Strata & Building Management
Sinking fund spent on the wrong things
Spending sinking fund money outside ss.24(2), 51(2) and 61(2) is a breach, not a judgement call. Owners have inspection rights and a s.31 certificate (s.73 for an MC), refusal to permit inspection is an offence carrying up to RM250,000 or three years under ss.26(5) and 62(5), and the tribunal can compel documents under Fourth Schedule Part 1 Item 12.
Quick summary
Quick answer
Best for
Risk level
Buyer action
| 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. |
Where the charge comes from
Start here if you need the Act restricts what the sinking fund may pay for. Routine repairs paid from it are a red flag, not a judgement call. This is a holding-cost question, so it belongs in your model before you buy — not in a complaint after you own.
First establish that it is actually misuse
Sinking fund money must be applied solely to capital expenditure, and the permitted purposes are listed exhaustively: s.24(2) for a joint management body, and s.51(2) read with s.61(2) for a management corporation. Painting and repainting common property, acquiring movable property for use in relation to common property, renewing or replacing fixtures and fittings, upgrading and refurbishment, and any other capital expenditure the body deems necessary. Routine repairs, running costs, wages and consumables are not on that list. Before you use the word misuse, check the expenditure against those paragraphs — a genuine capital item that was badly explained is a communication problem, not a breach.
Your inspection rights, and the certificate
Owners may inspect the books of accounts, and may obtain a certificate of the state of the funds — s.31 for a joint management body, s.73 for a management corporation. The certificate is the more useful instrument, because it requires the body to state the balances in a formal document rather than describe them at a meeting. Make the request in writing and keep it. If you are a purchaser doing due diligence rather than an existing owner, this is also the document your lawyer will want.
Refusing to let you look is a separate offence
This is the part that changes the dynamic. Failing to maintain or audit the accounts, or failing to permit inspection, is an offence under s.26(5) for a joint management body and s.62(5) for a management corporation — and committee members are personally liable, to a fine of up to two hundred and fifty thousand ringgit, imprisonment of up to three years, or both. Refusing to issue the s.31 certificate carries its own penalty under regulation 19(2) of the 2015 Regulations: a fine of up to fifty thousand ringgit, imprisonment of up to three years, or both. Volunteers who understand that they are personally exposed generally find the records.
Taking it to the tribunal
If inspection and certification do not resolve it, the Strata Management Tribunal is the forum — ss.102 and 105(1). Two heads of claim in Part 1 of the Fourth Schedule matter here: Item 1 lets you dispute the performance of a duty by the management body, which is where misapplication of the sinking fund sits, and Item 12 lets you compel the body to supply documents. File both together where records have been withheld, because the document order is what lets you prove the first claim.
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
Three levers, in order. Inspect the books and obtain a certificate of the fund balances under s.31 for a JMB or s.73 for a management corporation. If inspection is refused, that refusal is itself an offence under ss.26(5) and 62(5) — committee members personally liable to a fine up to RM250,000, imprisonment up to three years, or both, and refusing a s.31 certificate carries up to RM50,000 or three years under regulation 19(2). Then file at the tribunal under ss.102 and 105(1).
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| 1 | Check the disputed expenditure against the permitted purposes in s.24(2) or ss.51(2) and 61(2) before calling it misuse. |
|---|---|
| 2 | Make a written request to inspect the books of accounts and keep a dated copy. |
| 3 | Request the certificate of fund balances — s.31 for a JMB, s.73 for a management corporation. |
| 4 | If inspection or certification is refused, note that ss.26(5) and 62(5) make committee members personally liable up to RM250,000 or three years. |
| 5 | If it still is not resolved, file at the tribunal under Fourth Schedule Part 1 Item 1, and Item 12 to compel documents. |
Common questions
What can the sinking fund lawfully be spent on?
Capital expenditure only, as listed in s.24(2) for a JMB and s.51(2) read with s.61(2) for a management corporation — painting, acquiring movable property, renewing or replacing fixtures and fittings, upgrading and refurbishment, and other capital expenditure the body deems necessary.
Can I ask to see the accounts?
Yes. Owners may inspect the books of accounts and obtain a certificate of the fund balances — s.31 for a joint management body, s.73 for a management corporation.
What if the committee refuses to let me inspect?
Refusing inspection, or failing to maintain or audit accounts, is an offence under s.26(5) for a JMB and s.62(5) for an MC, with committee members personally liable to a fine up to RM250,000, imprisonment up to three years, or both.
Where do I file a claim about sinking fund misuse?
The Strata Management Tribunal under ss.102 and 105(1) — Fourth Schedule Part 1 Item 1 to dispute performance of a duty, and Item 12 to compel the body to supply documents.
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.
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.
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.
What actually happens if you stop paying maintenance charges
Stopping payment of maintenance charges triggers a statutory sequence, not a negotiation: a Form 11 notice from a JMB (s.34(1)) or Form 20 from a management corporation (s.78(1)) giving not less than 14 days, interest capped at 10% per annum, then a debt claim, a warrant of attachment over your movable property, or criminal prosecution.
Lewis Conclusion
Withholding charges is the one protest that cannot work, because arrears also disqualify you from the committee and from voting — the exact levers you would need to fix whatever you are protesting about. Pay under protest, then fight it at the tribunal or the AGM where you still have standing.
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Check the disputed expenditure against the permitted purposes in s.24(2) or ss.51(2) and 61(2) before calling it misuse.
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Make a written request to inspect the books of accounts and keep a dated copy.
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Request the certificate of fund balances — s.31 for a JMB, s.73 for a management corporation.
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If inspection or certification is refused, note that ss.26(5) and 62(5) make committee members personally liable up to RM250,000 or three years.