Strata Management Flashcards
where did strata scheme originate?
New South Wales, Australia
Objective of Strata Scheme ( Condo policy)
- More intensive use of limited land resources
- Greenery & open spaces for recreation
- Proper maintenance of community amenities & facilities
A system of title which gives
- Supporting rights over common property
- Exclusive ownership of strata lot
Duality in ownership
- An undivided common interest in shared facilities, i.e. common property
- A separate individual interest in the airspace, i.e. strata lot
Benefits of Strata Scheme
❖ Reduced cost of ownership
❖ Upkeep and maintenance cost are shared with other owners
❖ Ease of disposal for subdivided lots
Types of Strata Properties
- Single use type
- Mixed use type
Legislation Governing Strata Properties
- Land Titles (Strata) Act (LTSA)
- Building Maintenance & Strata Management Act (BMSMA)
Land Titles (Strata) Act (LTSA) provides for
➢ Strata subdivision
➢ Collective sale
➢ Termination of strata scheme
➢ Under the purview of MinLaw
➢ Administered by SLA
Building Maintenance & Strata Management Act (BMSMA) provides for
➢ Self-governance, management, control & administration of common property
➢ Resolution of disputes by Strata Titles Board
➢ Under the purview of MND
➢ Administered by COB of BCA
Parties in BMSMA
- management corporation
- owner developer
- council
- subsidiary proprietor
- managing agent
what does proprietor(owner-developer) means?
Any person/organization intending to develop a building
Subsidiary Proprietor (SP) meaning
- A purchaser (may be an individual or a company) whom developer transferred ownership of a unit to
- kinda like a condo unit owner
Management Corporation Strata Title (MC or MCST) meaning
juridical entity with perpetual succession that is empowered by law to administer and oversee common property of a strata development
Management Council (Council) meaning
- represented body of members appointed from among SPs to manage the strata development.
- Up to a maximum of 14 members in the Council.
Managing Agent (MA) meaning
- professional service provider engaged by the MC to manage the strata development,
- normally on a year by year contractual basis
Share Value meaning
- figure that shows
- allocation of proportionate share
- allocated to the owner in each strata unit in development.
Strata Unit/Lot meaning
Air space defined by the three-dimensional area within enclosure walls of the lot, floor & ceiling
Common Property meaning
- Parts of land/building in the strata development which are not comprised in any lot.
- Parts being used or enjoyed by occupiers of two or more lots
Strata Titles Boards (STB)
- tribunals constituted under the BMSMA
- to mediate and hear applications
- between SPs and MCs, or between SPs
- in relation to disputes arising out of strata titled property
- and orders for collective sales of property under the Land Titles (Strata) Act
Commissioner of Buildings (COB)
essentially an enforcement officer designed to police the rules and regulations of the BMSMA and LT(S)A.
Self-Regulating Framework of The BMSMA
- Allow SPs to decide on how to manage the property
- All SPs have a right to take part & vote in decision-making process & vote on decisions
- MC enforce their own rules (called bylaws) & by-laws provided in the Act when managing the estate
- SPs have responsibilities (e.g. sharing costs of upkeep of common property)
- Specific obligations of MC are performed by the council or MA
- MC will perform its obligations imposed by the Act and Regulations
(e.g. hold annual meetings)
What are common properties?
- Not comprised in any strata lot in strata title plan
- Common to all SPs; tenants-in common
- Cannot sell off the common property independently
- dont serve individual strata lots
- serve the entire space
Shared value (SV)
Each strata lot is allotted share values (SV)
Significance of SV determines
- Amount of maintenance contributions
- voting rights
- share in common property
Who accept SV allocation?
