Poor services from JMBs, Unlicensed Property Managers & Lucrative Trade!

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A DEPUTY minister agreed that the services of a number of joint management bodies (JMBs) of flats, condominiums and apartments are unsatisfactory.

“The residents who failed to pay are those who intentionally refused to pay. “But I don’t blame them as some of the services by the JMBs are not good.

“There have been complaints about this,” Deputy Housing and Local Government Minister Datuk Seri Lajim Ukin said in reply to Teo Nie Ching (DAP-Serdang).

Lajim pointed out that 10,640 complaints against the JMBs were received by the ministry in 2009 while 7,174 complaints were lodged from January to June 31 2010.

“We have forwarded the complaints to the respective JMBs for further action,” he added.

Lajim added 235 residents have been brought to court for failing to pay their dues to the JMBs, and they are now waiting for the decisions.

Earlier, Lajim said the Government had sufficient provisions allowing the JMBs and management committees to collect overdue maintenance payments.

“This is provided under Section 32 and 33 of the Building and Common Property (Maintenance and Management) Act 2007,” he said.

He said Section 32 provides the JMBs with the power to collect overdue maintenance charges by issuing a notice to the unit owners.

“If the unit owner does not pay within 14 days from the day the notice was issued, the JMB can take legal action against the resident,” he added.

Laim said Section 33 allowed the JMB to seek assistance from the Commissioner of Buildings to issue payment notices and also seize the property of unit owners who failed to settle their bills.

“The property seized from errant unit owners may be auctioned via public auction to cover the outstanding arrears,” he added.
  
One-sided story against JMBs

I REFER to the report “ Poor Services from JMBs” in which the Deputy Housing and Local Government Minister Datuk Seri Lajim Ukin said over 10,000 complaints were made against joint management bodies last year.

He only gave a partial and one-sided story as there are many success stories of JMBs and I am not sure if Lajim is aware and has been told about them?

On the other hand, one may ask how many complaints have been lodged with the Commissioner of Buildings (COB) by the JMBs and what action has been taken by the COB?

The Building and Common Property (Maintenance and Management) Act 663 was enacted in April 2007 and yet until today, many developers have not applied for the strata titles, and some continue to manage their estates. Does Lajim know how many of such cases? Has the Government taken any action against these developers?

Many JMBs fail simply because they do not get any assistance from the COBs. The crux of the whole matter is lack of law enforcement by the authorities.

MELVIN TAN,
Penang.

JMB_unlicensed Property Managers & Lucrative Trade

by Lee Siew Lian, New Sunday Times

Pitfalls await unwary apartment owners now that they are starting to manage their own common properties, writes LEE SIEW LIAN

APARTMENT owners are trapped in the middle of a roiling dispute over who should control the lucrative business of property management.

With an estimated RM600 million in annual fees at stake, the long-standing battle has left owners in a bind over who to appoint to help run and maintain their communal properties once they take over from developers.

While the two groups of property players slug it out, state governments are dithering over who to appoint as building commissioners, the officials who should be best placed to decide on the issue.

This leaves the country's 1.2 million apartment owners with little guidance over what to do and few safety nets to catch them if they make a mistake.

Because regulation of this industry is inadequate and dotted with loopholes, apartment owners are now exposed to major risks, including financial disaster.

It's a daunting and confusing task," says Veronica Gan, president of the Bangsar Heights Residents Association, which will soon form their own management corporation.

"What we need are some guidelines on the best practices to adopt or how to negotiate. The only material we have is from the House Buyers Association, but it's not really enough."

"There are many pitfalls during this transition period," says Chang Kim Loong, honorary secretary-general of the national HBA, "But no one's looking out for the consumers.

Thousands of joint management bodies (JMBs) were supposed to have been set up this year, giving owners of flats, apartments and condominiums a say, together with developers, in how subdivided properties are run.

JMBs are interim bodies for the years before strata titles are issued and owners' management corporations (MCs) set up to take over from developers.

One of their biggest responsibilities will be to appoint someone to manage their common property, from the grounds and lifts to corridor lighting and swimming pools.

Almost overnight, a huge and lucrative industry has opened up.

"If unit owners paid an average of RM50 in monthly maintenance charges, it would mean RM50 million a month, RM600 million a year," says Kumar Tharmalingam, secretary-general of the International Real Estate Federation(Fiabci), in Asia Pacific.

The Board of Valuers, a statutory regulator, says owners should appoint only property managers that it has registered. But a lobby group, the VAEA Joint Action Group, insists that there is no such restriction.

The VAEA refers to the Valuers, Appraisers and Estate Agents Act 1981, the statute that governs the board.

The Joint Action Group has players from different industries as members, ranging from the Real Estate and Housing Developers Association (Rehda) to apartment management corporations and the Associated Chinese Chamber of Commerce and Industry (ACCCIM). Fiabci Malaysia, which Tharmalingam used to head, is also part of the group.

The group reads the law differently and asserts that by definition under two other Acts, the owner bodies and corporations escape the effects of the Valuers Act.

