If you own or are planning to buy into a Jointly Owned Property, it’s important to understand everything involved. We’ve collated a list of commonly asked questions but if your query isn’t covered, please feel free to contact us directly.
Jointly Owned Property (also known as Strata Title Property) refers to the sub-division of land and buildings into units and common property. Jointly Owned Property covers buildings such as high-rise apartments, retail developments, office towers, villa communities and industrial buildings. These developments often have shared facilities as well as common property.
The following documents clarify the laws and regulations relating to Jointly Owned Property:
Examples of shared facilities include such items as hallways, entrance lobbies, swimming pools, tennis courts, golf courses, gymnasiums, elevators, vehicle parking and pathways. All owners within the development contribute to the maintenance and operation of these shared facilities and the common areas by paying money into a General and Reserve Fund that are jointly known as service charges.
Common areas, which are shown on the site plan in the Jointly Owned Property Declaration are those parts of property designated for common use by unit owners and occupiers and are generally those areas that are not part of an individual unit. The areas may include, but are not limited to: hallways, lobbies, stairwells, lifts and lift wells, roof, driveways, common area car parks (as opposed to individual allotted car park spaces for unit owners). They also cover service utilities and associated equipment such as air conditioning, cabling, electrical, telecommunications, computer and data service utilities, security systems, plumbing, drainage systems, mail delivery systems. Other systems designed to enhance the utilities of units and or common areas – such as gardens, pools, gymnasiums, and recreational rooms – are also covered in this term.
All owners collectively within a Jointly Owned Property are referred to as the “Owners Association”. An Owners Association is a separate legal entity from the individual owners just as a company is a separate legal entity from its shareholders.
The primary purpose of an Owners Association is to manage, operate and maintain the common property and facilities within the Jointly Owned Property.
An Owners Association operates in the same way as a business. The Owners Association can make rules regarding the use of common property and units that are binding for the Association, unit holders, tenants and visitors. Rules adopted by an Owners Association must not contravene the Jointly Owned Property Law.
Owners Associations raise funds by levying contributions from all unit holders. These are known as “service charges”. The General Fund is an annual service fee that covers the cost of maintenance, repair and management of the common areas for the budgeted year and includes building insurance, utility services and administration costs. Unit holders must also pay a service charge to the Reserve Fund to provide funds for maintenance and renewal of long-term structural and capital items of the building such as elevators. The General Fund levy and Reserve Fund levy are jointly known as “Service Charges”
The amount that each unit holder contributes to the maintenance funds is calculated according to the ‘unit entitlement’. The unit entitlement is allocated on the basis of the proportionate floor area of a given unit to the total area of all units within the Jointly Owned Property development.
All unit holders are effectively guarantors for their Owners Associations liabilities. Owners Associations debts are paid for by levying owners and once a levy is approved, by a majority vote of a general assembly, the levy becomes a legally recoverable debt. This debt is payable by the unit owner to the Owners Association and recovery of the debt is enforceable at law if it is not paid on or before the agreed date.
The Owners Association is responsible for ensuring community rules are being followed by residents and ensuring harmony within their community. The Owners Association must appoint an Association manager to perform many of the management and supervisory tasks of the Owners Association.
An Owners Association constitution defines the functions and powers of the Owners Association and determines how the financial and administrative affairs will be managed. The constitution also determines the processes required to protect the integrity of the common areas and the rights, responsibilities and obligations of owners and tenants. It aims to guarantee the fair and equitable management of the common areas for the peace and quiet enjoyment of the owners and tenants.
The key roles involved in an Owners Association include:
The Owners Association is made up of all the owners or their duly appointed representatives, and is managed by the owners of the building or community under the guidance and direction of the Owners Association Board of Directors (“the Board”).
The Board comprises a minimum of five and a maximum of seven members and the developer may not be represented by more than one member on the Board. The Board members are not paid for their services and must ensure the functions of the Owners Association are carried out in accordance with the law and the constitution. Owner members nominate and elect the Board by a majority vote of the owners on an annual basis at the Annual General Assembly.
The association manager is appointed by the General Assembly and may be an owner acting in a voluntary capacity (that is, the owner receives no remuneration for the role) or a specialist company licensed and registered by RERA.
