06 June 2013

LAW & REALTY: Gated and guarded communities

Gated and guarded communities

Contributed by Derek John Fernandez     
Friday, 29 June 2007 08:31am

GATED and guarded community (‘GACOS’) housing schemes are getting more popular. In some areas, residents have even taken to restricting access to public roads, providing guard posts to try to reduce crime. In other cases, developers see profit in selling exclusivity and security by GACOS and readily exhort the virtues of a gated and guarded community lifestyle in their glossy advertising. Whatever the social impact of GACOS, this trend is on the rise and there is a growing market for it.

For our purposes, a reference to GACOS or gated communities means the particular development, its facilities and services including the infrastructure (roads, drains, etc) within the development are privately managed and owned. Usually some form of physical barrier surrounds the boundaries to the development. Essentially, it is a “privatisation” of public spaces or spaces that would normally be managed by public authorities. By contrast, guarded communities refer to communities where residents employ private security to provide security services to an area which includes public spaces. This often involves an attempt to restrict or regulate public spaces privately. This would include the erection of barriers on public roads, guardhouses, etc.

We will now examine the legality of these schemes:-

Guarded Communities

It is unlawful to privately attempt to restrict or regulate public spaces without the approval of the relevant authority. In the case of an 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 who:-

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;

shall be guilty of causing an obstruction and may be arrested without warrant by any police officer or any officer of the local authority authorised in writing in that behalf by local authority and taken before a Magistrate’s Court and shall be liable on conviction to a fine not exceeding RM500, and in the case of a second or subsequent conviction to a fine not exceeding RM1,000.

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 relevant OCPD 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 85% consent by the residents in the area affected. For example, in Selangor, the Selangor Housing and Property Board and the local authorities allow guard houses to be built on the following guidelines:-

i. Applications made through Resident Association (RA) only;

ii. Consent by 85% of the residents;

iii. Agreement must be made between RA and Local Authority;

iv. Guard house without barrier are allowed and the location should not obstruct traffic (situated at road shoulder only);

v. The size of the guard house should not exceed 6ft x 8ft or other sizes that the Local Authority thinks fit and suitable;

vi. The location and design of the guard house must be approved by the Local Authority;

vii. 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;

viii. Appointed security guards must be registered with Ministry of Home Affairs or with other relevant agencies;

ix. Not to prevent/obstruct passing vehicles from entering the guarded area; and

x. LA and other utility companies are free to conduct their maintenance work in the guarded area.

The authorities do sometimes “turn a blind eye” to allow some form of limited barriers as long as they do not deny access nor unduly obstruct traffic and have the overwhelming support of local residents.

Gated Communities

The recent amendments to the Strata Titles Act 1985 (with effect from April 12, 2007) by the Strata Titles (Amendment) Act 2007 now allows a GACOS to be statutorily created and regulated more effectively like other types of strata schemes. As such, land parcels with buildings are now 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 section 5(h) of the Strata Titles (Amendment) Act 2007, is that only buildings of not more than four storeys may be erected on the land parcels intended to be subdivided and held under separate strata titles, or an accessory parcel.

Furthermore, any Deed of Mutual Covenants entered into between the developer and a purchaser of a parcel in a GACOS scheme agreement can be now easily enforced as 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.

PRIOR to the amendment to the Strata Titles Act 1985, the legal basis for the creation of a gated and guarded community (GACOS) scheme was grounded on a set of agreements between the developer and the purchasers in relation to their respective rights and obligations for the management and use of the areas in the development. Hence a developer would apply for subdivision of land into lots and subject to planning approval being obtained for the GACOS scheme, enter into a set of agreements and covenants to regulate the use of land in the scheme and, in particular, the land which would normally be public land or land to be surrendered to the authorities if it were not a GACOS scheme.

The problem with this was that many of these agreements, often referred to as Deeds of Mutual Covenants (DMC), were not enforceable against sub-purchasers once the separate issue documents of title were issued unless the developers were very careful in ensuring that the DMC was made to “run with the land”. The general view is that the DMC is merely a contract between the developer and the purchaser, and cannot be binding on and enforced against a sub-purchaser, unless he consented to it.

The consent of a sub-purchaser can easily be done in a case where the developer’s consent is required for the sub-sale. However, once a separate individual title is issued and transferred to the first purchaser, the developer’s consent will no longer be required and it is common for some purchasers in GACOS scheme to sell their property to sub-purchasers without getting the sub-purchasers to agree to sign a DMC with the developer or the person managing the GACOS scheme. Although the first purchaser shall contractually remain responsible to the developer if the sub-purchaser did not pay, for example, his security charges, this will be of little use in a case where the first purchaser has long gone, and the sub-purchaser is occupying the property.

One measure that could have been implemented by developers of a GACOS scheme prior to the amendment of the Strata Titles Act 1985, was to register the DMC as an easement under Section 282 of the National Land Code 1965, and upon registration the easement could then be enforced against any subsequent purchaser. The definition of easement under Section 282 of the National Land Code 1965 is wide
enough to cover the DMC. Alternatively, the developer could have sought the state authority’s permission to impose a condition or restriction in interest on the land to incorporate the DMC.

Thus, it is not surprising that many GACOS schemes have got themselves into problems with some sub-purchasers who refuse to pay the dues, but yet enjoy the facilities paid for by others. Of course, in some cases these sub-purchasers did have good reasons for not paying.

Planning requirements

Currently, 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 GACOS scheme. Planning law requirements as well as the State Authority have set out strict guidelines for approving GACOS. These guidelines also take into account socio-economic factors in determining whether to allow GACOS. Some of the matters addressed by the guidelines (in the case of Selangor) are as follows:-

(i) Application is made only by the land owner / developer;

(ii) The maximum area allowed for each “parcel” for “gated community” should not exceed 20 acres;

(iii) Type of development, number of units, building set-back and densities are regulated;

(iv) Roads in the housing scheme are not connected with the adjoining areas at the time the application is made or in the future;

(v) Facilities and open spaces to be provided are generally more onerous than normal development;

(vi) Facilities outside GACOS area are to be also provided by the developer;

(vii) Construction of guard house without barrier is permitted. The location should not obstruct the traffic (situated at road shoulder only);

(viii) The location and design of the guard house must be shown in the plan when the Planning Approval is being made;

(ix) The fencing height is regulated;

(x) Road reserves, street lights, drains, rivers, pavements, playground and vacant area remain as public reserved area. Developer can maintain the facilities based on agreement entered with the Local Authority;

(xi) Local Authority and other utility companies are free to conduct their maintenance work in the guarded area; and

(xii) Developer to propose detailed information with regards to the concept of ‘Gated Community’ development in:-

    a)Disclosure statement; and

    b)Deed of Mutual Covenants (minimum requirements must be incorporated as set out by the authority);

(xiii) Where developer wants local authority to provide some of the services then an agreement containing prescribed terms is to be included in the maintenance agreement between the local authority and the developer. These prescribed terms include a security bond.

Finally, it must be understood and appreciated that all purchasers of houses in a GACOS 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 GACOS will have to be borne by them in addition to the usual quit rent and rates levied.