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MANY articles have been written about buying a house and the problems involved. A reader has asked that the subject of land purchase as distinct from buying a house be discussed.

Of course buying a house also involves buying land. Similar principles are involved.

“Nowadays there is a trend for purchasing land. A few years back I purchased a piece of land in Semenyih. The buyers are ‘hooked’ to pay for nothing as the piece of land was left unfinished but we still have to pay for the loan to buy that piece of land.”

In this case the land was purchased from a subsidiary of a well-known company. However the land has not been developed as agreed on and the subsidiary has been wound up. So where do people such as our reader stand as to their entitlement and rights?

In all probability our reader is not alone in this situation. Nor is the company our reader is involved with the only one which has created such a situation.

In the mood of euphoria during boom times, many companies sold plots of land that would be developed into orchards or other purposes and the buyer had the option to ask for a house to be built on the land later.

These plots of land were not sold at cheap prices.

This euphoria to purchase land was caused by the perception that the land would appreciate substantially. This perception was further fanned in some cases by guarantees or buy-backs at a much increased price.

But whilst buyers like our reader will continue to fulfil their obligation, the same is not true of all the sellers. In some cases the developers defaulted.

Examples of such obligations undertaken in such an agreement are constructing the basic infrastructure including the installation of drains, water mains, water pipes, telephones and electrical services.

There are instances where purchasers have paid a substantial sum of money but the property has yet to be handed over even though the stipulated period has passed.

In some cases the company has been wound up. In other case the company has slowed down its business. In yet other cases there is just silence at the developer’s end and buyers cannot answers to their queries. What are the buyer’s rights?

This will depend on the terms and conditions of the agreement between the landowner/the developer and the buyer.

What is stated in the agreement will govern the relationship.

Therefore a person in such a situation needs to look at the agreement carefully and ascertain what his or her rights and obligations are. However many buyers are likely not to have paid attention to this.

Unlike the purchase of a house or apartment, the purchase of land is not governed by any law like the Housing Developers Act 1966. It is a matter purely of contract and the terms agreed upon between the buyer and seller.

These terms will be set out in the Sale and Purchase Agreement (SPA); sometimes there may be supplementary agreements. Usually the agreements are prepared by solicitors nominated by the seller and to whom the buyers are inclined to go.

In many such cases what happens is that whilst the legal fee is paid by the buyer who is under the belief that the solicitor is acting to protect him, the agreement may be drawn up, if not on the instructions of the developer, at least in a manner which is “biased” in favour of the seller/developer.

I have come across at least one agreement where the agreement contains some terms which are very one sided and place an extra burden on the purchaser.

This is a very unfair approach and where the seller/developer is the cause of adopting such an approach it is very unethical. But in the euphoria of buying an “orchard” during sales campaigns featuring beautiful pictures and scale models the buyer may not notice the unfavourable terms which are buried in a mass of legalistic words.

In addition the buyer finds the agreement inconvenient to read and perhaps difficult to understand. The buyer’s feelings are often assuaged by saying that after all it is a standard agreement.

When faced with such a situation the best thing to do is to consult your own solicitor on the agreement.

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