Corrected on 20 Oct 2008 at 10pm
PALM Spring @ Damansara in Petaling Jaya is a nice little condominium with some 2,180 condo units. With each unit paying between RM150 and RM200 per month in maintenance fees, the annual collection comes up to around RM4 million.
This example is meant to illustrate the potential gold mine that condominiums are to those who manage such properties. With the kind of monthly income being generated to upkeep these high-rise properties, those who are tasked with managing it can easily be tempted to be creative in their accounting.
In a previous instalment of Ampersand, I touched on the problems brought about by condominium residents who sometimes fight among themselves to manage their jointly owned property under the Building and Common Property (Maintenance and Management) Act 2007. This time round, I shall talk about the tricks developers use to try to circumvent this Act in order to retain control of these goldmines.
Poolside view of Palm Spring Damansara (Source: realestate.net.my)
While the Act is meant to allow property owners to dictate what happens to their condominium, this is done by office bearers who are elected at annual general meetings.
The general meeting can easily be manipulated by the developer, who is tasked with convening it. There have been cases where the developer takes charge of the meeting instead of allowing the floor to vote for an impartial chairperson. This allows the developer to dictate the flow of the meeting so that their proxies can be voted into the management committee.
Residents who turn up for such meetings, who may not be aware of their rights, may be foiled and denied their choice of viable resident candidates in the management committee.
Because the Petaling Jaya City Council (MBPJ) does not have the resources to ensure that all meetings are done according to the law, the residents themselves must report any wrongdoing so that the MBPJ can rectify the situation.
[Corrected] Thus far, the MBPJ has ordered extraordinary general meetings to re-elect the management committee for three condominiums. However, these were not because their management committees were controlled by developer proxies.
(© Bora Ucak/Dreamstime) Legal intimidation
Developers also argue legalities with the MBPJ, often bringing along lawyers to meet council staff to impress upon them how the council should be doing its job.
Several issues have already come to light. Among them is the attempted use of proxy voters holding more than one vote at the annual general meeting to ensure that the developer’s representatives get into the management committee. Other issues are the transfer of liabilities to a new management team not under the developer’s control with the use of dubious audited accounts, and the refusal to recognise the MBPJ’s interpretation of the Act.
It can be daunting for MBPJ staff to face off these developers, which was why the council started arbitration sessions where residents can bring their legal representative along to argue the technicalities of the law with the developer.
Through these sessions, the MBPJ came up with additional guidelines on how to interpret the law to prevent further abuses. These guidelines are available at the Commissioner of Buildings secretariat at the MBPJ.
The intimidation is not merely directed at council officers. Developers have also harassed residents and councillors with threats of lawsuits.
Unite or fall
I would like to stress that not all developers are crooks. There are some gems out there who gracefully hand over the duties of property management to residents.
For those properties that do have developer-related issues, residents must never ever think that the MBPJ will solely be on their side. Whatever decision the council decides upon shall be based on facts and not mere hearsay. Residents who raise issues of corruption and cronyism, for example, but do not provide documented proof will not be entertained by the council.
There have been many residents who have complained that providing such documented proof can be daunting, if not impossible. And yet, there have been numerous other condominium residents who have been able to unite and share the burden of fact-finding.
The truth is, with so much money at stake, it would be in residents’ interest to be aware of the law and mindful of the ways in which it can be circumvented.
MBPJ councillor KW Mak is happy to give talks to Petaling Jaya condominium residents who would like to learn more about their rights. He can be reached at 016-293 9603 (leave an SMS if he does not answer).