Maintenance Charges and the Sinking Fund

A maintenance account and a sinking fund account must be opened before any charges are collected (s 10, s 11, s 50, s 51). Money above RM5,000 not needed at once goes into an interest-bearing deposit account (s 36, s 80).

The maintenance account pays day-to-day upkeep of common property, cleaning, security, insurance premiums, quit rent and rates, audit fees, approved committee allowances and other running costs (s 23(3)). The sinking fund pays capital spending: repainting common property, renewing or replacing fixtures and fittings, upgrades and other capital spending the body decides (s 24(2)).

• The JMB or MC sets the charges at a general meeting and collects them in proportion to each parcel's share units (s 25(3), s 60(3)(b)).
• An MC can set different rates for parcels used for clearly different purposes.
• During the developer's period, the developer sets the charges by share units, and a purchaser who disagrees can ask the COB to review them.
• Within 28 days after the general meeting, every owner gets a notice of the charges, sinking fund contribution and interest rate (Form 5A for a JMB, Form 15 for an MC), also posted on the notice board.
• If funds are short, an AGM or EGM can set an amount each owner pays, by share units (s 33, s 77). An MC may borrow money; a JMB has no such power.

During the developer periods the sinking fund contribution is 10% of the charges (s 12(4), s 52(3)). A JMB or MC can set a different figure at a general meeting, but never less than 10% of the charges (s 25(4), s 61(3)).

An owner pays within 14 days of receiving notice. After that, interest runs at a rate set at the general meeting, capped at 10% a year (s 25(5), (6), s 60(3)(c)). The default by-laws set 10% a year on a daily basis unless a general meeting sets another rate.

Under the default by-laws, a defaulter (unpaid 14 days after notice) can be named on a defaulters' list on the notice board, have access cards turned off (reactivation charge up to RM50), and have use of common facilities suspended, including an assigned parking bay. Written instalment plans are allowed.

• Serve a written demand (Form 11 for a JMB, Form 20 for an MC) giving at least 14 days to pay (s 34, s 78).
• If still unpaid, file a claim in court or at the Strata Management Tribunal, or apply to the COB for a warrant to seize the owner's movable property (Form 21, fee RM20). Goods not redeemed within 14 days are auctioned under the COB's supervision (s 79).
• Not paying the demand without good reason is an offence: a fine of up to RM5,000, prison of up to 3 years, or both, plus up to RM50 a day while it continues.
• A tenant who pays the owner's debt to avoid seizure can deduct it from the rent (s 79(5)).
• Charges can be recovered from the owner's successor in title (s 60(4)). KPKT: a buyer at public auction must pay the previous owner's arrears.

For a fee of up to RM50, the JMB or MC must give an owner or prospective buyer a certificate within 21 days showing the charges and sinking fund, any arrears on the parcel, the balances of both accounts and any repairs the owner may be liable for (s 31, s 73; MM Regulations reg 19, reg 30). Failing to issue it is an offence.