The joint management body (JMB) or management corporation (MC) is given many powers by the Strata Management Act of 2013 so that it can satisfactorily perform its duties. Chief among them is the collection of maintenance fees and sinking fund contribution from each unit owner.
But what if, as a unit owner, you fail your responsibility to pay these monies? What can the JMB or MC do to you to compel you to pay? Before we answer that, let’s first define what a defaulter is.
Under the Strata Management (Maintenance and Management) Regulations of 2015, you are considered a defaulter if you have failed to pay the aforementioned charges and any other money imposed by, or due to the JMB or MC after fourteen days of receiving a notice of demand from such entities. Now let’s proceed to what kind of actions they can lawfully impose on defaulters.
What JMB is Allowed to Do Against Defaulters
1. Post Names of Defaulters in Public
If you don’t want to suffer the embarrassment of having your name included in a list of defaulters for all to see, then promptly pay the maintenance fee and the sinking fund contribution. This is because the JMB or MC has the power to prepare and post a list of defaulters along with the unit number and outstanding balance. It’s really shameful for your friends and family members to see this, but it’s more concerning for the latter as they are directly affected by this.
2. Prevent Defaulters from Utilising Shared Facilities
The JMB or MC has the right to obstruct defaulters, their immediate family, guests and tenants from enjoying the facilities in a strata development. This is because the maintenance fee and the sinking fund contribution that you have failed to pay are partly used for the upkeep of such facilities. So next time you are sweating it out at a condo’s gym or having a leisurely swim at the pool, be sure to have paid the aforementioned charges. Otherwise, you risk the spectacle of being shouted at and chased away from using these facilities.
3. Obstruct Defaulters from Accessing Common Areas
Similar to number two, the management has the power to block defaulters from utilising the common areas, which are maintained and managed through the fees paid by each unit owner.
Generally, the common areas in a strata development include the land the building stands on, the entire physical structure, plumbing system, heating and air conditioning systems, electrical systems, windows, roofs, stairs and hallways, elevators, swimming pools, tennis courts, carparks, and landscaping. Hence, if your unit is on a high level, better pay the maintenance fee and the sinking fund contribution, unless you want to be deprived of the right to use the elevator.
4. Suspend Passcard Access on Turnstile or Entryway
Visiting a condominium as a guest can be a hassle, as you need to undergo strict security protocols. But can an actual unit owner be forced to enter the premises as a guest? The answer is yes, either you’ve forgotten or lost your passcard or you’re a defaulter whose passcard was disabled. In fact, the JMB or MC has the power to deactivate the electromagnetic access device of defaulters, forcing them to enter premises as guests. So if you’re the impatient sort, be sure to pay your dues unless you wish to go through the security queue every single time you enter and exit your condo.
5. Instruct the Security Guard to Follow Defaulter
One disgraceful reminder that you really need to pay the maintenance fee and the sinking fund contribution is when there’s a security guard following you to your unit’s doorstep after you’ve arrived, or to your allocated car park when you’re about to leave. While you can consider this as an annoying harassment, this is a justified and practical move on the part of the JMB or MC, as it ensures that defaulters don’t utilise any of the shared facilities in the strata project.
6. Serve Letter of Demand (LOD) to Defaulters
The JMB or MC, as the entity empowered by the Strata Management Act of 2013 to collect maintenance fee and sinking fund contribution, is also given the power to serve a written notice demanding unit owners to settle their dues within a minimum period of 14 days. Please note that there is no required minimum amount to serve such notice.
7. Sue Defaulter in Strata Management Tribunal
If the outstanding fees are still unpaid after the provided time frame of at least 14 days has expired, the JMB or MC may file a summon or claim in a court or the Strata Management Tribunal to recover the amount owed.
Any unit owner, who without reasonable excuse, fails to comply with the demand for payment is deemed to have committed an offence. If convicted, the defaulter will face a maximum fine of RM5,000 and/or imprisonment of up to three years. If the offence continues, he will be liable to a fine of not more than RM50 for every day or part thereof during which the offence persists after conviction.
8. Enter Unit Without Permission And Confiscate Your Things
As an alternative to taking the defaulter to court or the tribunal, the JMB may apply for a warrant of attachment from the Commissioner of Buildings (COB). The warrant authorises the JMB to confiscate any of the defaulter's movable property (e.g. TV, PC, laptop, smartphone) found inside his unit or elsewhere in the state.
If the sum due is still not paid within 14 days from the date of attachment, the seized movable properties can be auctioned off to pay the defaulter's outstanding balance. The warrant of attachment allows a representative from the JMB to forcibly enter the defaulter's unit in the daytime and confiscate movable properties. If the person holding the warrant encounters difficulties in executing the warrant, he may seek the help of the Commissioner of Buildings, who in turn can seek the assistance of a police officer to execute the warrant.
9. Ruin Defaulter’s Credit Score in CTOS and CCRIS
This can negatively impact your finances. If the JMB reports you as a defaulter in CTOS and Bank Negara Malaysia’s Central Credit Reference Information System (CCRIS), then you will encounter difficulty in obtaining loans from financial institutions.
This is because both CTOS and CCRIS show your financial commitments and how you have repaid them or not. Essentially, these credit reports are used by banks to assess your credit worthiness. So if you have been marked as a defaulter, it’s still possible to get loans, but this credit is likely to come with higher interest rates and low margins of financing compared to those obtained by borrowers of good standing.
Read more: Powers and Duties of a Joint Management Body (JMB)
What JMB is Not Allowed to Do Against Defaulters
While the Strata Management Act of 2013 provides many powers to the JMB or MC so that it can recover the owed maintenance fee and sinking fund contribution, there are still some limitations on what they can do. Specifically, the JMB is prohibited from doing the following against defaulters.
1. Prevent Defaulter from Entering His Unit, or Sell His Unit
The JMB has no power to obstruct the defaulter from going into his unit, although they can make it inconvenient (e.g. prevent usage of elevator). This means the management can’t padlock the unit’s door. The JMB also can’t forcibly sell the unit to recover the owed amount, as the Act only allows it to confiscate movable properties, not immovable properties like residential units.
2. Obstruct Defaulter from Utilising the Parking Lot, or Going Out
Similarly, the defaulter still has the right to use the parking lot even if he has outstanding fees. Basically, this means that the JMB has no power to put the defaulter under house arrest, or prevent him from going out of the compound.
3. Sever Electricity or Water Supply to Defaulter’s Unit
Lastly, the management is not authorised to cut the utilities to the defaulter’s unit. Essentially, disrupting water and electricity supply is unlawful as this is ultra vires of the act, meaning acting beyond or outside the scope of powers provided by the law.
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(Written by G. Zizan, 3rd December 2019)