Malaysian Court of Appeal holds management corporations of residential strata building can prohibit use of residential units in buildings for business or short-term rentals through own house rules or bylaws
28 May 2020
Innab Salil & Ors v Verve Suites Mont Kiara Management Corporation  3 CLJ 480
In Innab Salil & Ors v Verve Suites Mont Kiara Management Corporation, the Malaysian Court of Appeal considered whether management corporation bodies of residential strata buildings, through their own house rules, can prohibit short term rentals of residential units in its building.
The Court of Appeal held that by reading section 70(2) of the Malaysian 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.
It 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. Since majority of the residents voted against the action, the majorities’ wish has to be taken heed of. Whilst the SMA allows the imposition of a fine of RM200 for any breach of by-law, the section does not provide for nor envisages an imposition of a RM200 fine for each day of continued infringement. The court held that the management corporation was not authorised to impose the fine for each day the infringement continued.