Who is Legally Entitled to Collect Maintenance Charges?

In many strata and industrial property developments, disputes frequently arise over whether a developer or a management company is legally entitled to collect maintenance charges from parcel owners.

This issue is significant because maintenance charges are not merely administrative payments. They involve statutory powers, contractual rights, and legal obligations imposed by law. 

Contractual Rights vs Statutory Powers

Under Sale and Purchase Agreement made between developer and purchaser (“SPA”), the developer is initially granted contractual rights to collect maintenance charges from purchasers. These rights exist because purchasers expressly agree to such terms under the SPA.

However, once the strata management regime comes into operation, the legal framework changes. The right to collect maintenance charges is no longer purely contractual. Instead, it becomes a statutory power governed by the Strata Management Act 2013 (“SMA 2013”).

Under the SMA 2013, the power to collect maintenance charges is specifically vested in:

• a Joint Management Body after delivery of vacant possession but before issuance of strata titles; or

• a Management Corporation after issuance of strata titles.

Accordingly, the collection of maintenance charges cannot simply be carried out by any private individual or company unless authorised by law.

Informal “Handovers” May Not Be Legally Sufficient

It is not uncommon for developers to issue informal letters stating that management responsibilities are “handed over” to certain individuals, committees, or companies selected by owners.

However, a mere handover of management tasks does not necessarily amount to an assignment of contractual rights under the SPA; or a transfer of statutory powers under the SMA 2013.

Our Courts have recognised this distinction. The authority to collect maintenance charges must arise from proper legal and statutory mechanisms, and not merely from informal arrangements or internal understandings between parties.

Property Management Is a Regulated Profession

Another commonly overlooked issue is whether the party collecting maintenance charges is legally authorised to act as a property manager.

In Malaysia, property management practice is regulated under the Valuers, Appraisers, Estate Agents and Property Managers Act 1981.

The Act prohibits persons from:

• acting as property managers;

• carrying on property management business; or

• recovering fees for property management services,

unless they are properly registered and licensed under the law.

This means that not every entity managing a building or industrial property development is automatically entitled to collect maintenance charges.

Questions Parcel Owners Should Consider

Parcel owners or management companies should not assume that the collection for maintenance charges is automatically lawful. Important questions that should be considered include:

• Is there a valid contractual or statutory basis for the charges?

• Was a JMB or MC properly established?

• Is the collecting party legally authorised?

• Is the collecting entity licensed as a property manager?

Where these requirements are absent, the legality and enforceability of the collection may be challenged.

As strata and industrial developments continue to increase throughout Malaysia, strict compliance with statutory requirements remains essential to protect both parcel owners and the integrity of property management practices.

At Shang & Co., we regularly advise clients on matters relating to strata property and disputes arising thereof. If you are facing issues relating to maintenance charges or property management, kindly reach out to us to obtain proper legal advice may help clarify your rights and obligations.