Some common terms in condo management

Source : Straits Times – 1 Aug 2009

Management Corporation

Automatically formed for every condominium or multi-unit private development. All condo homeowners are automatically members of the management corporation. It is a legal entity that may sue other parties, and can itself be sued by other parties.

Subsidiary Proprietor

The technical term for a homeowner on an estate.

Share Value

This reflects the share that an owner has in the common property of an estate. If a unit’s share value is five out of 100, then 100 represents all the shares of all the units in the condominium and five represents the shares allotted to that unit. The share value is used to determine the homeowner’s maintenance contributions as well as his voting rights. The higher his share value, the more maintenance contributions he has to pay and the more voting rights he has. In the case of residential properties, an apartment of up to 50 sq m is allotted five share values, and an additional share value is allotted for every additional 50 sq m of floor area.

Management Council

A representative body of homeowners or their nominees elected to run an estate. The council can have up to 14 members, including a chairman, secretary and treasurer.

Building Maintenance and Strata Management Act

This piece of legislation deals with the roles and responsibilities of various parties in a private estate. It can be found online at http://statutes.agc.gov.sg/

Strata Roll

A register of owners of each unit in the development. The information includes the share value of each lot, and the name and address of each lot’s mortgagee.

By-laws

These are prescribed in existing regulations and can also be put in place by the management corporation. Generally, they are created to control and manage the use of common property. Homeowners and tenants living in the estate are obliged to comply with by-laws.

Initial Period

This is the period between the time the management corporation is formed and the first annual general meeting. The gap between the two cannot exceed 12 months. During this period, the developer plays the role of the management council and is required to collect maintenance fees on behalf of the estate and keep proper accounts. The initial period can be shorter if homeowners from at least 10 per cent of the estate’s apartments submit a request to hold an annual general meeting (AGM) to elect a management council.

Some estate management professionals, such as Mr Chan Kok Hong from CKH Strata Management, suggest residents take over the running of their estates as soon as possible. This is because developers are obliged to fix the defects of a new condo within the first year. Having control of the estate would help homeowners identify possible problems early.

Management Fund

This is the fund for the day-to-day recurrent expenses of maintaining the development. It is used for items like cleaning, insurance and the salaries of staff.

Sinking Fund

This is collected for cyclical repairs or major works. It can be used for repainting the estate, waterproofing the roof and replacing the lifts.

The sinking fund tends to be neglected in many developments. When there are not enough sinking funds for major repairs, the management corporation has to raise extra funds through a special levy.

There are mixed views on special levies. While savvy investors prefer the special levy approach, as they would rather invest their sinking fund contributions elsewhere for better returns, others feel the levy is too onerous.

Homeowners who are thinking of selling their property in the short run tend to prefer sinking fund contributions kept to the minimum as they may not enjoy the rewards of that upgrading work.

Managing Agent

This is a professional estate management firm that is hired by a management corporation to run the estate. A managing agent can be appointed for a term of up to three years, but its performance must be reviewed at every AGM.

Some parts have been adapted from Strata Living in Singapore by the Building and Construction Authority (http://www.bca.gov.sg /BMSM/others/strata_living.pdf)