On 14 September 2018, the Ministry of Construction (“MOC”) issued Notification 227/2018 (the “Notification”) “Appointing Registrar and Opening Registration Office relating to Condominiums” as part of the implementation of the Condominium Law 2016 (“Condo Law”) and Condominium Rules Notification 267/2017 (“Condo Rules”).

This welcome development establishes the long awaited condominium registration offices allowing developers to register condominiums under the Condo Law and Rules. It is thus now possible for foreign nationals to own up to 40% of the total saleable floor area of the respective condominium building.

Prior to this Notification, the Condo Law was effectively on hold due to the inability to register any building meeting the conditions (i.e. a land area of more than 20,000 square feet and a minimum of six floors) to be considered as a “condominium”, thus rendering the Condo Law largely ineffective.

It is anticipated that developers will now be able to take full advantage of the benefits provided by the Condo Law, potentially breathing new life into the condominium development market through an accelerated influx of foreign capital.

This also opens up new opportunities in the mortgage market by making the issuance of a “condominium certificate” (a type of land title document) compulsory, and which will provide security of title to its holder.

We look forward to a slate of condominium registrations in the coming weeks and months.

Time Limitations

The ownership period of any respective condo unit will still be limited by the duration of the underlying land lease. In other words, where a condominium building is constructed on land leased from the government for a period of 50 years, the ownership right over any condo unit within the building will similarly be limited to 50 years. Whether the land leases will be subject to renewal without payment of a premium (as is the case in many nearby jurisdictions) still remains unclear. 

What types of land can be used to develop condominiums?

Nearly all types of land can be used to construct condominiums. The Condo Law Section 10 provides that the type of land which may be registered for the purposes of building a condominium “shall be of the ‘residential area’ type and must allow for the transfer of ownership under the existing law”. This broad definition appears to allow for most types of land to be used for condominium development. Read along with Section 15(c) it appears that eligible land also includes “land owned by the State or government departments”. This effectively makes most types of land available for condominium development except for obvious exclusions such as religious land and military (or ‘cantonment’) land.

Condominium Associations (Fees, Maintenance, and Legal Standing)

The Condo Law stipulates that the collective owners of a condominium are responsible for maintaining the sanitation and security systems of the condominium. The Condo Rules establish a framework for the maintenance of the condominium by requiring that an executive committee be established to manage each condominium.

The executive committee will exist as a separate legal entity which will carry out the duties of maintaining the condominium. Such a committee will have the power to sue and be sued. The collective owners of the condominium are required to contribute management fees to the executive committee so that it may adequately carry out its functions. The executive committee will determine the required contribution level from each condominium unit owner according to the size of their respective unit.

The executive committee shall set out management rules for the operation of the condominium and the collective owners are legally obligated by the Condo Rules to adhere to them. It is highly recommended that the management rules be carefully considered and professionally drafted given the legally binding obligations that they create under the Condo Rules. The penalty for any breach of the Condo Law or Rules is a fine of between MMK 1 million up to a maximum of MMK 5 million.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

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