Malaysian Court of Appeal holds management corporation of residential strata building can prohibit use of residential units in buildings for business or short-term rentals through own house rules or bylaws
29 April 2020
Innab Salil & Ors v Verve Suites Mont Kiara Management Corporation [2020] 3 CLJ 480
In Innab Salil & Ors v Verve Suites Mont Kiara Management Corporation, the issue before the Malaysian Court of Appeal was whether management corporation bodies of residential strata buildings, through its own house rules, can prohibit short term rentals of residential units in its building.
The Malaysian Court of Appeal held that by reading section 70(2) of the Strata Management Act 2013 (“SMA”) with regulations 5 and 28 of the Strata Management (Maintenance and Management) Regulations 2015, management corporation bodies are allowed to make additional by-laws through special resolution, for the purposes of regulating the control, management, administration, use and enjoyment of the building or land and common property in the strata scheme.
The court further held that the action of using residential units in the form of business enterprises such as short-term rentals would defeat the spirit and purpose of the SMA, which is to advance interest in communal living within a strata scheme. In this case, since the majority of the residents voted against the action, the majorities’ wish had to be taken heed of. Whilst the SMA allows the imposition of a fine of RM200 for any breach of by-laws, it does not provide for nor envisage an imposition of a RM200 fine for each day of continued infringement. Hence, the management corporation in this case was not authorised to impose a fine for each day the infringement continued.