Can Strata Blocks on the Same Superstructure Be Insured Separately Under the Strata Management Act?

In Malaysia's bustling property market, strata developments are commonplace, especially in urban areas where land is scarce. Property owners often face complex questions about managing shared spaces, maintenance, and insurance. A common query arises: can 2 blocks of strata properties built on the same superstructure be insured separately under the Strata Management Act 2013 (SMA)? This issue touches on the definition of a strata development, common property, and the statutory duties of management bodies.

This article breaks down the legal framework, drawing from key court judgments and statutory provisions. Note that this is general information based on available case law and should not be taken as specific legal advice—consult a qualified lawyer for your situation.

Understanding Strata Properties and Superstructures

Strata properties refer to multi-unit developments like condominiums or apartments where individual units are owned separately, but common areas are shared. The Strata Management Act 2013 (Act 757) and Strata Titles Act 1985 (STA) govern these schemes.

A superstructure typically means the overall building framework, including foundations, columns, and shared structural elements supporting multiple blocks. When two blocks share the same superstructure, they are often considered part of a single strata development. This has implications for management, maintenance, and insurance.

Under the SMA, a Joint Management Body (JMB) or Management Corporation (MC) oversees the entire development. Separate insurance for individual blocks could undermine this collective responsibility, especially if the superstructure qualifies as common property.

Insurance Obligations Under the Strata Management Act 2013

Section 90 of the SMA mandates that the MC or JMB insure the strata development, including the building and common property, against fire and other risks. This insurance is typically funded through maintenance charges and sinking fund contributions, apportioned by share units, not square footage. CBAL SDN BHD vs MENARA SAFUAN JOINT MANAGEMENT BODYPERBADANAN PENGURUSAN 3 TWO SQUARE vs 3 TWO SQUARE SDN BHD

Under the law, s 36(c) of the Strata Titles Act 1985 and s 59(2)(a) of the Strata Management Act 2013 require that maintenance charges and sinking fund contributions be calculated strictly in proportion to the share units allocated. PERBADANAN PENGURUSAN 3 TWO SQUARE vs 3 TWO SQUARE SDN BHD

Courts have emphasized that deviations from share unit apportionment are unlawful. CBAL SDN BHD vs MENARA SAFUAN JOINT MANAGEMENT BODY In one case, a JMB's attempt to charge based on square feet was deemed illegal, as it violated SMA Sections 21, 25, 60(3), and 61(3). CBAL SDN BHD vs MENARA SAFUAN JOINT MANAGEMENT BODY

Applying this to insurance: If two blocks share a superstructure, insuring them separately may not align with the SMA's requirement for unified coverage of the strata development. The superstructure likely falls under common property, necessitating joint insurance by the management body.

Key Court Insights on Common Property and Shared Structures

Malaysian courts have clarified boundaries of common property in multi-block developments, which directly impacts insurance feasibility.

Clubhouse Not Common Property Despite Shared Development

In a landmark ruling, the court held that a clubhouse was not common property, even within a strata development, as the strata plan did not designate it as such. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANOR

STA, there was no need for the strata plan to set out the common property in the development. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANOR

The developer retained title to the clubhouse land, and redevelopment plans were restricted via equitable estoppel to protect parcel owners' rights. The JMB had locus standi under SMA Section 143(2) to pursue common property claims. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANOR

This suggests that distinct elements (like a clubhouse) can be excluded from common property. However, a shared superstructure—essential to both blocks—is harder to segregate, likely remaining common and requiring collective insurance.

Maintenance Charges and Shared Responsibilities

Maintenance disputes reinforce unified management:- Charges must follow share units, not ad-hoc methods. PERBADANAN PENGURUSAN 3 TWO SQUARE vs 3 TWO SQUARE SDN BHD- Pre-2015, rates like RM0.31/ft² were limited to preliminary periods under SMA Section 52(2). TARGET TERM SDN BHD vs WALDORF AND WINDSOR MANAGEMENT CORPORATION & ANOTHER APPEAL- SPAs lacking common property descriptors bar maintenance claims without a Deed of Mutual Covenants. GOLDEN SUCCESS PROPERTY SDN BHD vs TRIPLE EQUITY SDN BHD & ANOR

The court ruled that misrepresentation regarding property titles constitutes a breach of contract and invalidates claims for maintenance charges without a deed. GOLDEN SUCCESS PROPERTY SDN BHD vs TRIPLE EQUITY SDN BHD & ANOR

For insurance, similar logic applies: Separate policies could be seen as ultra vires if they fragment responsibilities meant for the MC/JMB.

Challenges of Separate Insurance for Shared Superstructures

Attempting separate insurance raises issues:1. Risk Coverage Gaps: The superstructure's insurance might overlap or leave gaps, exposing owners to disputes.2. Statutory Non-Compliance: SMA prioritizes development-wide insurance. Courts dismiss claims based on illegal acts, like improper charge calculations. CBAL SDN BHD vs MENARA SAFUAN JOINT MANAGEMENT BODY3. Locus Standi and Disputes: Only the MC/JMB can typically insure/act on common property. Individual block owners lack standing. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANOR

In practice, developers or MCs insure the entire structure. If blocks are registered as separate strata schemes, separate insurance may be possible—but shared superstructures rarely allow this without subdividing titles, which courts scrutinize. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANOR

Related Considerations: Fraud, Estoppel, and Developer Duties

Courts address developer misrepresentations:- Misleading claims about common property don't always invalidate titles but trigger equitable remedies. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANOR- Fraudulent title claims must be substantiated. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANOR

Owners questioning shared insurance should review SPAs and strata plans. If the superstructure is ambiguously defined, equitable estoppel might prevent fragmentation. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANOR

Practical Steps for Strata Owners

• Review Documents: Check the strata plan, by-laws, and SMA compliance.
• Engage the MC/JMB: Propose resolutions at AGMs for insurance adjustments.
• Seek Declarations: Use SMA Section 143 for court clarity on common property. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANOR
• Apportion Correctly: Ensure contributions by share units to avoid invalidation. CBAL SDN BHD vs MENARA SAFUAN JOINT MANAGEMENT BODY

Conclusion and Key Takeaways

Generally, two blocks on the same superstructure form one strata development, making separate insurance under the SMA unlikely without clear title segregation. Courts prioritize unified management of common property, as seen in rulings on clubhouses, charges, and estoppel. CASA VENICIA JOINT MANAGEMENT BODY vs IDEAL HEIGHTS PROPERTIES SDN BHD & ANORCBAL SDN BHD vs MENARA SAFUAN JOINT MANAGEMENT BODY

Key Takeaways:- Insurance is a MC/JMB duty for the entire development.- Common property, like superstructures, demands collective coverage.- Improper apportionment risks court dismissal. PERBADANAN PENGURUSAN 3 TWO SQUARE vs 3 TWO SQUARE SDN BHD- Always verify with strata documents and professionals.

For tailored advice, contact a strata law specialist. Stay informed to protect your investment in Malaysia's property landscape.