- Commissioner of Building(COB) BEFORE sale of property
Can SV be changed
no, except for some instances
instances where SV can be changed
- error in entry
- value fraudulently assigned
- subdivision of a lot or an amalgamation of two or more lots
How is SV determined in Single Use Residential
50 & below = 5
51-100 = 6
101 - 150 = 7
151 - 200 = 8
201 - 250 = 9
251 - 300 = 12
+ 1 share for every 50m^2
formula for per share per month (single use resi)
Per share per month =
Management fund budget
/
Total Share Value
Single Use Non-Residential Development include
- Shops
- Offices
- Factories / Warehouses
Single Use Non-Residential SV
- determine the SV for the entire building
- SV for entire building must be in multiples of 10, e.g. 100, 1,000, 10,000…
Formula For SV in non-resi
SV in non- resi = (nfa of strata unit / total nfa of building) X SV allotted to building
how to calculate monthly maintenance contribution in non-resi
- monthly contribution per SV per month = annual budget / share allocated to building / 12
- monthly contribution per shop = monthly contribution per SV per month X said shop’s SV
Share Value In Mixed Development
- different user groups, e.g. shops / office / resiential, etc
- allocated based on weight factor & floor area
Proprietor(Owner-developer): Before MSCT, before Strata Title Plan is registered, before TOP
Developer manages & maintains before the formation of MC
proprietor: Before TOP: How to Establish & Manage Maintenance Fund
- Apply to COB to collect maintenance charges
- Quantum to be collected based on quotations (average of 2 years expenses)
- COB checks quotations & compare with similar developments before approving quantum
- No collection of maintenance is allowed until approval is given
proprietor: After TOP: Establish & Manage Maintenance Fund
Establish Maintenance fund under S(16) of BMSMA and open account with licensed bank to deposit maintenance charges
proprietor: Units sold before TOP & handed over at TOP, who pay maintenance fund?
Collect from SPs from the date the maintenance charges are due and payable
proprietor: Units sold before TOP and NOT yet handed over, who pay maintenance fund?
- Developer given a deferment period of 4 weeks after the date the TOP is issued to pay the maintenance charges
OR
- from the date the Maintenance Fund is establish, which is late
proprietor: Unsold Units, who pay maintenance fund?
- Developer is given adeferment period of 4 weeks after the date the TOP is issued to pay the maintenance charges
OR
- from the date the Maintenance Fund is established, whichever is later
proprietor: Accountability for Maintenance Fund: Maintenance fund accounting requirements
- Keep proper books of accounts for payments & receipts
- Appoint auditor for an annual audit & an audit within 4 months after the MC is constituted
- File certified true copy of audited accounts with COB, permit COB full access to accounts & records and make copies & furnish certified true copy of accounts, if required
- Allow inspection of audited Maintenance Fund accounts by Purchaser
- Within 28 days of audit completion: accounts made available for 2 weeks for inspection without payment of any fees
- At any other agreed time & place: permit inspection of accounts & other records after payment of a prescribed fee
proprietor: Accountability for Maintenance Fund: Money held by Developer in Trust
Deposited only with a licensed bank, no investment of Maintenance Fund monies allowed
proprietor: initial period after After MCST constitution to First AGM
- period from the day the MC is constituted to the day
when the 1st AGM is held - Or 12 months after the MC is constituted
- Developer plays the role of the MC
when proprietor close Developer’s established Maintenance Fund Bank Account, they need to appoint a
auditor to audit account after it is closed
when proprietor open new MCST account
- Transfer monies from Developer’s
Maintenance Fund account to MCST account - No deficit can be transferred into new MCST account
what happens when proprietor receive maintenance charges & deposit into MCST account
Keep proper books of accounts for convenient checking & auditing
what proprietor do when they play role of MCST as trustee &
observe restrictions of MCST in
Initial Period
a. Not to EXCEPT with COB’s approval
* make, alter or repeal by-laws
* grant easement or restrictive covenant
* execute transfer common property or give exclusive rights
* make contracts which confers rights and control beyond initial period
* borrow money or give securities
* appoint managing agent to hold office beyond initial period
b. Can
* Carry out alteration/erection of structure on common property via a Special Resolution
proprietor: Convene First AGM within how long
- Within 13 months after the date of constitution of the MC
OR
- Not later than 8 weeks after the Developer receives a written request from SPs making up 10% of the total number of lots
What happen to developers who did not convene the first AGM
- Guilty of an offence
- Liable on conviction and fine not exceeding $5,000
- A further fine not exceeding $100 per day for continuing offence
if a Developer does not hold the First AGM as required (SP)
- Any SP or Mortgagee in Possession may apply to the COB to appoint a person to
convene the First AGM
if a Developer does not hold the First AGM as required (COB)
- Appoint person to convene First AGM within such time & place specified
- Include any ancillary or consequential instructions to the Appointed Person to facilitate the convening of the meeting
- Appoint person shall be deemed Chairperson of the MCST
If a Developer does not hold the First AGM as required (general)
Notice of Meeting may be given as specified and served to all eligible SPs with copy of Agenda
Proprietor: After First AGM on handing over to MCST
- Documents to be handed over within 2 weeks after convening of First AGM
- Prepare and place annual budget for approval starting from first day of the month
following First AGM
what is in the docs when proprietor hand over after first AGM
- All plans required to obtain TOP & CSC
- Any as-built drawings that indicate location of pipes, wire cable, etc. for passage or provision of services
- Contracts entered into by or on behalf of MCST
- Copy of strata title plan
- Name & address of contractor, sub-contractors & material suppliers
- Warranties, manuals, schematic drawings, operating instruction, manufacturer’s manual relating to prefabricated bathroom units & other information regarding the construction, installation, operation maintenance, repair & servicing of any common property
- Record to be prepared or retained by MCST
- Any other records as may be prescribed
Proprietor, After First AGM on handing over to MCST, other aspects:
- MCST may appoint independent building surveyor
- to conduct a condition survey of common property prior to handover (subject to getting an approval at a General Meeting
to incur this expense)
Management Corporation
MCST/MC
what MCST do?
