dealings, registration of ownership can then be carried out at the respective land registry.

When buying Penang apartments and condominiums, in the case whereby strata title is available or forthcoming, it is advisable for buyers to ensure that the transaction shall only be completed when registration of transfer of ownership on the strata title is registered on Form 4 (Section 16, Strata Title Act) and when bank loan is required, insist on securing loan by way of charge instead of assignment.

Penang Scenario

According to the Malaysia’s Auditor General Report Year 2005 published by National Audit Department of the Prime Minister’s Office, a special studies have been conducted on the strata titles scenario of the Penang’s State Department of Land and Mines during the period 2002-2005, the following findings was released on 26.6.2006 as follows:-

Based on the auditors report 2005, the Department of Land and Mines Penang has carried out registration of a total of 39,593 strata titles for the period 2002-2005 of which 17,400 units were from 103 applications received during 2002-2005 and the remaining 22,193 units were from 267 applications received during 1995-2002.

In accordance with Section 8 of Strata Title Act, registered proprietors of high rise schemes are required to submit strata title application within 6 months after the date of issuance of certificate of fitness of occupation (CF). Based on the auditor report, there were 92 multi-storey housing schemes involving 21,282 parcels obtained CF from the local authority during the period 2002-2005. It was revealed that 79 of these projects or 85.9% involving 17,661 parcels have not submitted for strata title application during the stipulated period. The findings of the auditor analysis (based on a samplings of 60 multi-storey buildings) revealed that:-

48% of the developer companies do not submit application without any reason given.
10% of the developer companies experienced land subdivision difficulties.
7% of which waiting for issuance of CF for whole scheme
7% of which became insolvent
5% of which encountered land amalgamation problems
3% of which facing financial problems
12% other title related problems ie encumbrances / charges.

The auditor findings also revealed that enforcement against the errant developer companies was lax. In year 2004, only 14 cases have been filed for court actions. More information at auditor’s report (Bahasa Malaysia Version) page 26-37.

However, according to a Penang-based licensed land surveyor, this scenario is set to change with the implementation of the newly amended Housing Development ( Control and Licensing ) (Amendment) Act 2007 and The 2007 amendment of Strata Titles Act 1985 as well as the introduction of the New Act Building and Common Property (Management and Maintenance) Act 2007 [BCPMM Act]. With new measures such as introduction of computerization system for strata titles at the land registry, formation of joint management body (JMB) within 1 years from the date of commencement of the New Act ie 14/4/2007 or before 13/4/2008 for existing strata buildings as well as the need to apply for strata title by the developer companies as one of the conditions to secure the release of the 2.5% retention sum after completion of the strata buildings will likely see more strata title submissions within the stipulated period and faster issuance of strata titles in the coming years.

The emergence of many new high rise residential schemes along Georgetown - Gelugor Area. View of Gelugor area towards Penang Bridge…