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Housing Developers (Control and Licensing) (Amendment) Regulations 2002
Schedule G
 

Shamsulbahri bin Ibrahim
Legal Adviser,
Ministry of Housing and Local Government

and

Ms Toong Gek Fong
Advocate & Solicitor

The Housing Developers (Control And Licensing) (Amendment) Regulations 2002 ("the Amending Regulations") is made by the Minister in exercise of the power conferred by Section 24 of the Housing Development (Control And Licensing) Act, 1966 to amend the Housing Developers (Control and Licensing) Regulations 1989 ("the principal Regulations").

The Amending Regulations are largely designed to clarify and regulate the relationship between the housebuyers and the developers, to offer greater protection and safeguard to the interest of housebuyers and generally to regulate and control the housing industry and to ensure a more efficient system for the delivery of cost effective housing.

The purpose of this article is to enumerate and explain the material amendments made by the Amending Regulations to the Schedule G Sale and Purchase Agreement (Land And Building) of the principal Regulations.

Amendments

1. Amendment of Preamble of Schedule G

The first paragraph of the Preamble to Schedule G of the Principal Regulations is amended by substituting for the words "owner of land" the words "owner of all that *freehold land/leasehold land of ・・. years expiring on ・・.・. ".

The amendment requires the Developer to state expressly and in clear manner the tenure of the Land in the Sale and Purchase Agreement. Before the amendment, although the Developer is required to state the tenure of the Land in any advertisement for sale (Regulation 6 of the Principal Regulations), there was no requirement to state the same in the Sale and Purchase Agreement.

2. Amendment of Clause 2

Clause 2 of Schedule G of the principal Regulations is amended ・

(a) by inserting after the word "immediately" in sub-clause (1) the words "and at any time"; and
 
(b) by inserting a new sub-clause (2) to Clause 2
 
  "(2)

 The Purchaser shall grant such approval to the *Proprietor and the Vendor encumbering the said Land for purpose of obtaining credit facilities from any bank(s) and/or financial institution(s) only if the Purchaser has first received confirmation in writing from the relevant bank(s) and/or financial institution(s) disclaiming their rights and interests over the said Property and undertaking to exclude the said Property from any foreclosure proceedings which such bank(s) and/or financial institution(s) may take against the *Proprietor and Vendor and/or the said Land.".
 

(c) by inserting a new sub-clause (3) to Clause 2:-
 
  "(3)

In the event the said Land shall be encumbered to any bank(s) and/or financial institution(s) by the Vendor, the Vendor shall deliver or cause to be delivered to the Purchaser and/or the Financier a copy of the redemption statement and undertaking letter issued by such bank(s) and/or financial institution(s) in respect of the said Lot and shall authorise the Purchaser to pay such portion of the purchase price or the Financier to release such portion of the Loan, as the case may be, equivalent to the amount of the redemption sum payable in respect of the said Lot directly to such bank(s) and/or financial institution and thereafter the balance purchase price or the balance Loan to the Vendor provided all such payments and releases to be made progressively at the time and in the manner prescribed in the Third Schedule hereto.".

Generally amendments made to Clause 2 seek to safeguard the interest of the Purchaser in the event of foreclosure of the Land by the registered chargee of the Land. It is common practice for the Developer to require the Purchaser to pre-sign a blanket approval to allow the Developer to charge or further charge the Land at any time after the execution of the Agreement, and to request the Purchaser and/or the Purchaser's financier not to lodge private caveat over the Land for reason such caveat would delay the sub-division of the Land and issuance of individual titles. In the event the Land is charged by the Developer to any bank or financial institution, any action by the chargee to foreclose the Land shall affect the interest of the Purchaser adversely, as it was held in case like Tai Lee Finance Co Sdn Bhd v Official Assignee [1983] 1 MLJ 81 that in the event of foreclosure by the chargee-bank, the interest of a bone-fide purchaser for value cannot prevail over that of a registered chargee.

Amendment in item (a) is to insert the words "and at any time" after the word ・i>immediately". This is to prohibit the Developer to encumber the Land without the prior approval of the Purchaser for the period immediately after the execution of the Agreement.

