Commissioner Of Buildings (COB) In Malaysia, And Their 6 Main Functions

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Have you heard of the Commissioner of Buildings (COB)? Maybe it’s whispered about in your apartment complex at night — "be sure to pay your maintenance fees, or the Commissioner of Buildings will get you".

Don’t worry, it’s not as scary as that! The COB is actually a valuable part of effective facility management, and that’s particularly important when you live in a large stratified property.

So, let’s dispel the myths and get down to the truth. Here’s everything you need to know about the Commissioner of Building in Malaysia, and why that’s important to you as a property owner.

Understanding The Commissioner Of Buildings

The Commissioner of Buildings is essentially an enforcement officer designed to police the rules and regulations of the Strata Management Act 2013 (SMA).

This Act is the framework of regulation, which ensures stratified properties are managed and maintained in an effective and fair manner.

It’s the set of rules that lays out the rights and obligations of every single stratified property owner in Malaysia, as well as other relevant parties, such as management bodies and developers.

It includes essential elements of stratified property ownership, such as the rules and limits around maintenance fees and sinking funds.

A COB will only ever be appointed to oversee stratified properties such as apartments, condos, or flats, so you don’t have to worry about someone turning up at your bungalow looking to enforce any rules!

Stratified properties are those where owners possess a strata title to individual property units as part of a larger shared development, and some less common property types like townhouses.

In addition, the Commissioner of Buildings is empowered by a local council authority within a given state.

So, for example: the Commissioner of Buildings Selangor will have separate agents appointed by, and responsible for, municipal councils from Subang Jaya, Petaling Jaya, Kajang, and so on.

You can find a handy list of Commissioner of Buildings compiled by the National House Buyers Association to refer to here.

The COB is empowered to investigate and adjudicate on breaches of the SMA, providing a neutral third-party that ensures all rules are fairly applied to everyone involved. Basically, they’re kind of like the sheriff of building management.

PropertyGuru Tip

The term ‘adjudicate’ simply refers to the process of determining how much stamp duty is payable for the instrument of transfer.

A Commissioner of Buildings’ role isn’t just about punishing people though. It’s designed to ensure proper management and upkeep of stratified property is maintained for the benefit of all.

They’ve even got a cool description of their objective, taken from the official Klang Commissioner of Buildings’ website:

To ensure maintenance of joint property is implemented, based on the law and procedures, for creating harmony in life sharing joint property for the development of elevated [buildings].

What Does The Commissioner Of Buildings Do?

Like we’ve highlighted above, the Commissioner of Buildings enforces the rules laid out in the Strata Management Act 2013. But what does that really cover?

It’s not just maintenance fees and sinking funds like you might think. There are six main functions of the Department of Building Commissioner, as noted by the Klang COB:

1. Conducting inventory on buildings within the relevant local area.
2. Ensure the establishment of a Joint Management Body (JMB) for development involving stratified planning.
3. Resolving any dispute between the developer and the purchaser relating to the establishment of the JMB and account maintenance.
4. Monitor the action of a developer in addressing repair defects.
5. Enforce the law stipulated in the Strata Management Act (Act 757) 2013 and the Strata Management Act 2013 (Act 757).
6. Provide periodic learning about administrative management, audited accounts, financial provisions and other various topics related to the management of JMB/MC.

That list of duties covers a whole range of property management obligations, from accounts right through to education and support for the Joint Management Body (JMB) or Management Corporation (MC).

The Commissioner of Buildings is entitled to a range of powers in order to fulfill the obligations highlighted above.

They include, but are not limited to, access to accounts of management boards and developers for the purpose of auditing.

That means all decisions made by the COB should be informed by the latest financial information to ensure appropriate oversight.

The COB can also step in and appoint an individual to assemble meetings in order to meet the obligations of building management, or order the MC itself to hold an extraordinary general meeting (EGM) if required.

Commissioner of Buildings, or authorised personnel designated by the COB, may access a property for the purpose of carrying out essential repairs at any time.

The COB also has power to prosecute any individuals who fail to meet their payment obligations such as management or maintenance fees, and adjudicate on any dispute around payment of such fees.

That includes obligations around the defect liability period that’s laid out in the Housing Development Act.

Is The COB Always Right?

It might sound like the COB is some sort of all-powerful overseer of strata property management, but that doesn’t mean they’re not also held accountable.

The COB is answerable to the Strata Management Tribunal. On top of that, the rulings of the COB are ultimately answerable to legal processes in the courts, and challenges to COB decisions can be brought in via this way.

