Late delivery
of houses
19/03/2002 The Star Articles of Law with Bhag Singh
IT CAN be very frustrating to have bought a property and yet not get it well
beyond the time when it should have been handed over. It is equally frustrating
for a house buyer to have to keep on paying a developer even though he thinks
he has paid up whatever is due.
This happens when there has been a delay in the completion of the house or apartment
and the amount already paid by the buyer and the amount of compensation the
buyer looks forward to receive for late delivery, equals or exceeds the amount
of the agreed purchase price.
However, some housing developers are either unaware of, or otherwise deliberately
choose to ignore their obligation to pay compensation by way of liquidated damages
whenever there is a delay in completing and handing over a property. They have
done so on many occasions even though they ought to be aware that they do not
have a valid reason not to pay.
This state of affairs is well reflected in a situation involving a reader who,
in his own words, narrated the predicament he is facing:
"I purchased a three-room apartment in Selangor some time ago. The completed
house is yet to be handed over to me by the developer despite the fact that
51 months have passed. According to the Sale and Purchase Agreement, the apartment
should have been handed over by 36 months, failing which the developer is obliged
to pay compensation at the rate of 10% per annum based on the purchase price
which is RM92,000. A request for compensation was turned down and I was informed
that it may be considered at the actual time of handing over the house. But
the big question is, when will that be? I have so far paid 80% of the purchase
price or RM74,000 as progress payment. I am a retired government servant and
used all my life savings to pay for the apartment. I would like to focus my
query on the payment of compensation.
"I am sure that a similar predicament is faced by many other readers and house
buyers. The situation highlighted has two major concerns. The first is: when
will the buyer get the house, i.e. when will it be ready for handing over? The
other is compensation."
Well, as to completion, if work has started, only the buyer would know when
his property would be ready.
In this reader's case, as 80% of the work has been completed and work is ongoing,
it would appear that the property would be completed and ready to be handed
over in a matter of time.
In such a situation, reader who has already been very patient, just needs to
be a bit more patient; he will, in due course, get the house. Better late than
never, so the saying goes, and he should be consoled by the fact that all's
not lost as there are others facing more unfortunate circumstances than him.
House buyers are already aware of the many trials and tribulations facing them
in recovering compensation and damages for late completion. Due to utter desperation
and sheer frustration, many do not pursue the matter, thus relinquishing their
rights.
If a house buyer has already paid a substantial amount and what remains to be
paid is equal or almost equal to the amount of compensation or damage he's entitled
to, should he not hold on to the balance and set it off against whatever is
due to the developer?
I believe that this is what our reader had in mind when he related his situation
and posed the question. I think the reader would like to tell the housing developer
that he need not continue paying the developer, rather than seek a refund, since
the compensation due already amounts to or is near to what has to be paid.
Our reader's request for compensation though was turned down. Moreover, he was
told that his request "may be considered" - but only at the actual time of the
property's handing over. It appears that the housing developer views compensation
as a privilege that he can confer as he pleases.
Indeed, the attitude of many delinquent housing developers seems to be one of:
"It's okay if I'm late in delivering this house and am in breach of my obligations
as the house buyer still has to fulfil his obligations as stated in the agreement."
It's an attitude that's sadly prevalent.
By law, a house buyer is entitled to hold on to whatever balance is due and
set it off against the damages he's entitled to, should both amounts be equal.
If this is the case, the house buyer is entitled to tell the developer that
he will not make any further payments to the developer.
While this is the legal position to which a developer is in no situation to
object, a developer still holds the key, and ultimately, possession of the property.
A developer will use this advantage to bully the usually helpless house buyer.
Thus, the housing developer in such a situation will refuse to hand over the
property until and unless all monies have been paid. The house buyer will be
told that once he has paid all that is due, he will get the house key and then
he can sue the housing developer for compensation - which places the buyer in
a dilemma.
Should he not pay up, he cannot get possession, even though he has paid a substantial
amount. In the meantime, he has to pay rent for the house he's staying in and
he also has to begin paying instalments on the new house. On the other hand,
the housing developer has already collected most of the money and can afford
to sit tight on the house. The buyer is thus bullied into paying up.
What then can be done by the house buyer? He can, of course, sue the housing
developer for compensation. There will be numerous obstacles along the way that
will demoralise and derail all except those with exceptional determination and
grit.
In this regard, the law appears to be weak in its care and protection of the
aggrieved house buyer except for those with conviction in their minds and pockets
deep enough to pursue and fight for their rights. The amended law may provide
some relief but it may not cover all situations and houses constructed before
it came into force may be outside its purview.
As I have always stated, not all housing developers are delinquent or unreasonable.
Many of them fulfil their obligations honourably and there are thousands of
happy house buyers. But buying a house or apartment is, for many, a once-in-a-lifetime
occasion and when they are cheated in the way mentioned above, the fact that
there are many responsible housing developers affords little consolation.
|