Amendment in item (b), by introduction of new sub-clause (2) to Clause 2 is to prescribe the manner in which the Developer shall obtain the prior approval of the Purchaser to charge the Land after execution of the Agreement and to invalidate the current practice by some developers to require the Purchaser to pre-sign a blanket approval at the time of execution of the Agreement to allow the Developer to charge or further charge the Land to any bank(s) and/or financial institution(s) for any loan at any time after the date of execution of the Agreement. After the amendment, if the Developer intends to charge the Land at anytime after the execution of the Agreement, the Developer can only obtain the prior approval of the Purchaser to do so if the Developer shall have first delivered to the Purchaser the disclaimer and undertaking letter from the relevant bank and/or financial institution to exclude the Property purchased by the Purchaser from any foreclosure proceeding which might be taken by such bank and/or financial institution against the Land.

Amendment in item (c) by introduction of new sub-clause (3) to Clause 2 is to ensure that in the event the Land is encumbered to any bank or financial institution by the Vendor, the Purchaser shall be entitled to pay part of the purchase price or the Purchaser's Financier shall release part of the loan directly to the chargee/assignee on the Land to redeem the Property purchased prior to payment of the balance purchase price or release of the balance loan to the Developer. Before the amendment, the purchase price is to be paid by the Purchaser to the Vendor directly by instalments as prescribed in the Third Schedule, irrespective of whether the Land is charged or encumbered by the Vendor to any bank or financial institution and the Vendor only undertakes that the property purchased shall be free from encumbrances immediately prior to the handing over of vacant possession of the Property to the Purchaser. Though it is in fact common practice by the Purchaser's End-Financier to release part of the Loan to the bridging financier and chargee of the Land as redemption sum for the discharge/reassignment of the property financed prior to releasing the balance Loan direct to the Vendor, there are complaints from cash purchasers in many cases that the Developer does not allow such purchasers to make payment of any part of the purchase price direct to the existing chargee on the Land as the Schedule of Payments contained in the Schedule G Sale and Purchase Agreement do not have such provisions. The amendment is also in response to cases when Developer receives full purchase price from the Purchaser but fails to redeem the Property purchased from the existing chargee of the Land and thus not able to deliver and/or transfer the said Property to the Purchaser free from encumbrances.

3. Amendment of Clause 4

Clause 4(1) of Schedule G of the principal Regulations is amended by inserting at the end of that sub-clause the words:-

"The Vendor is not bound to commence or complete the works in the order referred to in Third Schedule and the Purchaser shall pay the instalments according to the stage of works completed by the Vendor PROVIDED THAT any damage to the completed works by subsequent stage of works shall be repaired and made good by the Vendor at its own cost and expense before the Purchaser takes vacant possession of the said Building.".

The amendment is to facilitate flexibility of works and to allow modernization of construction works as construction methods do not necessarily follow a set sequence of operations. After the amendment, the Vendor is not bound to commence or complete the works in the order referred to in the Third Schedule and shall be entitled to claim progress payments of the purchase price from the Purchaser according to such works duly certified as completed. The safeguard to the Purchaser is that any work certified for payment which shall be damaged by subsequent stage of works shall be repaired and made good by the Vendor at its own cost and expense before the Purchaser takes vacant possession of the said Building.

4. Amendment of Clause 5

Clause 5 of Schedule G of the principal Regulations is amended by inserting a new sub-clause (3) to Clause 5:-

・3)   If the Purchaser fails to obtain the Loan due to his ineligibility of income and has produced proof of such ineligibility to the Vendor, the Purchaser shall then be liable to pay to the Vendor only one per centum (1%) of the purchase price and this Agreement shall subsequently be terminated. In such an event, the Vendor shall, within twenty-one (21) days of the date of the termination, refund the Purchaser the balance of the amount paid by the Purchaser.・/b>

This amendment by introduction of new sub-clause (3) to Clause 5 is to protect the interest of such purchaser who is not able to obtain any loan from the Financier to complete the purchase of the Property from the Developer due to his ineligibility of income. Under the existing Clause 5, failure to obtain the Loan by the Purchaser (whether due to his ineligibility of income or otherwise) shall not be a ground for the Purchaser to terminate the Sale and Purchase Agreement or withdraw from the purchase of the Property and the Purchaser shall remain liable to pay the Vendor the whole of the Purchase Price and to complete the Sale and Purchase Agreement. After the amendment, the Purchaser who produces proof that his application for Loan was rejected by the Financier due to his ineligibility of income shall be entitled to terminate the Sale and Purchase Agreement and obtain refund of all moneys paid by him under the Sale and Purchase Agreement less such sum equivalent to 1% of the Purchase Price which is to be forfeited to and retained by the Vendor.

