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Know what you buy
01/04/2004 Published in Malaysian Business - Housing & Property By National House Buyers Association of Malaysia

Things may not be as they seem

How many of us have based our decision to buy a home on colourful brochures and enticing lifestyle illustrations? Many prospective house buyers usually have little knowledge of what aspects to look for when acquiring a home.

The construction of a project involves numerous parties and legislation, and when problems arise, help in any form is often time consuming and costly. The onus is on prospective house buyers to be well educated on their rights and to seek help from all sources available before they make their first payment.

It is important that buyers know their rights and how to use them. The Housing Development (Control & Licensing) Act 1966 (Amended 2002) ("Housing Act") controls the development of 'housing accommodation'. "Housing Accommodation' may not be same as what you think you are buying. Buyers of of service apartments and vacant bungalow lands are often surprised when told they have bought a commercial property.

In a recent newspaper article on a new trend in housing development - gated communities - house buyers were advised to be aware that there is no proper legislation on this type of schemes.

Development schemes may be called by various names coined by developers - such as condominium service apartments, condotel, cluster bungalow, resort homes, bungalow homestead, country homes, golf course villas - but these are only concepts of the development projects. It is a good idea to find out the legalities, for example, whether these developments are controlled by the Housing Act.

Extra Precaution

When purchasing a strata-title property, such a condominium or apartments, there are several additional precautions to take. For this type of property, you own not only your unit or strata lot, but also a share of the common property. Common property usually includes pipes, wires and other services contained within a floor, wall or ceiling of a building shown on the strata plan. It may also include facilities such as parking, recreational facilities and common storage areas, as well as the roof and the exterior walls.

Before you sign the sales contract, have your lawyer review all the documents, including the 'deed of covenants', bylaws, rules and regulations etc. It is recommended that purchasers of strata-title properties check out if the strata-title fees have been paid before the commencement of construction by the developer. Pay particular attention to any references to building repairs, defects and special funds (sinking fund). Know the payments that you will have to bear in order not to be caught unaware.

You should also be aware of the legal requirements around the formation of a management corporation of a strata-title building. Remember that the quality of the strata-title property you buy and, thus, the continuing value of your unit, will be significantly influenced by how well the management corporation performs its duties. If you intend to purchase one, be prepared to take an active interest in the affairs of the management corporation and ensure that the management council is being properly accountable to the strata unit owners.