Developer Administration Fee

A developer is not supposed to arbitrarily impose an exorbitant
administrative fee and benefit itself for its own neglect in applying
for the strata title.

As one of the conditions for giving their consent to assign,
developers usually impose an administrative fee of 1% on the
purchase price or on the value of the transaction (e.g. loan amount)
which must be paid in order to obtain their consent. The principle
of law stated that upon receiving the full payment of the purchase
price from the buyer, a developer is merely holding the property
on trust for the benefit of the purchaser pending the issuance of
the separate strata title, which the developer is obligated to apply
for. Hence, a purchaser is not liable to pay any administrative fees
upon paying full payment for a property. A landmark court ruling
in 2019 indicated that a nominal administrative fee of RM500 is fair
and reasonable.

Though commonly regarded as market practice, the imposition
of 1% can nonetheless be costly and unreasonable. However,
without legislative intervention, the law remains inadequate as
the only way owners could obtain remedy is through litigation
which is often time consuming and costly.

From Hartamas Note For The Week