- control & manage the common property
- exercise self-governance &
manage its own domestic affairs
what is a MC/MCST?
- A legal entity in law
- can sue and be sued
- can make and break contracts in its own name
Tiers of MCST
- Single-Tier
- Two-Tier
Two-Tier MCST
❖ Strata developments of more than one use type e.g. residential lots & non residential lots
❖ Single use developments where buildings are substantially different e.g. high rise apartment blocks and walk-up apartment blocks
First tier Main MC (more than one use type)
takes care of common property used by all SPs, e.g.
driveways, carparks, bin centre
Second Tier Sub-MCs (more than one use type)
takes care of limited common property (LCP) used exclusively by SPs within sector
A Residential Sub-MC (more than one use type)
takes care of the swimming pool, BBQ pits, etc.
A Retail Sub-MC (more than one use type)
takes care of the escalators, central air-con, etc
High Rise Sub-MC(single use type)
takes care of the lifts, etc
Second Tier Sub-MCs (single use type)
takes care of the pitched roofs, etc.
2-Tier MC
- LCP: a part of the common property that is clearly demarcated on the strata title plan for exclusive benefit & management of the SPs that make up the sub MC
- exclusive benefit & management of the SPs that make up the sub MC
- LCP managed by sub MC like how common property is managed by main MC
- SPs contribute to management fund & sinking fund
Roles & Responsibilities of MC
- Record keeping requirement (for at least 5 years)
- Compliance with auditing
requirements - Prepare and maintain Strata Roll
- Financial management/ accounting
- Convene meetings & keep
records in connection - Management & maintenance
- Effect insurance
- Make, amend, add or repeal by-laws
- Display / supply of by-laws
- Enforce by-laws
- Handle complaints / feedback / disputes
- Improvements & Additions to Lots
- Defects management
- Receive summons/legal process/other documents served
- Provide information / supply
of information - Terminate MC
MC: Record keeping
- Accounting records, financial statements
- Records of all notices received or court orders served
- Records of any completed transactions carried out
- Licenses, insurance policies, warranties filed for easy
reference - Drawings, documents & items received from all parties,
detailed & filed
MC: Compliance with auditing
requirements
Ensure yearly mandatory audit of books & accounts carried out & filing of reports
MC: Management & maintenance
- HR Policy & Administration of hiring staff for self- management
- Procurement of outsourced services & works & contracts administration
- Development of SOPs for operational management & SOP administration
Improvements and Additions to Lots shall only be allowed where it will NOT
✓ Detract from appearance of any of buildings comprised in the strata title plan
✓ Affect structural integrity of any of the buildings comprised in strata title plan
✓ Affect appearance of building façade
* Where MC is satisfied that any improvements have been carried out in contravention of S(37), MC may:
✓ By notice in writing give to SP of the lot at time requiring SP to carry out and complete, at his own costs, rectification works
✓ Do so & recover cost from SP, should the SP fail to carry out rectification works
Management Council
Represents the SPs in the day-to-day running of the strata scheme
members of MC
- chairperson
- secretary
- treasurer
- council members
Eligibility criteria for election to MC Council:
- Must be SPs or nominees of companies/immediate family members (spouse, child, sibling or parent).
