Can new owners inherit previous maintenance arrears?

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New Owners of Strata Properties Bought at Court Auctions Are Not Obligated to Inherit Previous Maintenance Arrears

The High Court has ruled that purchasers of strata properties through court-ordered auctions are not automatically liable for outstanding maintenance charges and sinking fund arrears accumulated by former owners. This decision clarifies that such buyers, having acquired property via a judicial sale, do not assume the previous owner's debts under the Strata Management Act 2013.
Ruling Based on Court-Ordered Foreclosure Sale

The High Court's decision stemmed from a case involving Rajinder Singh, who purchased an office unit at Megan Avenue 1 through a High Court e-auction in January 2024. The previous owner of the unit, Forward Wind Sdn Bhd, had accumulated over RM126,000 in unpaid maintenance charges and other fees before its liquidation. Following the auction, the property's management corporation demanded that Rajinder settle a total of RM182,000 in arrears incurred by the former owner.
Definition of "Successor-in-Title" Clarified

Judicial Commissioner Moh Kok Wai determined that Rajinder did not fit the definition of a "successor-in-title" as stipulated in the Strata Management Act 2013. The court reasoned that the property was acquired through a court-ordered foreclosure sale, distinct from a voluntary transfer or sale directly from the previous owner. Therefore, the statutory obligation to inherit past debts did not apply to him.
Upholding Confidence in Court Sales

The court emphasised that mandating auction buyers to take on debts they did not personally incur, and potentially were unaware of, would undermine the certainty and confidence in judicial sales. While acknowledging that the management corporation and other parcel owners might face losses due to the previous owner's insolvency, the court maintained that these liabilities could not be unfairly transferred to an unrelated purchaser who acquired the property through a court process. The management corporation's originating summons was dismissed, and it was ordered to pay RM10,000 in costs to Rajinder.

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Can new owners inherit previous maintenance arrears?

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