Gated & Guarded Community - Malaysia


     By Jayadeep Hari & Jamil

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The contents of this article although not exhaustive will serve as a basic guide to any lay person in asking the right questions and to an extent, making the right decision when purchasing a property in a gated and guarded housing scheme.

Peter has been married for a couple of years and he has four young children. He is now looking for a landed property to purchase that is nestled in a green lung area with superior infrastructure, landscaping, facilities and amenities. Most important to him is that the property he intends to purchase must be in a housing scheme that will give him and his family the security and peace of mind. In short Peter wants to purchase a property in a gated and guarded community.

Introduction

A gated community in Malaysia is generally focused on the need for a safer community with secured and guarded surroundings. In our residential development sector we see advertisements almost daily, exhorting the virtues of gated and guarded housing schemes or gated community as they are commonly called as a new privatized way of life.

Property developers today are reinvesting themselves in response to needs of an increasingly affluent population, keeping pace with the rapid changes in trends and consumer preferences in order to thrive. What has happened is that property developers have managed to creating a safe community through the provisions of security and exclusivity as part of a community’s lifestyle.

Although some housing schemes are not categorised as gated and guarded schemes, residents have nevertheless taken steps to restrict access of the general by setting up guard posts with the hope of preventing and reducing crime in the area. Usually some form of physical barrier surrounds the boundaries to the housing estate where residents employ private security to provide security services. This often involves an attempt to restrict or regulate public spaces privately by erection of barriers on public needs, guardhouses, etc.

In the Malaysian context, a gated community may refer to a cluster of houses or buildings that are surrounded by a wall or fence on a perimeter with entry or access of houses or buildings controlled by certain measures of restrictions such as guards, boom gates or barriers which normally includes 24 hour security, guard patrols, central monitoring systems and closed circuit televisions (CCTV) cameras.

Nevertheless there are certain gated and guarded communities in Malaysia offering more than security. Guarded communities such as Kajang Country Heights, Sierramas, Tropicana and The Mines are examples of contemporary housing schemes boasting common facilities such of golf courses, club houses and recreation areas. The emphasis in these guarded community are the combination of security, privacy and the affluent lifestyle of its residents.

Main Attractions of Gated and Guarded Community

The main attractions of gated and community is security, lifestyle and the protection of property values. There are also clear development guidelines for individual style homes which helps to keep house designs at an acceptable standard without too much homogeneity.

One very important feature of a gated community is that the building standards are more flexible and as such enables more efficient land utilization. For example removing the necessity for walled boundaries and fences.

Better quality “public” services, such as garbage removal and park maintenance can be expected as these jobs are privatized, leaving local authorities to concentrate on the provision of other aspects.

Gated communities are perceived as the answer or deterrent to crime, which is becoming more challenging to manage day by day. As part of a lifestyle, gated communities also provide the “niceness” of enjoying privacy and peace of mind, and perhaps homogeneity of the population within the community.

Liability of the Developer for Misrepresentation

A developer is legally bound by law to deliver a certificate of title to his purchasers and may be guilty of misrepresentation or breach of contract if he is unable to do so. In a gated community apart from the sale and purchase agreement, an agreement known as a Deed of Mutual Covenants (DMC)) would also be signed between the purchaser and the developer. Under the DMC all rights and responsibilities of purchasers and developers will be spelled out including matters related to the usage of the common properties, payment of maintenance fees, security services as well as the running of the management company. In theory the gated community concept depends on the principle of mutual consent of parties to the contract. Thus any non-compliance with the contract will enable the innocent party to initiate civil action.

In the absence of clear provisions as to how the gated community scheme should be implemented, purchasers would have to challenge the validity of certain exemption clauses that tend to exclude liability of developers. For instance, developers may routinely inform purchasers that their gated community schemes offer 24 hour security but at the same time if the DMC contains a clause that the developer could not be liable for any act of theft, purchasers may challenge such clause as invalid. In law, the fundamental terms of a contract cannot be abrogated by exemption clauses. Thus if security is regarded as a fundamental term in a gated community, any exemption that amounts to an escape clause excluding liability of the developer may be challenged by purchasers.


