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Management and Maintenance of Residential Building

With the implementation of BMSMA in 2005, looking after a condominium or residential building is no longer a simple task that can be carried out by any layman or even by experienced Managing Agent. It is no longer “just keeping the estate clean and the buildings in good repair”.

 

The MC (Management Corporation) is made a body corporate capable of suing and being sued. Besides being responsible for the overall management and maintenance of the estate, MCs are also responsible for the collection of Maintenance Fund from the owner of every lot. The Maintenance Fund is divided for use on expenses to manage the estate (Management Fund) as well as for the up-keep and maintenance of the common areas (Sinking Fund)

 

The Management Fund is used for looking after the common property, for Payment of insurance premiums, audits, legal fees, staffing, convening meetings and  all other recurrent expenses besides amounts covered by the sinking fund.

                                             

The Sinking Fund is for future capital needs. It must be enough to cover 1) Painting of the common property, 2) Acquiring movable property, 3) Renewing or replacing any fixtures on the common property and other property belonging to the MC, 4) Replacing, repairing or making good the common property, 5) Any debts other than amounts covered by the management fund and 6) Other capital expenses

 

The BMSMA specifies what who when and how the upkeep of common facilities like lifts, sport and recreational facilities like swimming pools, tennis courts, gyms and billiard rooms in their estates should be managed, checked and maintained.

 

Special attention is put on the maintenance of exterior features. Failing which the MC or person responsible can face severe penalties, including a fine up to $10,000 and/or jail up to 12 months or both (Sect 9-1).

 

As there are many inter-twain conditions with specific procedures and qualification that requires strict adherence to the use of Funds, contribution and timing - especially for additions and alterations works affecting the common areas, it is therefore imperative for more members of the team to be aware of every relevant sections of the Act.

 

Strict adherence to regulations calls for not only good knowledge of the BMSMA; it give rise to the need for good monitory systems to ensure compliance with both management as well as maintenance provisions. The whole team, from Council members to on-site maintenance staff, therefore needs to be made aware and mindful of the relevant regulations, provisions and procedures for their jobs

 

To rely merely on memory for compliance with the BMSMA is risky. Personally, I prefer to have a checklist as a guide to facilitate quick cross references and for immediate on-hand consultation. As a word of caution, please double check and update with the latest BMSMA, By-Laws and circulars of the relevant authority to include latest amendments and ensure accuracy before use. As for interpretation of the Act, always consult your lawyers.

SS 519 now spells the standard of conduct on how MAs should conduct and perform the services

Case 1 Sinking Fund & Tax                        Nov 8, 2008 - The Straits Times

K. C. Vijayan, Law Correspondent


A DISPUTE over one man's property tax which went all the way to the Court of Appeal has resulted in the tax authorities being asked to relook the rules - a move which could affect thousands of strata-titled private properties such as condominiums and malls. The Court has ruled that sinking fund contributions should form part of the calculation of how much tax is due on a property - but only if the fund has been used that year for repairs or maintenance on the estate.

For now, sinking fund contributions have been factored every year into the overall value of a property. Mr Tan Hee Liang, who owns a shop in City Plaza in Tanjong Katong, had challenged the Inland Revenue Authority of Singapore (Iras) on why that should be so. His lawyer Tan Hee Joek, from Drew & Napier, asked why sinking funds meant for maintenance and repair were included in the tax assessment, while contributions to the management fund, which can be tapped for the same purposes, were not.

The Court of Appeal, Singapore's highest court, has now dealt with the discrepancy. It decided that monies in the sinking fund need not be included in the tax calculation if they were not used in the year of assessment. But if they were tapped for maintenance and repairs which would have a positive impact on the property's overall value, then they should be included in the calculation. The three-judge court also held that, unlike most other types of tax declarations, the onus on showing that the sinking funds were used for maintenance and repair should lie with the taxman.

The court sent Mr Tan's case back to Iras' Chief Assessor to recalculate the tax owed, following its decision. It also asked Iras to come up with clear guidelines on the exclusions. But it remains to be seen if the judgment would have more impact on strata-title holders like building or unit owners in their contributions to the management fund, often several times larger than the sinking fund.

The current practice is to exclude contributions to the management fund when assessing property tax, as the fund is meant for general purposes not necessarily related to improvements. But the three-judge Court of Appeal termed the taxman's blanket exclusions as 'curious'. Judge of Appeal Andrew Phang said they were due to a 'mistaken belief' that management funds have nothing to do with maintenance and repair works. Taxpayers have benefited from the taxman's 'erroneous practice to date', he noted.

In Mr Tan's case, his unit had an annual rental value of $48,000. He was allowed to deduct his management fund payment of $2,400 from that amount, but not his sinking fund contribution of about $600. The final annual value of the unit, with the deduction, was $45,600.

But management funds are also used for maintenance and repair works which enhance the value of the property and, therefore, should be included in the tax assessment of the property's annual value, reasoned Justice Phang. This exclusion so far, the judge went on to say, could be a form of concession to taxpayers, which the Chief Assessor is entitled to grant.

Iras told The Straits Times it would follow up on the court's recommendation to draw up guidelines after it receives feedback from industry players. The change, if and when implemented, could affect unit-owners under the 3,000-odd management corporations that run strata-titled properties, including condominiums. But any changes would not affect previous property tax payments, Iras' lawyer Julia Mohamed told the court. Professional valuer Chua Beng Ee said the bulk of management funds is typically used to provide services like security and to upkeep facilities and utilities such as swimming pools, air-conditioning and lighting for common areas. Iras was thus right to exclude the management fund under current practice, he said.

'Monies used for maintenance and repair from the management funds are incidental in any case and expected to be small,' said Mr Chua. 'For practical reasons, the Iras should probably just extend the concession they have always had for management funds to the sinking fund, instead of having to laboriously study the accounts of each MCST (management corporation) to find out exactly which portions are meant for maintenance and repair.'

Ex-condo managing agent believed to have made off with $200,000
By Geraldine Soh, 938LIVE | Posted: 26 December 2007 2036 hrs

SINGAPORE : Police are looking for a former condominium managing agent, who is believed to be on the run with over S$200,000 worth in sinking funds from four condominiums.

It was understood that the woman is in her early 30s, but police have declined to confirm her name.

Condo residents, however, said the woman's name is Amutha Perumal and she is likely to have fled Singapore for over a year now.

She was alleged to have got away by forging cheques and falsifying financial accounts between 2003 and 2007.

Earlier this month, residents of one of the four condos, Adis Villa near Selegie Road, received a police report.

The report dated 9 April 2007 said the agent will be charged with 205 counts of forgery, upon her arrest.

The report was addressed to the chairman of the management council, but it was also sent to residents ahead of their final annual general meeting (AGM) on December 29.

Besides the police report, Adis Villa residents also received an AGM agenda asking that they consider, among other things, that the amount misappropriated be written off.

Apart from Adis Villa, she also managed Sophia Apartments, Mount Sophia Apartments and Pelikat Mansions in Hougang. - 938LIVE

Building Management and Maintenance control can be simplified into three (3) areas.1) Management 2) Maintenance and 3) Facilities Operation/uses.
 
A one-page worksheet/diary is useful if it can help MC to know at a glance:
 
1) The current (weekly) operation status and requirements and if works are in complaince with Rules and Regulations.
2) When are works executed and whether they are successfully completed within budget and the required time frame.
3) Whether problems and complaints are received; who are attending to them and if problems are successfully solved within the required time frame.
4) Who is In-charge of what and who to contact him for immediate attention.
5) When Bills and Payments are made; are they within budget and properly approved and recorded.

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