- At least 21 years old
- Not in arrears of contributions 3 days before election
- Un-discharged bankrupt may stand for election - status must declare in writing
max numbers of council members
14
What if SP owns 2 or more lots?
SP can nominate more candidates in proportion to the share value, but not > 49%
of the total no. of council seats
Chairperson
- Preside at Council Meetings, AGM & EOGM
- Ensure meeting is properly conducted
- Has authority to rule person out of order at meetings
- Has authority to rule whether a particular motion is in order
- Has the authority to declare results of the voting
- In the event of a tie, Chairperson does not have a second vote to break the tie
Secretary
- Prepare & distribute minutes of meeting
- Submit a motion for confirmation of the minutes at the next meeting
- Give the required notices under BMSMA
- Maintain strata roll
- Facilitate inspection of MC’s documents by a person
- Answering correspondences
- Convene meetings of Council & AGMS
- Attend to administrative or secretariat functions
Treasurer
- Notifies SPs of any levies under BMSMA
- Issues receipts for payments received
- Bank related matters
- Accounting for any money paid to MC
- Prepares financial certificate under BMSMA
- Keeps accounting records & prepares financial statements
- Shall not hold office as Treasurer for more than 2 consecutive terms
Council Members
- Act honestly and use reasonable diligence in discharge of duties
- To disclose interest in contracts & declare any conflict of interest
- Not to use position to gain, directly or indirectly, an advantage for himself or to cause detriment to MC
Restrictions to the MC Council
- matter must be decided by general meeting
- Matters that have been decided by the general body to put a restriction on the MC Council
when do Management Council have the responsibility to vacate MC Council Members
- When lot is sold
- A nominee of an SP ceases to be an SP
- On written notification to MC Council by the nominator on change of nominee
- Failure to attend 3 consecutive Council Meetings without prior permission
- Submission of written resignation
- Election of new MC Council at next AGM
- Removal at EOGM
- Member dies or becomes mentally disordered
- Conviction on or after 1 April 2005, by a Singapore court or
elsewhere of a fraud / dishonesty offence - Automatic vacation at the end of the AGM regardless of whether a new MC Council is elected
when do Management Council have the responsibility to vacate Office Bearers
- Vacation of an Office Bearer prior to an AGM:
✓ MC Council may appoint an eligible person to fill the vacancy for the balance of the term at a Council Meeting - Alternatively, to convene an EOGM for that purpose
Management Council has the responsibility to remove MC Council Members
- By Ordinary Resolution at AGM due to:
✓ Misconduct, neglect of duty, incapacity / failure to carry out
duties satisfactorily - Removal by MC Council
✓ When maintenance contributions are in arrears for more than 3 months
✓ Failure to attend 3 consecutive Council Meetings without
permission or reasonable grounds to do so
Management Council has the responsibility to remove Office Bearers
- If appointed at AGM, may only be removed at EOGM
- If appointed at Council Meetings, may only be removed at Council Meeting
Management Council has the responsibility to Co-opt on vacation / removal Office Bearer / Council Member position
- MC Council may appoint a person eligible for election to fill such vacancy for the remaining term of office
- Person appointed must give consent orally or in writing to fill the vacancy
Management Council also have the responsibility of…
Disclosure of Interests
Disclosure of Interests
- Declare the nature of interest in the contract
- Not take part in discussion or
vote relating to the contract
Who are SPs?