Legality of Gated and Guarded Communities

It is unlawful to privately attempt to restrict or regulate public spaces without the approval of the relevant authority. Any attempt to close, barricade or restrict the access of a public road, drain or space, there may be a contravention of Sections 46(1) of Street Drainage and Building Act 1974, Section 80 of the Road Transport Act 1987 and Section(s) 62 and 136 of the National Land Code 1965. In addition, provisions of the Town and Country Planning Act 1976 may also be violated where guard houses are built in the public land or road shoulders. For example, Section 46(1) of the Street Drainage and Building Act 1974 provides that any person can be held liable if he:-

a. builds, erects, set up to maintain or permit to be built, erected or set up or maintained any wall,
fence, rail, or any accumulation of any substance, or other obstruction, in any public place;
b. without the prior written permission of the local authority, covers over or obstructs any open drain
or aqueduct along the side of any street;

There is no problem with private security patrolling public roads in a housing scheme under the employment of the residents’ associations. Nevertheless, the local authority and the police should be consulted first. It has to be noted that erecting structures to restrict access to public roads or guardhouses is another matter and would violate the law unless the relevant authority gives its approval to do so.

In recognition of a growing problem of security, various local authorities and state governments have issued guidelines for guarded communities. These guidelines do allow erection of guard houses and the employment of private security based on the consent by the residents in the area affected.

For example, in Selangor, the Housing and Property Board and the local authorities allow guard houses to be built based on certain guidelines amongst which include:-

· Applications made through the Resident Association (RA) only;
· Consent by 85% of the residents;
· Agreement must be made between RA and local authority;
· Guard house without a barrier are allowed and the location should not obstruct traffic (situated at
road shoulder only);
· A written consent from Local Authority and Land Administrator (LA) for the construction of guard
house on reserved road/vacant land must first be obtained;
· Appointed security guards must be registered with Ministry of Home Affairs or with other relevant
agencies;

The authorities do sometimes “turn a blind eye” to allow some form of limited barriers so long as it is backed by an overwhelming support of the local residents and it does not deny access nor unduly obstruct traffic.


Planning Requirements

A developer may elect to proceed with subdivision of land under the National Land Code 1965, or subdivision of land into land parcels to be held under strata titles, under the Strata Titles Act 1985. Even if a developer chooses to subdivide the land under the Strata Titles Act 1985, it does not necessary mean that the developer can develop a gated and guarded scheme. Planning law requirements as well as the State Authority have set out strict guidelines for approving gated and guarded schemes. These guidelines also take into account socio-economic factors in determining whether to allow gated and guarded schemes.

Recent Amendment to the Law

The law governing development of land involving the construction of a building having two or more storey on alienated land held under one lot is governed by the Strata Titles Act 1985. This is probably the reason why a few property developers have adopted the Strata Title Act for their development of the gated community scheme. The problem that would however arise is when the land development of the gated community scheme involves the construction of buildings that are not feasible to be sub-divided into parcels as provided in the Strata Title Act. For instances bungalow houses, semi-detached houses, double and single storey houses.

The recent amendments to the Strata Titles Act 1985 (with effect from April 12th , 2007) by the Strata Titles (Amendment) Act 2007 now allows a gated and guarded communities to be statutorily created and regulated more effectively like other types of strata schemes. As such, land parcels with buildings are no longer needed to be governed by the Strata Titles Act, in the same way as a high-rise building if a developer chooses to do so. This means that for the purposes of the Strata Titles Act 1985, land parcels with buildings can in certain circumstances be treated like a multi-storey building lying down on its side. There are several important qualifications though.

The effect of the Strata Titles (Amendment) Act 2007, is that only buildings of not more than four storey may be erected on the land parcels intended to be subdivided and held under separate strata titles, or an accessory parcel.

Furthermore, any DMC entered into between the developer and a purchaser of a parcel in a gated and guarded community scheme agreement can be now easily enforced by the bylaws under the Strata Titles Act 1985.

The enforcement and management can now also be carried out under the Building and Common Property (Maintenance and Management) Act 2007, when the Management Corporation has not come into existence. This is a huge step forward from the past practice which was problematic to say the least.

Conclusion

The development of gated and guarded community schemes in Malaysia now seems to be part of the features of the housing industry. It is undoubtful that most of these schemes are of the high cost residential types that will be attractive to developers due to higher returns and the increasing demand from the market, especially in the urban areas like Kuala Lumpur, Shah Alam, Penang and Johore Bahru.

Finally, it must be understood and appreciated that all purchasers of houses in a gated and guarded community will have to pay considerably higher charges for the maintenance, sinking fund, security fees, electricity and water and other services because the cost of all facilities within the boundary of gated and guarded community will have to be borne by them in addition to the usual quit rent and assessment rates levied by the local authorities

ABOUT THE AUTHOR: Stanley Gabriel
The author is the Head of the Conveyancing Department in Messrs Jayadeep Hari & Jamil. Having been in legal practice for over 12 years, he has vast experience in matters concerning real estate and probate.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.



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