5 Misconceptions about Maintenance Fee of Strata Property
Most of us who live in a high-rise building should be familiar with maintenance fee, charged by the management body, either JMB (Joint Management Body) or MC (Management Corporation). Under the Strata Management Act 2013 (“SMA”), owner of a strata property has a duty to pay Service Charge, Contribution to Sinking Fund and certain charges to the management body. These charges are normally bundled together and billed monthly to the owner, and commonly referred to as the maintenance fee. However, based on our experience in dealing with strata management cases, many owners fail to understand very basic principles that applies to these maintenance fee. In this article, we have compiled the 5 most common misconceptions about maintenance fee under a strata scheme.
- Hey, I did not agree to this rate
It is a mistake to think that you have to agree on the specific rate before you become liable to pay maintenance fee. Unlike debt in commercial context which is mostly a contractual duty, an owner’s duty to pay Service Charges and Contribution to Sinking Fund is a statutory duty under the SMA. What it takes to determine the rate of maintenance charges is a simple majority at the Annual / Emergency General Meeting. And the decision of this simple majority binds every other owners under the same roof. Therefore, it is important to exercise your right to attend and vote at the AGM, so you will have a say in the charges you will pay.
- Let’s wait long enough so that I do not have to pay
In most of the debt recovery scenarios, the creditor will have to take legal action within six years from the date when the cause of action first accrues (in laymen term, it means when the debt first become due). This is known as the “limitation period” which exists to bring finality in litigation. However, this may not apply to your outstanding maintenance fee. Section 105 of the SMA expressly provides that the Limitation Act 1953 (from which the limitation period derives) does not apply to claims in Strata Management Tribunal. Taking one step further, there has been cases that decided that limitation period similarly should not apply to claims for sum due under SMA in a civil court. Therefore, do not dream for the outstanding maintenance charges to diminish over time, it likely will not.
- Can I ask management to give discount?
Many see those who sit in the management committee as people in the power. While the committee members have power to decide on administrative matters collectively, they certainly are not able to grant discount or waiver on the outstanding maintenance fee, even if you are their best neighbor. At most, they can decide whether to allow your payment by way of instalment. Whenever there is a genuine need to lower the rate of maintenance charges, such decision to reduce charge rate should only be done through the general meeting.
- Poor service of management does not deserve my payment
As said above, duty to pay the charges under SMA is a statutory duty, instead of a contractual one. As such, the fact that you have various complaints over the poor maintenance of the building is no excuse for you to avoid liability in paying the maintenance charges to the management body. This is so even if the management committee has failed their duties. You will not be exempted from paying maintenance charges even if you have suffered from the poor management or negligence of the management.
- Share unit, not square feet
The current law is settled that maintenance charges under the SMA must be charged based on share unit instead of square feet. This is a fact not only confused for many owners, but also a handful of management bodies that are still applying calculation based on square feet. Basically, share unit is a numerical representation of the rights, benefits and liabilities relating to a strata owner’s parcel, it is allocated based on the formula provided under SMA. In addition, share units also determine the voting rights of a parcel owner when voting by poll is called upon in a general meeting. Therefore, don’t get confused when your calculation based on square feet does not tally with the maintenance charges billed to you, they should be computed based on share units instead. If they are not, it is prudent to alert the management and find out why.
**The contents of this article do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. If you are facing legal problems, please speak to a lawyer. You are welcome to contact us, we provide wide range of legal services including matters relating to strata management law.
