Successor-in-title, ‘proprietor’ may not evade obligation to pay debts

IS it not the duty of the lawyers attending to the sale and purchase transaction in a strata property to ensure specifically the amounts outstanding (management charges, sinking funds, insurance and quit rent) or debts in the parcel unit due by the vendor(s) to the management bodies, as the case may be, are paid in full before the transaction is completed so as to ensure that the purchaser(s) are not burdened with the oversight of “past debts”?

Prior to the decision of Brightvite Sdn Bhd v Pantai Towers Management Corporation & Another Appeal [2019] case, the High Court in Sri Wangsaria Management Corporation v Yeap Swee Oo @ Yeap Guan Cheng [2009] made a similar ruling. Here, the subsequent purchasers refused to pay arrears of maintenance charges for the period prior to vacant possession, denying all liability for such arrears.

Although Section 45 of the Strata Titles Act, 1985 has been deleted (among others) and now “migrated” to the newly minted Strata Management Act, 2013 (SMA), the principle of law established in Brightvite and Sri Wangsaria Management Corporation continues to be applicable.

To our mind, the provision shows the intention of the legislature that neither a proprietor nor a successor-in-title nor that category of “proprietor” may evade the obligation to pay contributions or debts.

Hence, it is incumbent upon the purchaser(s)’ lawyers to make a written requisition under Section 73 of the SMA to inquire about the amount of charges and contribution to the sinking fund payable; time and manner of payment and any levied contributions owing by the vendors in respect of the property or any amounts outstanding pursuant to the SMA. If they have failed or neglected to do so, the purchaser(s) and/or their lawyers cannot allege that they are not aware of the indebtedness because of their own omission.

Litigation could be avoided if the parties entrusted had done what is required of them under the SMA. The liability of purchasers to be duly registered as proprietors and successor-intitle are clearly provided for in the law. It is also the obligation of the purchaser(s), as prospective purchasers to be vigilant of the need to conform to the SMA and its regulations if they are to choose to stay in a stratified property.

There is a corresponding Section 31 in the SMA that relates to the same issue titled: “Right of parcel owners or prospective purchaser” for those developments still under developer management period or joint management body status, where individual strata titles have not been issued. The prerequisite form is under Form 10 of the Strata Management (Maintenance & Management) Regulations, 2015 – Regulations 19.

A person who purchases a unit in a strata development enters into a threefold relationship.

First, he is the individual owner of his unit. Second, he is a co-owner with all other owners of the common property and the land of the strata development. Third, he is automatically a member of the owners body (management body) to whom the management and maintenance of the scheme is entrusted.

Harmony can only be achieved if the strata development is managed properly, the common property and facilities maintained adequately and regularly. The proper maintenance, efficient management and ultimately the success of the strata development will depend on a steady flow of payments to the coffers of the common funds. This includes “the debts”.

This article was contributed by National House Buyers Association secretary-general Datuk Chang Kim Loong.