Understanding the importance of perfecting your strata title

By Viktor Chong viktorchong@thestar.com.my

For some homeowners, having a strata title bears little significance. They may not see the necessity to perfect the transfer (issue the strata title in his name) due to the legal fees and stamp duties incurred from that process. These homeowners, however, will be in for a frustrating time once they attempt to sell the property or charge it for a refinance with the bank.

What constitutes a strata title?

Ismail Sabri Wee and Wong partner Ng Choon Yon explained that strata titles are basically separate individual titles issued for the kind of property whereby the building or land is subdivided into a number of parcels.

It specifies the ownership details, area of the particular unit and accessory parcel. In other words, it acts as the final proof of the built-up area of the owner’s unit and the owner’s apportionment of the share in total aggregate units.

Among the importance of a strata title is that it empowers the owner with control over the individual units of high-rise properties and strata landed ones. In this regard, it acts as proof that enables the owner to get involved in the maintenance and management of said strata property.

A strata title also acts as a dealing instrument when it comes to certain processes involving the property, for instance, charged it to the bank for a loan," said Ng.

Furthermore, it facilitates disposal of the property—a vendor wishing to sell off his property with a strata title does not need to get the developer’s consent nor pay any consent fees arising therein.

Legal hurdles to overcome

“As long as the strata title has not been transferred, the land and common property are still owned by the developer according to the land registry,” said Ng. Nevertheless, it is to be stressed that the beneficial ownership in respect of that particular parcel has already been assigned to the purchaser or the financial institution following the execution of the sale and purchase agreement (S&P) and/or deed of assignment.

Without a strata title, the owner (beneficial owner) has to procure all the S&P documents for the property. Assuming that the property in question had changed ownership a few times over, the current buyer will need to procure the S&P from the very first point of transaction ( first purchaser with the developer), then the S&P between the first purchaser (now seller) with the second purchaser, stretching forth till the final transaction.

“Following enforcement of amendments to Strata Titles Act and introduction of Strata Management Act 2013, strata titles need to be issued upon vacant possession of the property,” said Siow.

“There is a huge process to go through if there are any missing documents in between the length of transactions,” said Ismail Sabri Wee and Wong partner Siow Wai Pin, who pointed out that a police report needs to be filed. With the possession of a strata title, however, the owner can easily prove his ownership through a land search.

Previously, it is a norm for owners of strata properties to take up to several years to obtain their strata titles. According to Siow, the enforcement of the Strata Titles (Amendment) Act 2013 and Strata Management Act 2013, enunciated that strata titles need to be issued upon vacant possession of the property. As a consequence, prolonged delay in issuance of strata titles should no longer be the case today.

All projects approved after the enforcement of the amended Act in June 2015 are now subjected to the amended Act whereby the Act expressly safeguard the rights of the strata owners and buyers by stipulating vacant possession with strata title. Albeit, it is a long journey for those unlucky house buyers of older strata projects, where this issue has yet to be resolved. Below are the simplified steps on how to get your strata titles:

Scenario A

Developer yet to transfer strata title to house buyers

1/ Buyer needs to check with the Land Office if the developer has actually applied for the strata title

2/ In the event that the developer has applied for the strata title, buyer or lawyer (appointed on behalf of the buyer) shall inquire the developer on the transfer of strata title

3/ Developer informs the buyer that strata titles are out

4/ Buyer appoints a lawyer to draft Form 14A memorandum of transfer to the Land Office to transfer title from the developer’s name to the buyer

5/ Lawyer writes to the developer for the necessary information once documents are signed

6/ Lawyer applies for stamp duty with Lembaga Hasil Dalam Negeri (LHDN)

7/ Buyer pays the stamp duty

8/ Lawyer compiles the necessary documents and presents to Land Office to transfer the name

Scenario B

Developer yet to apply for strata title in the first place

1/ Buyer needs to check with the Land Office if the developer has actually applied for the strata title

2/ Buyer discovers that the developer did not apply for strata title

3/ Buyer needs to file a complaint to the Commissioner of Buildings to enforce the developer to apply for the strata title

4/  Developer informs the buyer that strata titles are out

5/ (Succeeding steps similar to scenario A)

Scenario C

Developer undergoes liquidation and did not apply for strata title in the first place

1/ Court appointed liquidator opens a Book of Strata with the Land Office

2/ Liquidator on behalf of the developer informs the buyer that strata titles are out

3/ Buyer appoints a lawyer to draft Form 14A memorandum of transfer to the Land Office to transfer 4/ title from the developer’s name to the buyer

5/ Lawyer writes to the liquidator for the necessary information once documents are signed

6/ (Succeeding steps similar to scenario A)

Additional cost

Additional costs include the surveyors’ cost, consultancy costs to appoint an architect to draw up a new planning design of the building, and other relevant administration costs. In this context, the Commissioner of Buildings acts as the mediator in resolving the issue. In addition, legal fees and relevant stamp duty fees would be payable as well, and the amount of legal fees and stamp duty will very much depend on the valuation of the property.

For example, the legal fees for transfer (using the same Sale and Purchase Agreement transaction lawyer) for a property valued at RM650,000 (bought from a housing developer) would be RM1,550

For example, the legal fees for transfer (not using the same Sale and Purchase Agreement transaction lawyer) for a property valued at RM650,000 (bought from a housing developer) would be RM3,100

For example, the stamp duty for transfer for a property valued at RM650,000  (bought from a housing developer) would be RM13,500.

About the Contributors

Ng Choon Yon is an Advocate & Solicitor of the High Court of Malaya. He graduated with an LLB (Bachelor of Laws) degree from the University of Nottingham Trent, (Dublin) UK in 2012. He was admitted as a Barrister-at-Law in the Republic of Ireland (The Honorable Society of King’s Inns) on October 2013. After his graduation, he commences his pupillage at Skrine and was admitted to the Malaysian Bar in 2014.

Siow Wai Pin is an Advocate & Solicitor of the High Court of Malaya. He graduated with an LLB (Bachelor of Laws) degree from the University of Liverpool in 2012. He obtained his Certificate of Legal Practice in the year of 2013 and thereafter commences his pupillage at the chamber of Messrs. C.K Cheong & Seow Kuala Lumpur.

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