By:
Bryan Lui (Co-Managing Partner) [bryanlui@luibhullar.com]
Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh@luibhullar.com]
Insights from a Strata Lawyer on What Happens If You Don’t Pay Your Condo Maintenance Fees
Maintaining a condominium complex requires collective effort from all unit owners. Each owner must contribute to the upkeep through regular maintenance fees. But what happens when a unit owner fails to pay? Here’s what you need to know, with insights from a strata lawyer.
Types of Condo Maintenance Fees
As a condominium unit owner, you’re required to pay certain maintenance fees, as these properties are considered strata developments under the Strata Management Act 2013 (SMA). The fees are crucial for ensuring proper management and maintenance of the buildings and common areas.
There are two primary types of fees:
Service Charge:
This is a monthly payment for the maintenance of common facilities and properties within the development, such as swimming pools, elevators, and security services.
Sinking Fund:
This is a reserve fund collected for future expenditures, including major repairs, refurbishments, or replacement of fixtures.
How is the Maintenance Fee Calculated?
The amount you pay as a maintenance fee is determined by a standard formula outlined in the Fourth Schedule of the Strata Titles Rules 2015:
Operating expenditure / Total share units in condominium development = Maintenance fee per unit
Should you be dissatisfied with the maintenance fee established by the developer or the Joint Management Body (JMB), you have the option to seek a review from the Commissioner of Buildings.
Subsequently, the Commissioner could direct the JMB or developer to engage a property manager to reevaluate and propose a suitable fee.
Is Paying the Maintenance Fee Mandatory?
Yes, paying the maintenance fee is a legal obligation under Section 12(5) of the Strata Management Act 2013. As a unit owner, you must pay the management body within 14 days of receiving a notice. Failure to do so will classify you as a defaulter under the Strata Management (Maintenance and Management) Regulations 2015 (SMR 2015).
According to Regulation 6(2) of SMR 2015, the management is entitled to charge interest on the overdue amount, starting from the end of the 14-day period at a rate of 10% per annum or any rate determined by the management.
Consequences of Not Paying Maintenance Fees
If you fail to pay your maintenance fees, the management body has the authority to take several actions:
Legal Action: The JMB can sue you in court or take the matter to the Strata Management Tribunal if you don’t settle the outstanding charges within 14 days of being served with a written notice.
Forced Entry and Seizure: The management can forcibly enter your unit and seize movable property, which will be auctioned to cover the outstanding charges. Seized items typically include electronics and appliances.
Defaulter List: Your name, unit number, and the amount owed may be displayed publicly in common areas.
Deactivation of Access Card: Your access card to the residential complex can be deactivated without prior notice. A fee of up to RM 50 may be required to reactivate the card.
Restricted Access: You may be required to sign in when entering the building, and a security guard may need to accompany you to your unit. Access to common facilities, including your assigned parking space, will also be suspended.
Credit Blacklisting: Your name could be blacklisted in CTOS and CCRIS, which may negatively affect your ability to secure future bank loans.
Fines and Imprisonment: Failing to pay maintenance fees can be considered a criminal offense. You may face fines up to RM 5,000 or imprisonment for up to three years, or both. Continuous offenses could incur additional fines of up to RM 50 per day.
[BUT DO KEEP NOTE: The management cannot block your access to your home or cut off your electricity or water supply.]
Consulting an SMA lawyer or a strata lawyer can help home buyers navigate the complexities of the Strata Management Act 2013, ensuring their rights and interests are protected.
Please contact us for a free consultation via WhatsApp (+60143000960) or E-mail (admin2@luibhullar.com) for any queries regarding Strata Management matters.
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