Landed with problems
16/01/2001 The Star Articles of Law with Bhag Singh
The purchase of landed property could involve just a piece of land, a house
or a commercial building. It involves the commitment of substantial resource
in terms of the initial payment and the monthly instalments.
When hiccups arise, the consequences for the buyer may not
only be burdensome but on occasions, disastrous. The purchaser may face difficulties
and find the law not entirely on his side.
It is understandable that the public is often gratified to
read about a major revamp in the law which will bring wide changes. It has been
intimated that the amendments will be more balanced and comprehensive.
Whilst all this is commendable, the changes contemplated
are not always intended to protect all property buyers but merely those who
are governed by specific legislation.
An example of a problem faced that is not governed by the
existing Housing Development Act and is unlikely to be altered by the changes
proposed to the Act is reflected in a reader's letter: "In November 1994,
my father entered into a sale and purchase agreement with a a 'reputable' developer
for the purchase of a bungalow lot. The format of the agreement in question
was not in any of the prescribed form as stated in the housing development legislation.
As to date, the developer has only billed my father 50% of the purchase price.
"There was no mention of the time frame for the developer
to deliver vacant possession of the property. Instead, provision for vacant
possession was only dealt with in the following unclear clause:
"Subject to the purchaser having paid all purchase price
instalments payable ... and all other monies due under this agreement and the
purchaser having performed and observed all the terms and covenants on his part
under his agreement, the vendor shall let the purchaser into vacant possession
of the said plot upon completion of the infrastructure works referred to in
Clause 12 hereof."
The reader goes on to make the following observations which
many readers are likely to be familiar with.
Since it has taken the developer five year plus to bill 50%
of the purchase price, does it mean the purchaser has no recourse in the law
for an earlier delivery of vacant possession?
As I understand it, there is a time frame of two or
three years under the law for the vacant possession of the property.
In the agreement, the developer is entitles to charge 10%
as interest on late payments. On the other hand, nothing is mentioned
on the default of a developer when vacant possession is not delivered.
Many questions posed by the reader show how the legal position
is misunderstood. The point to note is that the Housing Developers Act does
not govern all purchases of landed property.
This is because the Housing Developers Act is for the control
and licensing of the business of housing development in West Malaysia.
Housing development is defined as: "To develop or construct
or cause to be constructed in any manner more than four units of housing accommodation
and includes the collection of monies or the carrying on of any building operations
for the purpose of erecting housing accommodation in, or over or under any land;
or the sale of more than four units of housing lots by the landowner or his
nominee with the view of constructing more than four units of housing lots by
the landowner or his nominee with the view of constructing more than four units
of housing accommodations by the said landowner or his nominee.
What does "housing accommodation" mean? This phrase is defined
in the Act to mean "any building, tenement or messuage which is wholly or principally
constructed, adapted or intended for human habitation or partly for human habitation
and partly for business premises".
It is clear that the purchase of a plot of land does not
come within the purview of the Housing Developers Act. As such, the requirements
of the Act need not be incorporated into the Sale and Purchase Agreement (SPA)
which is what has happened.
Therefore, it is left to the seller and buyer to agree on
the conditions and terms to be included in the SPA.
When there is no date for handing over vacant possession,
the seller must do so within a reasonable time. If not, the purchaser could
take that as a refusal by the seller to fulfill his obligation. This would entitle
the buyer to seek a refund for what has been paid and a claim for damages. Alternatively,
the purchaser may seek specific performance.
The law of contract in our country concerns itself not with
fairness but with what has been agreed to. If a person has agreed to a contract
which is unfair, he cannot later complain and use it as a basis for reneging
from his obligation under the alleged "unfair agreement" which is otherwise
in accordance with the law
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