In one example from 2010, a Management Corporation (MC) for a development in Penang challenged the COB in the High Court over a ruling that only unit owners could be elected as council members of stratified property management corporations.

The COB ruling, and the following appeal, were later upheld. The COB isn’t always in the right, however.

In 2013, the COB ruled on a case whereby a developer owed a JMB for a shortfall of RM500,000 in overdue maintenance funds.

The JMB referred the matter to the COB, who ruled that the sum was owed by the developer to the JMB. A court ruling later dismissed this, citing lack of jurisdiction in this matter by the COB.

What’s The Difference Between COB And Strata Management Tribunal?

At this point, some of you might be wondering where the Strata Management Tribunal (SMT) comes into play?

The Strata Management Tribunal is another legally recognised body, which, like the Commissioner of Buildings, provides a vital service in overseeing stratified properties.

While the COB is concerned with the general needs and enforcement of building maintenance and management, the SMT is a body which exclusively deals with resolving disputes. There are some subtle differences however, that should be recognised.

Ultimately, the COB is answerable to the SMT, since it’s the empowered legal authority for overseeing the implementation of the full Strata Management Act 2013. The Strata Management Tribunal is limited to claims brought by the following parties:

• Developer
• Purchaser
• Proprietor
• Joint Management Body (JMB)
• Management Corporation (MC)
• Subsidiary Management Company (SMC)
• Managing agent
• Relevant parties (Special permission granted by Tribunal)

The SMT is designed to provide an affordable and accessible dispute resolution body for problems of stratified ownership. There’s no legal representation required, except in extremely complex cases where it’s deemed that one party may be disadvantaged by lack of representation.

The critical point to understand about the SMT in relation to the COB is that the SMT will only hear claims covering financial costs up to a maximum RM250,000.

Any cases over that amount, such as the 2013 disputed claim noted above, are outside that scope. You can find out more about the full details of the Strata Management Tribunal here.

Breaking down the difference between SMT and COB in the most simple way possible – the Commissioner of Buildings is the sheriff and the enforcer, the Strata Management Tribunal is the judge(s) who oversee application of the law.

These are all important measures to ensure all stratified properties don’t end up becoming like the Wild Wild West of property management!

Relevant Guides:

• Serviced Apartment vs Condo In Malaysia – What’s The Difference?

• What You Should Know About Living In A Strata Landed Property In Malaysia

• 9 Townhouses Below RM500,000 In Klang Valley You Should Check Out!

Disclaimer: The information is provided for general information only. PropertyGuru International (Malaysia) Sdn Bhd makes no representations or warranties in relation to the information, including but not limited to any representation or warranty as to the fitness for any particular purpose of the information to the fullest extent permitted by law. While every effort has been made to ensure that the information provided in this article is accurate, reliable, and complete as of the time of writing, the information provided in this article should not be relied upon to make any financial, investment, real estate or legal decisions. Additionally, the information should not substitute advice from a trained professional who can take into account your personal facts and circumstances, and we accept no liability if you use the information to form decisions.

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Are you overpaying your property maintenance fee?

A property, no matter how great-looking it is, is only as good as its management and maintenance. It will look clean and polished when it is new but the good news is, it can still look as good even as it ages.

According to the Strata Management Act 2013 (SMA 2013) which came into effect in June 2015, a strata owner or occupier needs to pay a monthly maintenance fee or service charge to the Joint Management Body (JMB) or Management Corporation (MC) which will be used to manage and maintain the common property of the development.

Other than the maintenance fee, strata owners are also required to contribute to the sinking fund which is normally at the rate of 10% of the total amount of charges.

“A sinking fund is a reserve fund collected from the strata owner for future expenditure which is typically less predictable and cost a lot more than the usual maintenance fee. The sinking fund is usually used for large scale repairs such as a painting job or refurbishment of the interiors of common facilities,” says Chur Associates managing director Chris Tan.

However, some owners may feel that the maintenance fee is too much. But how much is too much? How is the fee amount calculated or set? Is there a formula or a guideline?

Formula to derive the share units

Under the SMA 2013 and Strata Titles Act 1985 (STA), a residential or commercial unit is technically known as a parcel and each parcel has a share value that is expressed in whole numbers under the STA.

“Upon the approval of computation and allocation of share units prepared by the licensed land surveyor, the director of Land and Mines will issue the Certificate of Share Unit. To derive the share units in a strata scheme, there is a standard formula under the Fourth Schedule of the Strata Titles Rules 2015,” explains Burgess Rawson Malaysia managing director Wong Kok Soo.

