Strata & Building Management
Buying an auction unit: do you inherit the previous owner's maintenance arrears?
Unpaid maintenance charges do follow the parcel to the next owner — ss.60(4) and 61(4) allow recovery from the proprietor or his successor-in-title, and s.68(4) does the same for a subsidiary management corporation. But Act 757 creates no statutory charge or lien on the parcel, which changes how you should do your due diligence before bidding.
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| Best for | Owners questioning what they pay, and buyers modelling the holding cost of a high-rise before they commit. |
|---|---|
| Risk level | Medium |
| Buyer action | Send Lewis your building name, the charge you pay and what you are trying to decide, and he will tell you what to check first. |
Money first, opinions later
What follows takes apart the proclamation of sale wording decides this, and a 'free from encumbrances' line does not mean what most bidders think. The Act separates two funds for a reason, and knowing which one pays for what settles most disputes.
Arrears reach the successor-in-title
This is the part most bidders get wrong in their own favour. Section 60(4) provides that outstanding charges may be recovered from the parcel's proprietor or his successor-in-title. Section 61(4) does the same for unpaid sinking fund contributions, and s.68(4) applies the same rule to a subsidiary management corporation. Under a joint management body, s.33(1) frames the outstanding expenses against the parcel owners for the time being constituting the body. In plain terms: the fact that you were not the owner when the arrears accrued does not, by itself, put them beyond your reach.
But there is no statutory lien on the parcel
Act 757 does not create a statutory charge or lien over the parcel for unpaid sums. That is a meaningful distinction. It means the management body's remedies are the ones the Act actually gives it: recovery as a debt under ss.33(3) and 77(3), and a warrant of attachment over movable property under ss.35 and 79. It does not have an automatic encumbrance sitting on the title that a purchaser must clear before transfer. Owners and bidders regularly assume the opposite in both directions — some assume the title is blocked, others assume the debt evaporates on transfer. Neither is right.
What to do before you bid
Write to the management body or managing agent and ask for a statement of account for the parcel: charges, sinking fund contributions, interest, and the date of the last payment. Ask separately whether a Form 11 or Form 20 notice has been served and whether any warrant of attachment has been applied for. Then read the proclamation of sale and the conditions of sale for the clause dealing with outgoings — auction conditions vary, and the wording there tells you what the seller is and is not clearing. A phrase like 'free from encumbrances' does not answer the maintenance-arrears question, because the arrears are not registered as an encumbrance in the first place.
Price the whole picture, not just the arrears
A parcel in long arrears usually sits in a building that has been under-collecting for years. That means the arrears figure is only the visible part: the sinking fund is likely thin, the deferred capital works are likely stacked up, and a special levy is a realistic possibility once the scheme tries to catch up. Ask for the last two years of audited accounts and the sinking fund balance alongside the arrears statement. If the discount on the unit is smaller than the arrears plus a plausible levy, the auction is not the bargain it looks like.
Verify this against your own building
Ask management for the latest audited accounts, the current charge rate per share unit and the sinking fund balance before you rely on anything here. Rates and building costs differ; the statutory framework does not.
Buyer checklist
Two things are true at once. Arrears are recoverable from the successor-in-title under ss.60(4), 61(4) and 68(4), so buying at auction can hand you the previous owner's bill. But Act 757 creates no statutory charge or lien on the parcel itself — recovery runs as a personal debt (ss.33(3), 77(3)) or through a warrant of attachment over movable property (ss.35, 79).
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| 1 | Write to the management body for a full statement of account on the parcel before you bid, not after. |
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| 2 | Ask whether a Form 11 or Form 20 notice has been served and whether a warrant of attachment has been applied for. |
| 3 | Read the proclamation and conditions of sale specifically for the outgoings clause — 'free from encumbrances' does not cover maintenance arrears. |
| 4 | Request the last two years of audited accounts and the sinking fund balance alongside the arrears figure. |
| 5 | Add arrears plus a plausible special levy to your bid price before deciding the auction is a discount. |
Common questions
Do I inherit the previous owner's maintenance arrears if I buy at auction?
They are recoverable from the proprietor or his successor-in-title under ss.60(4) and 61(4), and s.68(4) for a subsidiary management corporation. Being a later owner does not by itself put the arrears beyond reach.
Is there a lien on the parcel for unpaid charges?
No. Act 757 does not create a statutory charge or lien on the parcel. Recovery runs as a debt under ss.33(3) and 77(3), or through a warrant of attachment over movable property under ss.35 and 79.
Does 'free from encumbrances' in the proclamation clear the arrears?
Not by itself. Maintenance arrears are not registered as an encumbrance on the title, so that phrase does not address them. Read the outgoings clause in the conditions of sale instead.
How do I find out the arrears before bidding?
Write to the management body or managing agent for a statement of account on the parcel, and ask separately about notices served and any warrant of attachment applied for.
Lewis Chong
REN 69566 · IQI GlobalProperty advisor helping KL, JB, and Penang buyers make data-backed property decisions.
Related reading
Use one buyer framework across different news.
Buying, selling, charging or inheriting a unit that has no strata title yet
Once a parcel is sold, the proprietor of the alienated land is obliged within three months to apply for strata titles under s.8 of the Act 1985, measured from the superstructure stage certificate, completion, or the sale depending on which applies. The buyer's own obligations begin immediately: s.52(1) and s.52(8) treat purchasers as proprietors liable for charges.
Lewis Conclusion
Ask for the subdivision application filing date before you pay the first charge. If there is a date, the delay is in processing. If there is none, you are paying charges as a proprietor under an Act that says the proprietor is in breach, and that is a conversation to have in writing with the developer.
How your maintenance charge is actually calculated — share units, not floor area
Malaysian maintenance charges are apportioned by allocated share units under the Strata Management Act 2013, not by floor area — s.8(1) sends the computation to the First Schedule, and s.12(3), s.25(3) and s.60(3) apply it through the developer, JMB and MC periods. Here is how to read your own bill and when a different rate is lawful.
Lewis Conclusion
If you only remember one thing: ask for your share unit figure, not your square footage. It is the number that sets your bill and your vote for as long as you own the unit, and it is printed on documents you are entitled to see.
The sinking fund explained
The sinking fund is a statutory capital reserve set at a minimum of 10% of the maintenance charge under ss.12(4), 25(4), 52(3), 61(3) and 68(3) of Act 757. It may only be spent on capital items — painting, replacing fixtures, upgrading common property — and a general meeting may raise the rate but never drop it below 10%.
Lewis Conclusion
Ask two questions before you buy into any high-rise: what is the sinking fund balance, and when were the lifts, the roof and the external paint last done. If the balance is small and those items are old, the shortfall is coming to you as a special levy — it is only a question of which year.
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Write to the management body for a full statement of account on the parcel before you bid, not after.
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Ask whether a Form 11 or Form 20 notice has been served and whether a warrant of attachment has been applied for.
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Read the proclamation and conditions of sale specifically for the outgoings clause — 'free from encumbrances' does not cover maintenance arrears.
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Request the last two years of audited accounts and the sinking fund balance alongside the arrears figure.