Contributed by Mary Lau
Hindsight is an excellent teacher. I now cringe whenever I read the Sale and Purchase Agreement (SPA) of a development which I bought. Relying on the name of the developer and its good location, I just signed without caring much about the details.
Impeccable show units, scale models and presentation by well-attired sales attendants can make an indelible impression. Beyond that, how are buyers assured that the promotion is an accurate rendition of the development before signing the SPA?
Thanks to the wisdom of lawmakers, an additional measure has been legislated in the Strata Management Act 2013 (SMA) to protect the interests of buyers of strata title properties. And this new measure comes under the Schedule of Parcels (SOP).
With the SOP, there is more transparency and certainty concerning design specifications, parcels, accessory parcels, common properties, equitable share units, and that strata titles would be issued eventually. The SOP can’t simply be changed, and thus there would be more assurance that what you see is what you would eventually get. The SOP came into force on June 1, 2015. Despite this assurance, it is still important to know what is included in the SPA.
Composition of the SOP
Essentially the SOP shows a legend of all parcels, accessory parcels and common properties (SMA Sec 6(3b)). They also include the location plan, storey plan and delineation plan - which are based on approved building plans.
It has to show the proposed share units for each parcel or proposed parcels, total share units of all parcels, and the proposed quantum of share units for each provisional block (SMA Sec 6(1)).
The developer’s licensed surveyor prepares the SOP, and there must be a certificate from this surveyor that the buildings or land parcels shown in the SOP or amended SOP are capable of being subdivided under the Strata Titles Act (STA).
The buildings or land parcels have to be constructed in accordance with approved plans and specifications (SMA Sec 6(3c,3d)).
Every developer has to file the SOP with the Commissioner of Buildings before they can sell, and it has to be prominently displayed at the sales office (SMA Sec 6(5a,5b).
Income-generating spaces: Common areas or Parcels?
In one particular office development, spaces are designated for usage as a convention hall and eateries in a separate section close to the main buildings.
One might ask if the rental income generated from these spaces would belong to the joint management body or management corporation (MC) and the relevance of the SOP in this matter.
The sales attendants had not heard about the SOP, and they didn’t seem to understand my questions. Initially, they thought those facilities belong to the developer.
If that is the case, the lots for those usages would be considered parcels to be held under separate strata titles - which means they can be sold. The rental income would not go into the management funds unless those areas are under common property.
In one residential development, it was generous of the developer to provide spaces allocated for commercial usage in an annexed building as part of the common property when they could have carved them as parcels and profit from the sale or income. In another development, these spaces are within the main buildings.
The SOP would clear any uncertainties as it would show whether such spaces are under parcels or common areas. If the SOP is not placed at the sales gallery, buyers can ask for it before proceeding further.
As the number of share units for each parcel is shown in the SOP, buyers would also be able to gauge the amount of maintenance charges and sinking fund contribution required to be paid in proportion to their share units.
Attachments to Schedule H
The terms and conditions of the SPA for residential strata properties in uni-classification or mixed-development, including landed strata, are prescribed under the Housing Development (Control and Licensing) Act 1966.
This standardised SPA is under Schedule H. The revised Housing Development Act (HDA) was a result of the Housing Development Amendment Act (HDAA) 2012 and the corresponding Regulations which were also amended, and they came into force on June 1, 2015.
For residential landed properties with individual titles, the prescribed SPA is under Schedule G. Both Schedule G and H do not apply for commercial properties. SoHo is covered under the HDA as it is part residential and can be used partly as a home.
The revised Schedule H, effective June 1, 2015, incorporates various sections of the Strata Management Act 2013 (SMA) and one of the sections in this schedule makes reference to the SOP as shown below.
“AND WHEREAS the Developer has, at its own cost and expense, obtained the approval of the building plans (hereinafter referred to as “the Building Plan”) from the Appropriate Authority, a copy of a schedule of parcels has been filed with the Commissioner of Building under the Strata Management Act 2013 [Act757];"
Below are the wordings displayed at the top of the first page of a Sale and Purchase Agreement using the Schedule H template:
With reference to the SPA of an apartment in a mixed development project which I bought in 2013, copies of approved plans were attached in the first schedule.
These included the site plan, layout plan, floor plan of the parcel, storey plan of the building, accessory parcel plan, common facilities plan and building plan.
In our case, one could hardly read the words or make out some of the plans as the original drawings were scaled to A3 size. This is where the SOP comes in handy as buyers can go through the details at the sales office.
The second schedule contained a list and description of common facilities and services provided for the development. They were segregated under three sections: Common facilities exclusive to the component, common facilities shared by all components in the development and common services to all components. It also listed the facilities that would be operated by third party operators.
For mixed projects, know what is included in the Exclusive Common Property for your component. If different rates of maintenance charges are eventually used, the costs of that portion will be borne by the respective component owners, proportionately to the number of their share units.
To read part 2 of this article, please click on this link (https://www.starproperty.my/news/116741/don-t-skip-the-details-of-your-strata-development-before-making-a-purchase-part-2).
Mary Lau is an ordinary citizen who has a passion for strata matters. She holds a BSc in Land Management from the University of Reading, UK (1991) and is a licensed valuer with the Board of Valuers, Appraisers, Estate Agents and Property Managers Malaysia. Her early career was mainly in valuation and feasibility studies. She handled numerous disputes for owners affected by compulsory acquisition and was appointed high court assessor in Sarawak for compensation cases. In 2007, she began her own work in real estate and other ventures. In her free time, she likes to write and share her experiences with others.
This article is intended to convey general information only. It does not constitute advice for your specific needs. This article cannot disclose all of the risks and other factors necessary to evaluate a particular situation.
Any interested party should study each situation carefully. You should seek and obtain independent professional advice for your specific needs and situation.