The standard formula for maintenance fee:

Refer to Table A for an example of how the share unit is derived for an apartment parcel.

What does the maintenance fee cover?

The MC chairman of Sri Penaga, one of Bangsar’s oldest condominiums, Khaw Chay Tee shares with EdgeProp.my that one of the biggest components in the operations expenditure of a residential condominium is security, followed by the property management staffing and cleaning.

“Normally these components make up 50% of your service charge. So at the end of the day, it really boils down to how well-managed that property is. If you are able to manage the property well, then you can keep the cost reasonable. There are some condominiums where the MC likes to carry out projects which incur costs, but that is a separate matter. As each condominium differs in its number of facilities and the density of the development, it is not so easy to compare and ask why this condominium in Bangsar is different from that condominium in Bangsar,” says Khaw.

Knight Frank senior executive director Kuruvilla Abraham concurs that the service charge will vary depending on the service level the JMB or MC requires.

“One can find cheaper options for the various services required which no doubt will result in lower service charges. However, don’t expect good service levels. The right thing to do is to get value-for-money services that commensurate with the expected service levels,” he says.

It also depends on the design of the development, he adds.

“The development with a reasonable number of facilities and a greater number of units will generally pay a lower proportion of service charge compared to one with similar facilities but with lower density.”

Furthermore, developments with more facilities such as fountains, gardens or swimming pools would naturally command a higher fee as more maintenance is needed.

When it comes to maintenance, the level of quality is subjective, reminds Chur Associates’ Tan. Hence, questions often arise on whether what they are paying is actually put to good use.

Kuruvilla points out that he has yet to come across a developer that has charged parcel owners more than what they are supposed to pay. (Photo by Knight Frank)

“What is the definition of “clean” to you? For some, clean means I don’t see any rubbish. For others, it means it has to be squeaky clean and sparkling. We cannot even come up with an industrial standard for door size and window size, how do we even budget the cleaning cost then? If I were the cleaning company, how would I charge you if your windows are bigger than others? Do I charge more? Or can I say the unit price is RM2 per window per cleaning [regardless of size]?” Tan questions.



He adds that the priorities of residents in different projects mean the maintenance fee charged for each development would be different.

“Some residents place a lot of emphasis on security, so they would rather [the JMB or MC] spend more money hiring guards from a prestigious company while there may be some who think that [the JMB or MC] should spend the money to clean the swimming pool daily because they use it often,” he explains.

Wong: To derive the share units in a strata scheme, there is a standard formula under the Fourth Schedule of the Strata Titles Rules 2015. (Photos by Low Yen Yeing/EdgeProp.my)

The problem with a low maintenance fee

The Malaysian Institute of Property and Facility Managers (MIPFM) president Sarkunan Subramaniam tells EdgeProp.my that problems often arise when the property developers set a lower-than-normal maintenance fee in the initial period to induce sales.

“During the first two years, the equipment is still under the defects and liability period, so if say, the swimming pool has an issue, you can just call the technician to come over for free. However, when the JMB or MC takes over when the warranty period has passed, cost will start to be incurred,” says Sarkunan.

Under the STA 2013, developers are not supposed to pass on any deficits or liabilities to the JMB and MC.

Chur Associate’s Tan says problems can also crop up later when a developer designs a very over-the-top facility or development but prices the property at a low selling price, hence attracting the wrong user/buyer profile to the project.

Sarkunan: Problems often arise when the property developers set a lower than normal maintenance fee in the initial period to induce sales.

“If I ask you what you want in your development, you will surely say you want everything. But nobody tells you that in order to have everything, moving forward, the monthly contribution will be higher. When the entry point is low, everybody wants to buy but nobody thinks about the maintenance fee in future.

“On many occasions, it is not about who gives the best facility but who is paying for it. Are you going to use it? How often do you go to your condo’s gym or would you rather go to a gym outside? Why? Maybe because you have your own personal trainer or you don’t want to be seen by your neighbour. So are we overdesigning and overproviding?” Tan questions.

In accordance with the Strata Management Act 2013 (Act 757) (SMA), developers shall hand over the maintenance and management of the strata development (common property) to the JMB not later than 12 months of vacant possession or the MC, should the strata titles be issued and transferred to the purchasers, whichever is earlier.

The items developers are required to hand over include the list of assets, fixtures and fittings, as-built plans, operation manuals as well as the audited accounts of the service charges, deposits and sinking fund as prescribed under the SMA via Form 4 (for JMB) and Form 13 (for MC).

