KUALA LUMPUR, July 15 — The High Court has ruled that buyers of strata properties at court-ordered auctions cannot automatically be required to settle maintenance charges and sinking fund arrears incurred by previous owners.
According to Free Malaysia Today, the recent ruling arose from a dispute involving Rajinder Singh, who bought an office unit at Megan Avenue 1 for RM1.62 million through a High Court e-auction in January 2024.
The unit’s former owner, Forward Wind Sdn Bhd, had accumulated more than RM126,000 in unpaid maintenance charges, sinking fund contributions and other fees before it was wound up.
After Rajinder became the registered owner, the property’s management corporation demanded that he pay more than RM182,000 in arrears incurred by the company.
The management corporation argued that the outstanding charges followed the property and that Rajinder was liable as a “successor-in-title” under the Strata Management Act 2013.
Rajinder, however, said he should only be responsible for charges incurred after he became the registered owner, as he had acquired the unit through a judicial sale rather than directly from the former owner.
Judicial commissioner Moh Kok Wai ruled that Rajinder did not fall within the Act’s definition of a “successor-in-title” because the property was acquired through a court-ordered foreclosure sale, not a voluntary transfer.
He said requiring auction buyers to assume debts they did not incur and may not have known about would undermine certainty and confidence in court-supervised sales.
Moh acknowledged that the former owner’s insolvency could result in the management corporation and other parcel owners bearing the losses, but said the liabilities could not be transferred to an unrelated purchaser.
The court dismissed the management corporation’s originating summons and ordered it to pay Rajinder RM10,000 in costs.
