One
of the question to be found in the sequel to 40 Questions You Should
Ask Your Lawyer Before Buying A Residential Property in Malaysia. This
new book will concentrate more on strata development. 40 more questions
and now finishing up the final 10 questions. This is also the reason why I have not post up an entry here for quite some time.
Here is a rough draft of
the answer to the question 'Can accessory parcel or common property in
strata development be sold?'. Most developers in Malaysia have done it one time or another but is it legal?
Accessory parcel and common property are
two different subject matters in a strata development although both can be seen
to overlap each other. Accessory parcel is an extension of a parcel owned by
the purchaser in a strata development which can be a building attached to the
parcel or just a space labeled to show its connection with the parcel. In
short, an accessory parcel is privately owned and comes together with a parcel
when it was bought by the purchaser of a parcel within a strata development. As
for common property or facility, it is shared by everyone with a strata
development although some of these common properties are within the sphere of a
parcel. Common properties are managed by the management of a strata development
and they can be immovable or movable objects. Certain accessory parcels may
look like the part of common properties and vice versa. The best example for
this is none other than the parking lot. When a property is bought and sold in
a strata development which has many parcels attaching themselves to each other
with overlapping functions such as a floor to a parcel which can be a roof to
another parcel, a parking lot which can be an accessory parcel to one
particular parcel can exist next to another parking lot which is a common
property. That is why it is important in the initial development plan of a
strata development for the housing developer to survey, label and get approval
for every inch of the strata development. That is why the plan for accessory
parcel, especially if it is not attached to the sold parcel and the plan for
common facilities are given the option to be attached in the First Schedule of
the Sale & Purchase Agreement of a strata development. In order to answer
to question whether the accessory parcel or common property can be sold or not,
we need to differentiate the beneficiaries of each subject matter.
Accessory parcel is built within a
strata development to be sold to a particular purchaser. In the preamble of the
Schedule H of the Housing Development (Control and Licensing) Regulations 1989,
it is stated that ‘….the Vendor (the
housing developer) and the Purchaser has agreed to purchase the parcel with
vacant possession….with accessory parcel with vacant possession distinguished
as accessory parcel No: ………….. of Building Land Parcel No:……………… (which is
delineated and shaded BLUE in the Accessory Parcel Plan annexed in the First
Schedule)’. The additional wording which appears in a bracket ‘(hereinafter
referred to as “the said Parcel”)’ means that an accessory parcel is part of a
parcel within a strata development. As it owes its existence to a particular
parcel, in a nutshell, an accessory parcel can be transacted as long as it
belongs to that particular parcel.
In Section 34(2) of the Strata Title
Act 1985, under the ‘Rights of proprietor in his parcel…’, it is also
specifically stated that ‘No rights in an accessory parcel shall be dealt with
or disposed of independently of the parcel to which such accessory parcel has
been made appurtenant’. It means that each accessory parcel must co-exist with
the parcel that it is attached to. As such, the only transaction which is
available to the owner of the accessory parcel who is also the owner of the
parcel is to rent out any particular accessory parcel under his control. If the
accessory parcel is a parking lot, that parking lot can only be rented out on a
monthly basis and not sold individually as it cannot be separated from the
parcel. As all accessory parcels must be labeled to indicate which parcel it is
attached to, it is impossible to be sold.
Common property or common facility is
built by a housing developer for a strata development to be shared among the
purchasers. Common property is generally whatever not within a parcel. If the
accessory parcel is privately owned once it is sold to the purchaser, common
property is publicly shared among the purchasers and is actually owned
collectively by all the purchasers within the strata development. If the
decision about any accessory parcel is to be made by the owner of the parcel,
any decision about any common property is made by the collective effort of the
purchasers through the management of the strata development. Management of
strata development differs depending on the time the strata development is at.
From the time of vacant possession to within one year of the date of vacant
possession, the management will be under the control of housing developer. After
that one year the common property will be managed by the joint management body
until strata title is out which will then pass the management to the management
corporation.
At each interval, the powers given to
the management are properly spelt out. When in relation to common property, the
housing developer has the decision to decide what initially can be built and
labeled as common property or common facilities. Under Clause 17 of Schedule H
of Housing Development (Control and Licensing) Regulations 1989, the housing
developer ‘…shall, at its own cost and expense, construct or cause to be
constructed the common facilities serving the housing development…’. Common
facilities plan can also be attached in the First Schedule of the same
agreement. Among the duties and powers given to the Joint Management Body under
Section 8 of the Building and Common Property (Maintenance and Management) Act
2007 are to ‘…maintain the common property and keep it in a good state of good
and serviceable repair;’ -Section 8(1)(a) and ‘to purchase, hire or otherwise
acquire movable or immovable property for use by the purchasers in connection
with the enjoyment of the common property;’ – Section 8(2)(d). The same
provisions as replicated in Section 43 of the Strata Titles Act 1985 as duties
and powers of the Management Corporation.
In all the clauses and sections of
the agreement, regulations and acts, common property can only be managed,
maintained, controlled, enjoyed and added with movable property. There is
nowhere in any of these provisions that a common property can be sold. However,
if a shop or a retail space is labeled, marked and reserved as a common
property, it can be rented out or even leased as it can be enjoyed by every of
the owner(s) of the parcels within the strata development. In the Third
Schedule, Strata Titles Act 1985, as By-Laws for the Regulations of Subdivided
Buildings, under clause 3, the Management Corporation is allowed to ‘…by
agreement with a particular proprietor grant him exclusive use and enjoyment of
part of the common property or special privileges in respect of the common
property or part of it’ That will also mean that a common property such as a
car park, under the control of the management of the strata development, can be
rented out or leased out to the owner of parcels within the housing
development. For any shop(s) or additional parking lot(s) or any other space(s)
to be sold by the housing developer which are other than the residential
property within the housing development, such spaces have to be parcels and
declared as such. As long as these spaces are labeled as common property, it
cannot be transacted as such.
