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.