Thursday, December 12, 2002

Principle is now ‘caveat venditor’

The Star
Roger Tan

I REFER to the letter, “Build first, sell later,” (The Star, Dec 10).

For the information of Frustrated, the recent amendments to the housing development laws have already taken care of the “build-then-sell” concept by encouraging developers to adopt it.

Section 7A of the Housing Development (Control & Licensing) Act 1966, the new Regulation 11 (1A) of the Housing Development (Control & Licensing) Regulations 1989 and the new Regulation 1A of the Housing Development (Housing Development Account) Regulations 1991 now provide that a housing developer is not required to open and maintain a housing development account.

He is also exempted from adopting the statutory Schedule G or H sale and purchase agreement if, at the time of the sale of the property, the property has already been completed with the certificate of fitness for occupation (CFO) and a copy of which has also been forwarded to the buyer.

In other words, the Government is now telling the developers to sell completed units with CFOs or be prepared to face the full force of the law which has now become very much more stringent and consumer-oriented after the amendments.

With these amendments, the developers should now take heed of the government’s warning that they should only sell when they are ready to do so.

Frustrated’s proposal to increase the amount to be held back by the stakeholders by 10% to 15% is not fair to the developers as the current 5% is a fair amount to be held back in the event of defects to the property.

Any other more serious breaches of contract can be referred to the new Homebuyers Tribunal or to the courts if the amount claimed exceeds RM25,000.

Regarding the proposal to have the stakeholder’s money held by the bank instead of solicitors, may I assuage his fears that with the new amendments to Section 7A of the 1966 Act, money held by the stakeholders has been given similar protection as money held in the housing development account.

This means such money is not deemed to be part of the property of the developer if his company winds up or is under liquidation and it shall be vested in the official receiver.

With this positive note, it is hoped the interest of housebuyers like Frustrated will no longer be so easily compromised by interested parties.

In fact, this is the most major revamp of the housing laws since 1982 and Housing and Local Government Minister Datuk Seri Ong Ka Ting is to be congratulated for his determination in pushing through these new laws during his first term of office.

May I say that the principle for the housing industry to be adopted now is caveat venditor (let the sellers beware) instead of caveat emptor (let the buyers beware).

Kuala Lumpur.
(via e-mail)

Wednesday, February 20, 2002

Easier now to sue developers

New Straits Times
By Carolyn Hong

KUALA LUMPUR, Tues. - Purchasers who have taken a loan to buy an apartment will soon find it easier to sue the developer for breach of contract.

Once the Housing Development Act comes into force, they would not have to get the financial institution involved other than getting its written consent to the suit.

A new provision, Section 22C, was inserted after the court had ruled that purchasers had no right to sue in their own names, as they had transferred this right to the bank. The purchaser would have to make the financial institution a party to the case but the banks may be reluctant to get involved.

The new provision gives the right to buyers to act on their own unless there is a clause to the contrary in the loan agreement. In that case, they would have to get written consent from the bank.

The new Act, which is actually the revised Housing Developers (Control and Licensing) Act, has yet to come into force although it has been passed by Parliament and gazetted.

Lawyer Roger Tan, who sat on the Housing and Local Government Ministry committee to draft the amendments, told the New Straits Times that the new Section 22C has retrospective effect. This means that it will also apply to sale and purchase agreements entered into before the Act comes into force. However, it only applies if the purchaser wanted to bring the matter to court, and not to the Housing Tribunal.

He only has the right to go to the Housing Tribunal with his complaint if the sale and purchase agreement is signed after the Act comes into force.

Section 22C will only apply to those buying homes from housing developers, and not to purchasers of commercial property or those buying from someone who is not a housing developer.

In an article written by Tan and the Ministry's legal adviser Shamsulbahri Ibrahim, distributed to the media to publicise the amendments, it was noted that the homebuyer had lost the right to sue as far back as 1984. The Federal Court then had ruled that the buyer has no locus standi to sue if he had bought the property without title and assigned his rights to the financier. Most borrowers would do that when they sign the loan agreement. Tan said these would usually be apartment buyers as it normally takes years for titles to be issued.

He said there are many cases where apartment buyers had faced difficulties suing the developer over defective workmanship or late delivery.

Saturday, February 2, 2002

More protection for housebuyers

The Star
By Chelsea L.Y. Ng

KUALA LUMPUR: The gazetted changes to housing laws will allow housebuyers to enjoy more protection, ranging from having disputes resolved by a tribunal to enhancement of enforcement up to the stage of issuance of the certificate of fitness for occupation (CFO) and transfer of titles.

The Housing Development (Control and Licensing) (Amendment) Act 2001, gazetted on Thursday, emphasises on preventive measures, better protection for purchasers as consumers and also focuses on enhancing the authorities’ investigation and enforcement powers.

The new Act does away with the exemption of co-operative societies, statutory bodies and agencies under the control of the federal or state governments (which include the government’s housing developers) from its application.

It also creates a new office of Deputy Controller of Housing, who, together with the Controller, can delegate their powers to the local authorities.

Two members of the ministry’s Steering Committee on Legislative Drafting – the ministry’s legal adviser Shamsulbahri Ibrahim and lawyer Roger Tan – said in their joint article on the amended Act that the legislation was a major revamp of the 1966 principal Act which was last revised in 1977.

The Bill for last year’s amendment went through the Houses of Parliament in October and received Royal Assent on Jan 24.

They said the new Act was expected to enhance the enforcement of the provisions in it. There were several other amendments, which focused on the same note.

One requires developers to exhibit “at all times in a conspicuous position in any office and branch office of the licensed housing developer’’ a copy of their licence, advertisement and sale permit and to report to the Controller not later than Jan 21 and July 21 of each year on the progress of their projects. This helps the ministry to monitor the progress of every housing project and to take necessary action to ensure that such a project would eventually be completed.

Another allows the ministry to monitor the progress of handing over of vacant possession in accordance with the Uniform Building By-Laws.

It also allows the Controller to undertake the necessary investigation to ascertain the reason why a particular local authority refused to issue or withheld the issuance of the CFO so that the Controller can take the matter up administratively with the local authority.

Apart from that, the legislation has more ‘goodies’ in store for homebuyers. It gives protection to the last 5% of the purchase sum deposited by housebuyers with the developer’s lawyer pending the handing over of vacant possession, similar to that of monies held in a housing development account. This move ensures that the housebuyers’ monies will not be deemed as part of the developer’s property in the event the licensed housing developer should be declared a bankrupt or his company liquidated.

When contacted, Housing and Local Government Minister Datuk Seri Ong Ka Ting confirmed that the Government had gazetted the new Act.

He, however, said the Act could not be enforced immediately as there were some final fine-tuning to be carried out.

“We are in the process of setting the date of enforcement of the Act,” he added.