Debts must be paid, else our assets could be auctioned off to pay, even if one is a famous personality

Debts must be paid, else our assets could be auctioned off to pay, even if one is a famous personality

What happens if I don’t pay the management fees? (As per Strata Management Act 2013)

Strata home owners who refuse to pay the management fee. How bad can it be? Just let it be and forget about it since nothing could be done to force the owner to pay the management fees? Well, it’s totally not true. In fact in the worse case scenario the owner could even be jailed! This is after their belongings have been auctioned off and it’s still not enough to cover the management fee… Yes, imprisoned for up to three years. Read more details here:

Article in propertyguru.com.my: Unit owners need to pay the fees within 2 weeks of getting a written notice from their Joint Management Body. Otherwise, they will face penalties. For instance, those who make late payments will face a 10 percent interest rate charge per annum.

The Commissioner of Buildings also has the power to confiscate any movable property like TV, furniture and appliances owned by unit owners in arrears. The seizure can be carried out by the developer or Joint Management Committee (JMC) member in the presence of the Commissioner during the daytime.

The developer and JMC is allowed to keep such movable items until the outstanding management fees are paid within 14 days. But if the debt is not paid within the said period of 14 days, the belongings can be auctioned off by the JMC or developer under the Commissioner’s supervision, with the proceed paying for the management fees.

Can I go to prison for not paying management fees?

Unit owners who default on their management fees can face a fine of not more than RM5k and/or imprisoned for up to three years. If this issue still persists after being convicted, he is liable for an additional daily fine of not more than RM50. Read more details here: Article in propertyguru.com.my

If it’s not about management fee but about unpaid debts?

Here’s one such case. Famous personality with a debt of over RM1 million. Reason for this debt is for a renovation work. Of course, I also wonder why the renovation company proceeded with the renovation work or completed the work if the amount being owed is over RM1 million. Well, the court case and the auction of assets of this famous personality as below:

Article in nst.com.my. Over 700 pieces of furniture, household appliances and three vehicles belonging to cosmetics mogul Datuk Seri Hasmiza Othman, popularly known as Datuk Vida, were auctioned for RM1mil at her house in Persiaran Bukit Meru on Thursday (Oct 30).

Assets auctioned included sofa sets, dining tables, curtains, air conditioners, flower pots, chandeliers, carpets, ceiling fans, fridges, televisions, a billiard table, piano, banjo, electric guitars, a telescope and other items.

On Nov 25 last year, Hasmiza had all the items and three vehicles in her house sealed by the Kuala Lumpur High Court after a sub-construction company sought to recover over RM1mil in debt. Hasmiza had failed to settle a debt of RM1,060,285 for the renovation of her factory in Shah Alam into a studio. Article in nst.com.my

If we could not afford the management fee, do not buy the unit

Many years ago, I went to a luxury high-rise unit. Maybe not luxury, maybe we say it’s high-end high-rise unit. Total size was around 1,400 sq ft. Property was not that new, the club house also look dated. The property developer is a rich company, so it did not really put a lot of effort to sell all the units and did not really want to sell it with a big discount. It’s also low density which explained why my wife and I did not know what to say when the sales person told us that the monthly management fee was RM950. I repeat, RM950! Management fee was enough to pay for a RM200,000 property’s monthly mortgage! Haha.

Of course we did not proceed. We prefer to pay anything extra for the unit price and not for the maintenance fee lah. From my understanding, that high-rise project still have unsold units but when the developer themselves are very cash rich, then these could be a small issue for them. They prefer not to sell at a huge discount as they do not want to anger their existing buyers.

Renovation should be a maximum of 20 percent of the unit price

If we bought a RM500,000 property, we should just spend a maximum of RM100,000 on renovation. This is because renovation expenses are not going to be built into the selling price. Perhaps some percentage of it but not the whole renovation expense. So, the more we spend, the more we lose if we intend to sell the property in a short period of time. So, if we look at the RM1 million renovation cost of the above case, perhaps the factory is 5 times higher and thus, it required extensive renovation.

Reminder to pay what is owed so that we do not run into any legal cases. Yes, this includes PTPTN borrowers too. You have enjoyed the facility, so please pay back so that future generation could also enjoy the same facility too.

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