Developers, Joint Management Bodies (JMB) and Management Corporations (MC) all bear the responsibility of managing the development during the relevant period in which the development is entrusted to these bodies. While the developers may have vast experience in managing developments, the JMB and MC who are largely comprised of parcel owners may not have the relevant experience and expertise. For this reason, the JMB and MC usually enlist the help of professional managing agents to carry out the daunting task of managing the development.
The question this article intends to answer is whether there are restrictions as to who can be appointed as managing agents for stratified properties. In answering this question it is important to remember that both the JMB and MC are creatures of statute which owes their existence and operates and functions in accordance to the same, in this case, the Strata Management Act 2013 (SMA).
While the SMA has vested the JMB and MC with the power to appoint managing agents, the appointment of such managing agents comes with conditions. The SMA expressly provides that no person or entity may be appointed as the managing agent if that person or entity has a professional or pecuniary interest in the development.
The SMA has gone on to suggest that the following categories of persons are prohibited from acting as a managing agent:-
- Any person who has been responsible for the design or construction of the development;
- Any person or any of his or her nominees, officers or employees has any material interest in the development;
- Any person who is a partner or is in the employment of a person who has any material interest in the development; or
- Any person or his or her family holds any interest in the development whether directly, as a trustee or otherwise.
What is clear from the SMA is that there are broadly speaking, two categories of persons that are prohibited from acting as the managing agent for stratified properties. Firstly, all those persons that have a professional interest in the development pertaining the design or the construction of the same. Presumably the individuals or entities that fall within this category are developers, engineers, planers, architects, construction company, sub-contractors, all of whom had in one way or the other contributed to the design or the construction of the development.
The second category that is prohibited from acting as managing agent is those persons that have a material interest directly or indirectly in the development. This category would include developers or parcel owners by way of example.
The rationale of the prohibition in the SMA is that the managing agent ought not to be in a position of conflict of interest in carrying out its duties. A conflict may arise when for instance, a developer or parcel owner is appointed as the managing agent wherein the said developer or parcel owner may now be reluctant to collect or enforce non-payment of maintenance charges for its own units.
WRITTEN BY:
DAVID SAMUEL
PARTNER
CHAMBERS OF FIRDAUS
