Management Corporation (MC) meetings serve as crucial forums for decision-making in condominium and strata-titled developments, where stakeholders discuss various aspects of property management. One contentious issue often debated is the extent of voting rights held by developers over parcels they own as proprietors. This article aims to thoroughly analyse the legal framework surrounding this issue, shedding light on the nuances of developer entitlement to voting rights in MC meetings.
The determination of developer voting rights in MC meetings is guided by statutory provisions that outline the rights and obligations of property stakeholders. Section 21 of Strata Management Act 2013 (SMA 2013) explicitly states that each proprietor, provided they meet eligibility criteria, has the right to vote on matters during MC meetings, whether on a show of hands or on a poll. Furthermore, Section 22(2)(c) identifies proprietors as parcel owners, underscoring their importance in property governance.
Central to the interpretation of voting rights is the definition of a parcel owner as outlined in Section 2 of the legislation. According to this provision, a parcel owner is defined as either the purchaser or the developer of a parcel. This definition serves as the foundation for understanding the developer’s entitlement to voting rights, particularly concerning both sold and unsold units within the property. Section 22(2)(g) is instrumental in delineating the developer’s voting rights over unsold units. It explicitly states that developers possess voting rights equivalent to purchasers in respect of unsold units. This provision acknowledges the developer’s ongoing involvement in managing and overseeing unsold parcels until they are transferred to individual purchasers.
However, the crux of the issue emerges when considering the developer’s voting rights over sold units. Despite being the proprietor of these parcels, the developer’s classification as the parcel owner is subject to interpretation. This ambiguity stems from the definition of a purchaser as someone who has acquired an interest in the parcel. In the case of sold units, the interest in the parcel has been transferred to individual purchasers, thereby raising questions about the developer’s status as the parcel owner in this context. Moreover, the transition of ownership from the developer to individual purchasers alters the dynamics of property management and governance. While the developer retains control during the development phase, their role evolves upon the sale of units. The transfer of ownership confers rights and responsibilities upon individual purchasers and diminishes the developer’s direct involvement in the management of sold units.
In conclusion, the issue of developer voting rights in MC meetings requires a meticulous examination of relevant legal provisions. While developers enjoy voting rights akin to purchasers concerning unsold units, their entitlement to vote over sold units hinges on their classification as parcel owners. This classification is influenced by the transfer of ownership to individual purchasers, which diminishes the developer’s direct stake in the management of sold units. By elucidating these distinctions, property governance can proceed in a manner that fosters transparency and equitable decision-making within the management corporation.
About the author
Noorvieana Lim
Associate
Real Estate
Halim Hong & Quek
noorvieana.lim@hhq.com.my
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