No Strata Title? Can't Stay? Clarification: Penalties Apply to Developers, Not Home Buyers

Key figures

• ●The RM100,000 fine or three-year jail term applies to developers or original landowners, not home buyers
• ●Under the Strata Titles Act 1985 and Strata Management Act 2013, residents are classified as buyers (Pembeli) until the strata title is registered
• ●The legal standard for occupying a unit is the Certificate of Completion and Compliance (CCC), not the strata title
• ●Where no strata title exists, a Deed of Assignment is required to transfer rights under the SPA to a new buyer
• ●Only one prosecution of a developer for failing to apply for a strata title has been recorded to date

News summary

A recent report quoting Daniel Lee Abdullah, director of the strata and sub-strata division of the Department of Director General of Lands and Mines (JKPTG), said occupying a home without a strata title could result in a maximum fine of RM100,000 or three years' imprisonment, drawing concern among high-rise residents. Malaysian Association of Building Management Administrators (MAM) president Ooi Boon Eoi has clarified that the legal liability and sanctions apply entirely to developers or original landowners, not to buyers.

Ooi told Nanyang Siang Pau that the earlier report was misleading because of confusion in translation and legal terminology. Under the Strata Titles Act 1985 and the Strata Management Act 2013, the term 'Pemilik Asal/Pemilik Tanah' refers to the original landowner or developer, he said. Before a strata title is obtained, residents are legally classified as buyers ('Pembeli'), and only once the strata title is formally registered in their name do they become owners ('Pemilik').

As a result, the legal consequence of failing to apply for a strata title on time — a fine of up to RM100,000 or imprisonment of up to three years — falls entirely on the developer or landowner who fails to fulfil their duty, he explained.

On the question of whether buyers can move into a unit without a strata title, Ooi clarified that the legal standard for occupying a unit is whether the Certificate of Completion and Compliance (CCC) has been obtained, not the strata title. As long as the property has its occupation permit, buyers can lawfully move in.

He added that even where some high-rise homes remain without a strata title after 20 or even 30 years of occupation, that is entirely the developer's or landowner's responsibility and has nothing to do with the buyers. If a developer or landowner delays or refuses to apply, enforcement by the lands and mines office is directed at the developer or landowner.

If the developer or landowner has been wound up, the responsibility for applying for the strata title falls to the liquidator appointed by the court. Ooi also noted that in a property transaction where no strata title exists, both buyer and seller must sign a Deed of Assignment to formally transfer the rights and ownership under the original sale and purchase agreement (SPA) to the new buyer. He also noted that, despite the strict law, prosecutions of developers for failing to apply for strata titles have so far been extremely rare — only one case to date.