The association manager is an entity with a statutory function to perform the day-to-day running of the administrative, financial and secretarial aspects of the Owners Association, in addition to arranging the maintenance and upkeep of the common areas and facilities owned by the Owners Association.
These mandatory obligations of the Owners Association are detailed in the Jointly Owned Property Law Regulations.
The property developer constructs the building but has further responsibilities in a Jointly Owned Property development. Upon completion of construction and once all the necessary approvals for the authorities are obtained, the building is then handed over to the owners.
The developer has the following responsibilities in relation to a Jointly Owned Property development:
The Escrow Law provides that 5% of the property purchasers’ funds are to be withheld in Escrow for the project for a period of one year after the units are registered in the name of the buyers and title deeds are issued in their names.
The Jointly Owned Property Law provides that, with respect to the construction contract provisions in the civil transaction code, the builder, (not the developer) remains liable for a period of ten years from the date the completion certificate of the building is issued.
The builder and not the developer (unless they are the same person or organisation) is responsible for repairing and curing any defects in the structural elements of the Jointly Owned Property notified to the builder by the Owners Association or a unit owner.
The builder of a development, or that part of a development undertaken by the builder, remains liable for one year from the date of the completion certificate of the building to repair or replace defective installations (which could include mechanical and electrical works, sanitary and plumbing installations and the like) in the Jointly Owned Property.
The developer of the Jointly Owned Property is responsible for forming and registering the Owners Association with RERA.
In addition to registering the Owners Association, the developer must:
The Owners Association must manage the following matters:
Owners Associations have strict rules and regulations as how to conduct their affairs. The decision-making process is transparent and well-documented in the form of minutes of meetings, which shall detail the voting outcome for motions passed or not passed by the owners.
Owners discuss at the pre-schedule meeting, topics for discussion and agreement. Each agenda has a clear motion put forth regarding the topic for owners’ consideration or for matters for decision by the Board members. These decisions could include such matters as the selection of a contractor such as a cleaner, gardener; fire safety equipment servicing; or perhaps to consider a number of quotes to expend the funds to obtain an in depth building report by a specialist consultant to examine the forward budget forecast for the Reserve Funds minimum ten-year plan.
The agenda must be circulated to all owners at least 21 days in advance of the scheduled meeting date.
There are several different types of meetings:
Notices of a Board meeting must be circulated to Board members with at least 14 days’ advance notice stating the date, time, venue and items for discussion and agreement. Board meetings may be by electronic means.
Minutes of meetings for Annual General Assemblies, Extraordinary General Assemblies and Board meetings are documented and circulated. At the following meeting the minutes of the last meeting form part of the record being accepted as a true and accurate record of decisions made at the prior meeting.
The process of decision-making involves a clear description of the topic, a clear statement of the suggested decision that is “the motion” for the proposed action, and an option for owners to vote YES or NO, either supporting or withholding their support for a proposed decision.
Regardless if the property is under construction or it is a completed property, every potential purchaser has the right to know the following information about the Owners Association:
A Reserve Fund is a fund set up by the Owners Association to cover the costs of known future capital expenses. Examples of the types of items for which Reserve Funds are set aside include matters such as painting and repairing the building structure and replacement of common property items such as lifts and electric motors.
All Jointly Owned Properties are required by law to have a minimum ten-year Reserve Fund plan in place. This means that Owners Association must plan how they will repair and maintain common property and raise sufficient funds to cover the cost as the building components deteriorate over the lifetime of the building.
The amount required for the ten-year Reserve Fund plan will vary significantly between different Jointly Owned Properties. For instance, newer developments may require relatively less money to be set aside than an older development which are both registered at the same time as the older building would invariably have more repair work due and less time to accumulate the funds. Each Reserve Fund plan should reflect the individual needs of its development.
While members of an Owners Association are not prevented from preparing a ten-year Reserve Fund plan themselves, for legal and litigation purposes it is strongly recommended that the Owners Association engage a suitably qualified expert that specialises in the preparation of Reserve Fund plans.
There is a series of steps repeated during each ten-year cycle following the development of the first ten-year plan.
The establishment of the Owners Association creates an unlimited liability for its members, and each member has joint and several liability to the Owners Association. For this reason, the Jointly Owned Property Law requires a certain minimum amount of insurance cover to protect the unit owners.