The JMB and MC can then decide by votes or by appointing a registered property management company to suggest an amount for the maintenance fee.

“The owner has the right to request to see the accounts during the Annual General Meeting related to expenditure and raise the matter during the meeting,” says Knight Frank’s Kuruvilla.

However, he points out that he has yet to come across a developer that has charged the parcel owners more than what they are supposed to pay. In fact, the chances are higher that due to non-payment, the management account is likely to be in deficit resulting in there being insufficient funds to carry out proper maintenance and management of the development.

The problem with strata living is, everybody wants to have a well-maintained place to live but not everyone is prepared to pay for it.

“This is why the government passed the Strata Management Act 2013 (and Acts before this) so that after one year post development, it will give the parcel purchasers/proprietors the opportunity to manage the property and thereby giving them an understanding by getting first-hand knowledge in what it takes to maintain and manage a development well. Until one is directly involved, one will not be able to appreciate why service charges have to be paid on time to ensure there is sufficient funds to pay for the maintenance and management of the development.”

This story first appeared in the EdgeProp.my pullout on Nov 30, 2018. You can access back issues here..


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New beginning in Malaysian strata property management?

With more and more people living in stratified buildings, the new Strata Management Act is timely in helping to reduce animosity among residents and owners during dispute resolutions.

Act for peace: An effective and efficient dispute resolution mechanism will help promote peace and good neighbourliness in stratified buildings.

LAST Sunday, I attended the annual general meeting (AGM) of the management corporation of an upmarket condominium as a proxy for my wife. Its last AGM was held in September last year.

This AGM was by far the most heated and disorderly since the management corporation was set up some six years ago. A fight almost broke out despite the presence of representatives of the Commissioner of Buildings (COB) and the police.

Let me now share with you my personal thoughts about the AGM, before examining whether the new Strata Management Act (SMA), when it comes into force, will help minimise and remove such animosity which appears to be rather prevalent and common among occupants living and undertaking business in stratified buildings.

In fact, trouble was already brewing before the AGM. In the AGM notice sent to owners of all the 170 parcel units, all the three outgoing 2011/2012 Council (CM2012) members – in their 30s (let’s call him CM1), 60s (CM2) and 70s (CM3) – jointly signed and attached a three-page letter containing allegations of impropriety against the previous Council (CM2011) members.

The CM2011 members, through their lawyers, demanded that their written explanatory response also be circulated to all the parcel owners before the AGM. This was refused.

Drama-charged

The situation was aggravated when CM2, the outgoing CM2012 chairman, used his welcoming speech, delivered in Mandarin, to reply to CM2011 members’ written explanatory response, which was also not circulated during the AGM. He also attempted to make more allegations of impropriety against CM2011 members until I intervened because the latter had not first been given any opportunity to be heard. Procedurally also, this should not have been done before first electing the chairman of the AGM.

I also observed that each time someone spoke up against any resolution proposed by CM2012, CM3 would shout and try to interrupt and intimidate the speaker. A fight almost ensued when some parcel owners confronted CM1 and CM3 during the break. They wanted to know why their parcel unit numbers had been displayed on the notice board as not having settled a one-time payment of RM400 for upgrading work, approved in the 2010 AGM. The parcel owners felt aggrieved that they had been publicly shamed, claiming and showing proof that at the time the notice was put up, CM1, CM2 and CM3 as Council members themselves had failed to pay maintenance charges for a few months, but their parcel unit numbers were not mentioned in the said notice. CM3 then raised his walking stick cum foldable chair, wanting to strike his fellow septuagenarian CM2011 member who questioned him until he was restrained by police and the former’s wife.

(Interestingly, I was informed by the COB that a fight virtually broke out before him during the extraordinary general meeting of a nearby condominium on Oct 28 when chairs were also thrown! Fortunately, goodwill prevailed when the injured decided not to press any criminal charges.)

The AGM then proceeded with election of 2012/2013 Council members. The House decided to elect only seven Council members. Eight owners were nominated. When the COB suggested that voting could be dispensed with if the House decided to change the number to eight, CM2 strenuously objected. CM2 vociferously proclaimed that he could not accept the CM2011 Chairman into the new Council. When one of the eight said he would withdraw so that the number could be reduced to seven, CM2 objected too because that would mean CM2011 Chairman would get elected. It was obvious to everyone present that there is a lot of bad blood between CM2 and CM2011 Chairman. Then almost half of those present who are owners living in the condominium walked out in protest.