5. New Clause 7

Schedule G of the principal Regulations is amended by inserting immediately after Clause 6 the following new Clause 7 ・

"Purchaser's Right to Initiate and Maintain action

7. The Purchaser shall be entitled on his own volition and in his own name to initiate, commence, institute and maintain at any court and tribunal any action, suit or proceeding against the Vendor or any other person in respect of any matter arising out of this Agreement unless a contrary intention is expressed in any agreement, assignment or charge between the Purchaser and his Financier in which case the prior written consent of the Financier must first be obtained."

Introduction of new Clause 7 is to give the Purchaser the right to enforce the Sale and Purchase Agreement against the Vendor or to initiate and maintain action against the Vendor in his own name at any court or tribunal in respect of any matter arising out of the Sale and Purchase Agreement, notwithstanding the Purchaser shall have absolutely assigned all his rights and interest under the Sale and Purchase Agreement and the Property to his Financier as security for the repayment of the Loan given by the Financier to the Purchaser. After the amendment, the Vendor shall not be entitled to raise the defence that the Purchaser has no locus standi to commence and/or maintain such action by reason that the Purchaser has assigned absolutely all his rights and interest under the Sale and Purchase Agreement to his Financier.

6. Amendment of Clause 8 (Clause 9 after Amendment)

Clause 8 of Schedule G of the principal Regulations is amended ・

(a) by substituting for the words "fourteen (14) days" the words "twenty one (21) working days"; and
 
(b) by inserting a new sub-clause (2) to Clause 8 : -
 
  ・2)

The Vendor shall not be entitled to charge interest on late payment in respect of any instalment if the delay in payment of such instalments is due to any one or more of the following:-

    (a)

the relevant progressive claim notice referred to in the Third Schedule hereto furnished by the Vendor to the Purchaser and/or the Financier is not complete or not in compliance to the requirement of Clause 4(2) herein;

    (b)  in the event the said Land is encumbered to any bank(s) and/or financial institution(s) by the Vendor, such bank(s) and/or financial institution(s) shall delay of fail to issue and deliver the redemption statement and undertaking letter in respect of the said Lot to the Purchaser or the Financier;
    (c) in the event the said Land is encumbered to any bank(s) and/or financial institution(s) by the Vendor, the Financier shall refuse to release the relevant portion of the Loan equivalent to the progressive payment due on the ground that such progressive payment is insufficient to settle the full redemption sum payable in respect of the said Lot."

The amendment in item (a) is to allow the Purchaser more time to make progressive payments as set out in Section 2 of the Third Schedule within 21 working days (previously 14 days) after receipt by the Purchaser of the Vendor's written notice. Corresponding amendment is made to Section 2 of the Third Schedule. After the amendment, the Vendor shall charge interest on late payments if any of the instalments shall remain unpaid by the Purchaser at the expiration of the 21 working days' period (previously 14 days).

The amendment in item (b) is to identify and state expressly certain instances where the Vendor shall not be entitled to charge interest on late payment where the delay in payment of such instalment is not due to the fault of the Purchaser but due to reasons attributable (directly or indirectly) to the act or omission of the Vendor. Before the amendment, the Vendor appears to have the absolute right to charge the Purchaser interest on late payments immediately after the expiration of the said period of 14 days, regardless of who is in fact at fault in delaying such payments.

7. Amendment of Clause 9 (Clause 10 after Amendment)

Clause 9 of the Schedule G of the principal Regulations is amended -

(a)  in sub-clause (1)(a):-
 
  (i) by inserting before the words "fails to pay" at the beginning of that sub-clause the words "subject to sub-clause (3) below,"; and
 
  (ii) by inserting after the words "clause 8" at the end of that sub-clause the words "for any period in excess of twenty-eight (28) days after its due date";
 
(b) in sub-clause (1)(b):-
 
  (i) by inserting before the words "fails to pay" at the beginning of that sub-clause the words "subject to sub-clause (3) below,"; and
 
  (ii) by substituting for the words "within the time stipulated for payment" in that sub-clause the words "for any period in excess of twenty-eight (28) days after its due date";
 
(c) by substituting for sub-clause (1)(c) the following sub-clause:-
 
  "(c) commits any breach of or fails to perform or observe any material terms or conditions or covenants herein contained in this Agreement; or".
 