They claim the two Acts -- the Strata Titles Act 1985 and the Building and Common Property (Maintenance and Management) Act 2007 -- allow owners' committees to appoint what they call managing agents.

"Anyone with the right experience and ability can be a managing agent. JMBs and MCs can appoint any one they see fit to manage their properties," says Datuk Teo Chiang Kok, See Hoy Chan director.

Their problem with the Valuers Act is that it effectively allows only registered valuers to become property managers. They say this makes the property management industry a monopoly for just a few hundred registered valuers.

"But it is the free market that should decide," Teo says.

Board of Valuers president Datuk Abdullah Thalith Md Thani says anyone involved in managing and maintainingproperty should be properly regulated and well-qualified."

I want to open up registration to anyone who is interested. It's a misunderstanding.

He says he had proposed to amend the Valuers Act, but intense resistance from developers and other property players forced him to drop the matter. Thalith is president by virtue of his post of director-general of the Valuation Department under the Ministry of Finance.

Thalith agrees with most industry players that the Act's provisions for regulating property managers are inadequate, and enforcement patchy.

But he worries that those who appoint the so-called managing agents could be courting financial disaster arising from mistakes, negligence and dishonesty. Those registered under the Act would be required to obtain professional indemnity insurance, he points out.

The HBA, a voluntary organisation which represents home owners, agrees owners are exposed even if these unregistered managing agents had adequate indemnity insurance.

Chang, who is honorary secretary, argues that the insurer could repudiate liability and refuse to pay up since the managing agent is not a legitimate property manager registered with the Board of Valuers.

Indeed, the same could happen to owner bodies themselves, the JMBs and MCs, he says.

"The relevant statutory provisions do include prosecutions and the right to sue, but this is hardly any protection at all to owners.

There are too few preventive measures." The HBA favours tighter regulation and compulsory licensing of property managers. "Lives and properties are entrusted to their care, control and management," Chang says.

He also urges the board to grant amnesty to competent but unregistered property managers, to encourage themto register.

"It's similar to the drive that was extended to unlicensed real estate agents some years ago."

Fiabci's Tharmalingam agrees, saying the board has, by inaction, allowed unlicensed property managers to flourish for 20 years: "They now have the right to exist.

A valuer by profession, he goes even further to say the JMBs and MCs should also be registered. Registering these owner bodies would offer a safety net to individual unit owners, he explains: "Those who serve in the (executive) committees have a responsibility for the (financial) performance of the JMBs and MCs. If the board is prepared to regulate property managers, then it should take responsibility for the JMBs and MCs too."

The problem is the laws governing stratified properties have been drafted and amended piecemeal, leaving loopholes that expose apartment owners, Tharmalingam claims.

"It's a solvable problem, but cooler heads must prevail.

KUALA LUMPUR: At least once a month, the lifts stop working at the high-rise apartment block where Liew See Lanlives. "There is little we can do as the developer is the only one with the power over the management company," she said.

Soon, though, the housewife and other owners of Bukit Pandan Two condominiums will be able to have a big say in how the property is run.

Sometime this month, the residents association she leads will meet to form a collective body that will take over running of the property.

All she needs is between eight and 12 owners, and up to two representatives from the developer, to form what is called the joint management body (JMB).

This JMB will maintain the common property, decide how much to charge for maintenance and collect the charges. It also can sue and be sued.

More importantly, it will be able to seize the units of owners who dont pay their maintenance fees, to be auctioned off to settle what is owed.

This major change in the laws regulating high-rise residential buildings came in April, with the the Building and Common Property (Maintenance and Management) Act 2007.

These provisions will affect about 500,000 strata-titled units across the country and their two million occupants, as well as millions of ringgit in sinking funds and collected monies.

Until April this year, apartment owners spent years  and sometimes decades waiting for developers to convert master titles into individual strata titles.

In that period, developers controlled the upkeep of the property, often appointing subsidiaries or business associates to the role of management company.

The law gave little recourse to frustrated owners, many of whom endured poor service from management companies.

Problems range from dirty common toilets to leaking roofs and poor lighting in stairwells. Now the JMB will manage the property until the permanent management body is formed after full conversion of the master title.

The relationship between owners and management used to be a no-man land. This new law will help to regulate that area," said Chang Kim Loong, secretary-general of the National House Buyers Association.

An estimated 70 per cent of Malaysia stratified residential properties are badly managed, forcing owners and occupants to put up with deplorable conditions, he said.

Then again, developers and management companies, too, had problems.  Difficulty in collecting maintenance charges was top of the list and they are barred from cutting off the water supply or denying entry as an enforcement measure. Now, owners will share these headaches, too. 

With the new law, developers of new properties must form the JMB within a year of giving vacant possession.

And all developers of existing apartment properties must form the JMB before April 12 next year. 

So far, three apartment properties have formed and registered their JMBs. Two are in Kuala Lumpur and one in  Petaling Jaya.

One of them is the Sri Murni condominium off Jalan Duta here.  Its developer, IGB Corporation Bhd, held a meeting last month to elect 12 owners to the committee.