Condominium Management

Over the past year there have been flurry of activities to hand over the management of condominiums to the respective owners. Many owners are getting their strata titles which has been owed to us some going back more than 10 years. Management bodies comprising owners are being formed. Decisions are being made whether to vary the fee contributions, insurance and other management issues. Some I have seen going smoothly with nothing untoward but most are quite messy.

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Take Mutiara Villa for example. The condominium was completed more than 15 years ago. It was only in the past 2 years that owners have started to receive their strata titles. And in all these years, we have been paying our maintenance fees without actually seeing any accounts on how the money has been spent. There are about 250 units, each paying on average RM250 per month which totals a RM62,500 monthly collection or RM750,000 per year. In the past 15 years about RM11 million was collected. So today in 2008, the management or the developer has yet to be able to present any audited accounts going back the years on how this RM11million has been spent.

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Of course, the management and developer argued that many owners have not paid up. In fact, when Mutiara Villa held a briefing last month to owners they revealed that only 10% of the owners payment has been up to date. This is a shocking fact! Why then has the management not done anything to compel the owners to pay up?

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What has been most worrying is the developer is now on the verge (as required by law) to hand over the management of their properties to the owners. Will it now become the onus of the owners' management committee to go after the defaulters? What about other liabilities such as the poor maintenance like falling structures, legal fights and other legacies that the owners now will inherit? So, the developers have created a mess and now they are going to pass the mess to the owners to handle.

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The Mutiara Villa briefing turned into a shouting match and the new management body appointed by developer Sari Mutiara under a clout of secrecy now promised to hold the 1st AGM to form a management committee by December 2008. It is interesting to see if this is going to happen.

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In the case of Mutiara Villa, the developer Sari Mutiara is not that well known. In fact, they are no longer active. However, on the other end of it we have E&O - the well known developer from Penang famous for high-so projects such as 202DC, Dua Residency, Sri Tanjung Pinang and runs a posh hotel in Penang called Eastern and Oriental.

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E&O has been on the receiving end of the stick by owners at Kampung Warisan. During the 1st AGM conducted last weekend the owners were upset that only the 2007 accounts were being distributed and even that is un-audited. There were shouts of incompetence, poor governance and unprofessionalism from the owners and a top financial representative from E&O even brought out the word "Fraud"! Interesting that this word came out from an E&O representatives mouth. The fact is, nobody ever accused E&O of fraud but while the finance representative was making his defence, under so much stress he uttered that the residents should not be suspicious of E&O committing fraud with their money.

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In my opinion, it is highly unprofessional of E&O being a respected and experienced company not being able to come up to the owners in a cooperative and transparent way. About 6 months ago, the owners of Kampung Warisan formed a residents committee. They highlighted many issues of poor maintenance and management to E&O and demanding some transparency in the accounts but the very same finance representative from E&O sent them a letter stating that the residents committee is not a recognised body. During the AGM, a foreign owner blasted E&O of not properly informing all owners about the AGM. E&O replied that letters of invitation were given through the residents committee (which they officially said that they did not recognize). Here they were trying to pass the blame.

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E&O also sent out the agenda of the 1st AGM which was "To DECIDE" and "TO DETERMINE" a number of things such as whether to continue with the insurance policy, vary or maintain the quantum of the maintenance fees etc. No doubt the strata title act requires all these agendas to be included in the 1st AGM but E&O has not even provided the residents with a proper audited accounts and also the insurance policy for the residents to be able to make an INFORMED decision. And the 1st agenda of the meeting that E&O drafted, the AGM has to vote to adopt the agenda of the AGM which means all those issues need to be DETERMINED and DECIDED upon.

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Unlucky for E&O, the owners were able to out-manouvre them. The first action which the owners took, which was provided by the Strata Titles Act was to elect a Chairman among them to chair the meeting. This was an important move as the Chairman was then able to conduct the flow of the meeting away from the intentions of the developer. Then the AGM voted to proceed to elect the Management Committee and adjourn the meeting straight after so that the decisions will only be made when the 1st AGM reconvenes after E&O has provided all necessary information to the owners to make an informed decision. In this way, E&O cannot say that they do not want to provide whatever information to an "unrecognized body".

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It is extremely important that all owners of condominiums or apartments to keep their payment up to date and to acquire their strata title. Otherwise they will not be able to vote or be voted into a decision body which determines the fate of their properties. UMLand however conducted the 1st AGM for Seri Bukit Ceylon without this requirement. I noticed that there has been some minor irregularities in the conduct of the AGM, for example not all owners who voted got their strata titles and the meeting was chaired by the CEO of UMLand instead of a Chairman elected by the owners. Proxies were also voting by show of hands - which the Strata Title act says they could not. Proxies can only vote by secret ballot.

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Nevertheless, I am impressed by UMland's conduct. The fully audited accounts were published and distributed to all owners prior to the AGM. Despite the accounts running at a loss, UMLand made the decision to absorb all the lossed so that the new Management Committee started from a clean slate. Unfortunately, the AGM voted to increase the maintenance fees from 25sen to 34sen psf. It was also heartening to see that the owner of the biggest block of units in Seri Bukit Ceylon, Somerset Serviced Residences agreed to pay a higher maintenance fee at 40sen psf. Makes me just want to cry.... To top it up, UMLand treated all the owners to delicious sandwiches and cream cakes at the end of the AGM.