- SP of a lot in a strata scheme is the owner
- SP is a person registered with Registrar of Titles
- SP’s name, unit no., address within Singapore & email address (if any) are recorded as owner on strata roll of MC
- SP may be an individual, 2 or more people or a company to whom the developer has transferred ownership of a unit, as shown on the strata certificate of title
- If SP is a company, it must nominate an individual person to have their name placed on strata roll in order to exercise or perform on its behalf any power, duty or function conferred by this Act on the company
- SPs usually need to borrow money to purchase their strata units. They do so by offering lender (banks or financial institutions) the security of a mortgage on their strata property. Lender or mortgagee can then become a “joint member “of the MC with SP
Pre-Formation of MC, property is managed by
Pro Tem Committee
Pre-Formation of MC
- formed by purchasers
- facilitate smooth handover
- Usually initiated before 1st AGM
- Not a legal body
- No executive powers
SPs can
- To exclusive use & enjoyment of lot
- To lend out / rent / sell / mortgage lot
- To use & enjoy common property with other SPs
- To attend all meetings & vote at AGMs or proxy in place
- To support & shelter of lot & provision of building services
- To attend Council Meetings as an observer
Roles & Responsibilities of SPs
- Compliance/observance of prescribed by-laws, regulate social behavior
- Financial obligations on paying maintenance contributions
- Compliance with Notices issued by Public Authority in relation to the maintenance of the lot
- Notice to be given by SP
- Installation of safety equipment
Prescribed By-Laws
- Noise: not to create disturbance
- Obstruction of Common Property: not stop/interfere with lawful use of common property by others
- Drying of Laundry: Should not hang laundry as can be seen from outside the building
- Keeping of Animals: Do not annoy others in the estate
- Duty to maintain lot
what happens when there is late payment by SP
- MC may levy a late interest charge
- Serve SP a written demand
- if still dont pay after 14 days, SP is liable for fine, MC has right to recover any unpaid contributions as debt thru Small Claim Tribunal / Court
- MC can also register a charge against the strata lot
How can MC force the sale of a unit?
a. register a charge with the Registrar of Titles
b. pass a special resolution to sell the unit
c. placing a notice of the intended sale in one or more approved daily newspapers
d. after six weeks and there is no legal action to restrain the sale, the MC can sell the unit
What improvements & alterations SPs cannot do
- improvement & additional work to lot which may result in an increase in total GFA of entire development
- depending on nature of improvement/alteration, may beed consent from URA/BCA & obtain a 90% resolution
Notice to be given by SP
- SP required to update their contact with MC
- SP shall not later than 10 days of completion of the transfer of
ownership to give MC written notice of transfer
Can SP be prohibited from installing safety equipment?
NOOOOOOOOO
what are examples of safety equipment
- window frille/screan
- railings & fences
- anything restricting the opening of a window/door or an opening which outdoor facing
- any screen / other device to prevent entry of creatures, intruder alarms/monitoring systems, locks
Roles & Responsibilities of Mortgagee in Possession, Lessee or Occupier
- Understand & observe the by-laws of the MC
- ensure use of lost does not interfere with any support / shelter provided in that lot for other areas of the development
- use or enjoy the lot / common property in such a way that does not cause a nuisance / hazard to occupiers of other lots
What are Managing Agent (MA)
- professionals engaged by Management Council to manage the development
- Since Council Members are volunteers, actual day-to-day operations is delegated to MA
- be competent, knowledgeable & be able to provide strategic advice
Appointment /Termination of MA
- May be appointed by developer during the initial period
- May be appointed by MC by Ordinary Resolution at AGM
- May be appointed by the Management Council without AGM if authorized by SPs at last AGM
- MA term is up to 3 years subject to annual performance review at AGM
Work involvement of MA
- Perform delegated duties of MC’s power, duties & functions
- MA cannot be cheque signatory for MC bank accounts, cannot chair MC Council Meetings or AGMs or EOGMs
Restrictions of MA
- Cannot be delegated on any matters on restrictions
imposed on Council or to make decisions on a restricted
matter that can be determined only by MC in AGM - Cannot canvass for proxy votes
Liabilities of MA
- can be held liable for any contravention of the BMSMA as if it had been committed by the MC
Role of the Commissioner of Buildings
- Administrative Role
- Monitoring Powers Role
- Empowerment role
- Enforcement Role
By laws
- regulations pertaining to maintenance, management
& use of parcels and common property as prescribed in BMSMA - contained in the BMSMA are AKA Compulsory / Prescribed By-Laws which cant be amended or repealed
- bind developer, MC, Sub MC, SPs, lessees, & occupiers of
lots
House Roles
- regulations set out by
developer & MCST - Until and unless these House Rules have been passed as additional by-laws in a
general meeting via Special Resolution, they only have contractual binding effect on SPs only - Before formation of MC, residents must obey House Rules set by the developer which essentially are to serve the same purpose as Compulsory / Prescribed By-Laws.