Nevertheless CM1, CM2 and CM3 were elected even though it was obvious that they did not enjoy any support from the live-in owners. Their support came, instead, from the proxies. Twelve proxies who were present actually represented owners of 48 parcel units. CM1, CM2 and an estate agent who is also an owner (EA), were also each a proxy to several parcel unit owners. It was abundantly clear that these proxies were mainly CM2’s friends.

When challenged whether these proxies knew who the principals/owners they were representing, the mainly Mandarin-speaking group just remained silent. But CM2 openly instructed them on how to vote and they voted according to his instructions. If voting had been done by show of hands, CM1, CM2 and CM3 could have lost, but it was done by poll where the proxies’ votes are calculated according to all their principals’/owners’ shares of the parcel units.

In fact, this expressly went against the COB’s circular that a person can be a proxy to only one owner at any one general meeting. According to the management office, just like last year, CM2012’s supporters’ completed proxy forms were submitted in bulk by CM2 and EA, that is, they were not submitted individually by either the owners/principals or their proxy holders. No verification was also done whether the owners/principals did personally execute the proxy forms or whether the owners/principals and proxies knew each other.

It is sad to see that the live-in owners who were present were powerless to decide on the affairs of their condominium which they know most. Instead, these outsiders (one of them a former gardener at the condominium), who appeared bored and lost throughout the proceedings when English was used, had the ultimate say.

To my mind, the entire AGM is invalid as the legality of the proxies’ appointment and voting is seriously in doubt because it has also gone against the law of agency.

In fact, I had raised this issue of manipulating the proxy voting system even way back in June last year in my article, “Resolving tenancy disputes” (Sunday Star, June 12, 2011). I also subsequently had a brief SMS discussion with the Housing and Local Government Minister Datuk Seri Chor Chee Heung.

I am glad that the SMA has now made the one-proxy-one-owner rule clear in paragraph 18 of the Second Schedule. However, in light of the above and the relaxation of quorum requirement, paragraph 18 should be amended to state that only an owner’s immediate family member, tenant or attorney (appointed by way of a power of attorney) is qualified to be his proxy. If the owner is a corporation or organisation, the same principle should also apply in that there should be a close nexus between the owner and his proxy.

This will also compel owners to take more responsibility and a keen interest in the management affairs of their properties by making an effort to attend the general meetings. Such an amendment is not required to be tabled before Parliament as the minister is empowered to do so under Section 152 of the SMA.

Timely law

That said, assuming the SMA is in force now, the above fiasco could have been avoided. Under the new law, the Council will be known as a management committee and no committee member shall hold office for more than three consecutive terms. Also, a committee member will be deemed to have vacated his office if his conduct brings discredit on the management committee.

Most importantly, any dispute or altercation among owners living in stratified buildings can be resolved through the Snatrata Management Tribul. Hence, the Tribunal ought to be set up expeditiously unlike the Strata Titles Board which was never set up since the enabling provision was first inserted in the Strata Titles Act, 1985 (Act 318) in December 2000.

With an effective and efficient dispute resolution mechanism in place, this will help promote peace and good neighbourliness in stratified buildings. A lot of precious time can also be saved during general meetings. For example, in the Dec 9 AGM, CM2011 and CM2012 members seemed to be more obsessed with each other instead of discussing real issues such as lax enforcement of House Rules, the recent robbery-cum-rape case that reportedly took place and the appearance of a large crack on the exterior wall of the building next to one of its columns.

Similarly, the performance of the managing agent engaged by CM2012 at RM8,000 per month was not discussed. In my view, the performance of CM2011 members in managing the condominium is better than the said managing agent’s. Not to mention, they did it voluntarily. In this respect, I must register my agreement with Chor that registered valuers should not have monopoly over the management of stratified properties because strata owners must be allowed to have a choice and the right to decide who is best to manage their building.

As a whole, congratulations are in order for Chor, Datuk Seri Douglas Uggah Embas, Minister of Natural Resources and Environment (NRE) and their ministry officials in revamping the laws relating to strata management. When the SMA comes into force, the Housing and Local Government Ministry will take over from the NRE in monitoring the management of all stratified buildings and the operation of the SMA. Act 318 has also been amended and the Building and Common Property (Maintenance and Management) Act 2007 will be repealed.

Time will only tell how successful the SMA is in coming to grips with multifarious problems faced by those who live and do business in stratified buildings. But it cannot be gainsaid that this new law marks a new beginning of a comprehensive legal framework in strata management.

Comment by Roger Tan

> The writer is a former chairman of the Conveyancing Practice Committee of the Malaysian Bar Council. 

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