Can MC make additional By-
Laws from time to time?
yea :3
but…
under what conditions Can MC make new By-Laws
- Must be supported by passing a Special Resolution in the general meeting
- Must not contradict Prescribed By-Laws
- Will only be in force if a copy of By-Laws under MC’s common seal has been lodged with COB not later than 45 days after passing resolution by MC
- MC shall display By-Laws on the notice boards
Can SP made new by-laws?
yea :3
under what conditions can SP make new By-Laws
- Must give written notice to Secretary of the MC Council to ask for a motion for proposed additional By-Law to be included in the general meeting agenda
- Motion must be supported by Special resolution to be considered approved
- Additional By-Law passed in general meeting will only take effect after a certified true copy under the MC’s common seal is lodged with the COB within 45 days of passing of motion
What if there is a breach of By-Law?
MC or SP or Resident may apply to Court for an order to:
* Stop SP or resident concerned from non-compliance with By-Law
* Recover damages
Types of maintenance contributions
- management fund
- sinking fund
- special levy
management fund
used to manage the day-today
operational expenses for common areas
Sinking Fund
cater for long-term future expenditure
Special Levy
where there are insufficient funds to cover expenses involving major expenditure or unforeseen work
Payment & Collection of Management Contribution
- SPs make timely payments to MC to avoid incurring interest charges
- collection is on monthly basis, quarterly, half-yearly, or yearly
- payment via: bank transfer, cash, cheque etc
- Quantum levied dependent on SV
- use to fund MF & SF, amount of contribution on MF & SF is reviewed or decided at general meetings
Types of Insurance For MCST
- Damage/Fire Policy
- Public Liability Policies
- Error & Omission
- Workmen’s Compensation Policy
- Other Insurance policies
Insurances by
- MCST
- SP
- MA
Damage / Fire Policy
- most important
- True Demand Policy
- Limited Liability Damaged Policy
True Damaged Policy
- Repair, restore / replace of
damaged portion of subdivided building to - original condition in event that is destroyed/damaged by fire, lightning, explosion / any other occurrence specified in the policy
Limited Liability Damaged Policy
- Liability of insurer is limited
to amount insured decided
by MC in insurance policy - increased building cost, removal of debris & professional fees for re-rebuilding works are taken into account
Public Liability Policies
- Against damage to property, death or personal injury
occurring on common property - Minimum recommended amount is $1mil for residential estates; $2mil for commercial & industrial buildings
Error & Omissions
- Protect MC against negligence or oversight by council members
- Should be taken to protect against instances where council members make
judgment errors or fail to discharge duties as expected - Smaller estates: Sum insured = $500,000
- Larger estates: Sum insured = $1mil
- Covers only genuine mistakes
- Not Covered: Fraud, acts of defamation, slander, libel by council members, fines imposed by authorities, deliberate omissions to cover costs
Workmen’s Compensation Policy
- Workmen’s Compensation Act
- Cover all workers employed
by MC regardless of salary
Other Insurance Policy
- Plate Glass Policy
- Contents
- Medical & Hospitalization
- Cash-In-Transit
Insurance by SPs (free choice)
- Home Contents Policy
- Renovation Works
- Personal Liability
Insurance by MA
- carry their own PI insurance
- MA take out an individual policy unique to development with MCST endorsement & non cancellation clause for protection purpose, thru doing so, MCST becomes beneficiary of policy & not MA
- Reasonable sum to be insured: 2 years maintenance fund contributions
- Recommended: policy premiums listed separately from MA fee; by doing so, MA would absorb premium if it resigns from the development
PI stands for
Professional Indemnity
First AGM
- Within 13 months after date of constitution of the MC, i.e. within a month after Initial Period; OR
- If got written request from SPs who hold at least 10% of the total number of strata lots in development,
- Requisition can only be made by a registered SP to whom the developer has transferred ownership of unit to.
- Developer must then convene the First AGM within 8 weeks upon receiving the written request
Subsequence AGMs
held on each calendar year and not more than 15 months after the last AGM
What is an EOGM
Extraordinary General Meetings
what EOGM do
Convened at any time to consider any matters of
concern to MC Council or SPs
2 ways to convene EOGMs
- MC Council
- SPs
MC Council convening EOGM
By majority vote of the MC Council