(d) in sub-clause (2):-
 
  (i) by substituting for the words "If the Purchaser fails to comply with any of the term of this Agreement or if any such unpaid instalments and interest remain unpaid for any period in excess of twenty-eight (28) days after its due date" in that sub-clause the words "Upon the occurrence of any of the events set out in Clause 9(1) (a), (b), (c), or (d) herein";
 
  (ii) by inserting after the words "interest are paid" in that sub-clause the words "or sub-clause (3) hereof shall apply,"; and
 
  (iii) by inserting after the words "the said notice" in that sub-clause the words "at the option of the Vendor";
 
(e) by inserting after sub-clause (2) the following sub-clause (3):-
 
  "(3) If the Purchaser shall before the expiry of the said fourteen (14) days notice obtain approval of the Loan and paid the difference between the purchase price and the Loan and deliver to the Vendor the undertaking letter from the Financier to release the Loan to the Vendor, the Vendor then shall not annul the sale of the said Property and terminate this Agreement unless the Financier default in its undertaking to release the Loan to the Vendor or fail to make the first disbursement of the Loan to the Vendor within thirty (30) days from the expiry of the said fourteen (14) days notice.".

Amendments in item (a), (b) and (d)(i) and (ii) are intended to rearrange Clause 9(1)(a), (b) and Clause 9(2) so that Clause 9(1) contains the list of events of default by the Purchaser while Clause 9(2) prescribes the manner of giving of notice to the Purchaser to terminate the Sale and Purchase Agreement upon default by the Purchaser.

Amendment in item (c) to Clause 9(1)(c) is to ensure that the Vendor shall only be entitled to terminate the Agreement in the event of breach of any material term, condition or covenant by the Purchaser. Before the amendment, besides failure by the Purchaser to make payment of any instalment or any sum payable under the Agreement within the stipulated time period, Clause 9 also allows the Vendor to terminate the Agreement if the Purchaser shall commit any breach of any term or condition or covenant contained in the Agreement, irrespective of whether such breach is trivial or material.

Amendment in item (d)(iii) to insert the words "at the option of the Vendor" to Clause 9(2) is to confirm the right or option of the Vendor to choose to terminate the Agreement or to treat the Agreement as subsisting and to seek specific performance of the Agreement, in the event of default by the Purchaser. This is consistent with the basic law of contract as stated by Lord Duredin in Mayson v Cloret : "party to a contract for sale of land, as in any other contract, has the option either of terminating the contract or of treating the contract as subsisting when the other party fails to perform an essential obligation of the contract of sale or when he refuses to perform the contract entirely". In fact, before the amendment, the use of the words "the Vendor may, subject to sub-clause (2) hereof, annul the sale of the Property ・・. " in Clause 9(1) indicated that the Vendor shall have the right but not obligated to terminate the Agreement in the event of default by the Purchaser. However, the amendment seeks to further clarify and confirm the right of the Vendor to avoid any ambiguity in construction and possible litigations.

The purpose of the introduction of new sub-clause (3) to Clause 9 is to allow the Purchaser to proceed with the Sale and Purchase Agreement in cases where the Purchaser has acted diligently and fulfilled all his obligations to obtain the approval of Loan and paid the differential sum between the Loan and the purchase price within the said 14 days' notice period. Any delay in payment due to delay by the financier and/or its solicitors in preparation or completion of documentation without fault of the Purchaser shall not constitute an event of termination of the Agreement.

8. New Clause 12

Schedule G of the principal Regulations is amended by inserting the following new Clause 12 ・

"Consent to Assignment/Sub Sale

12. (1) in the event the separate document of title to the said Lot has not yet been issued and no memorandum of transfer of the said Property has been executed in favour of the Purchaser and Provided that the purchaser has fully paid the purchase price and duly complied with all the terms and conditions and stipulations on the Purchaser's part contained herein, the Vendor shall not, subject to sub-clause (2) hereof, withhold its consent to any intended sale, transfer or assignment by the Purchaser to any third party (including any bank or financial institution) and the Vendor shall endorse consent to the assignment between the Purchaser and his intended purchaser/assignee within twenty one (21) days from the date of receipt by the Vendor of such assignment.

(2) The Purchaser shall pay to the Vendor consent cum administrative fee in the sum of RM500.00 or 0.5% of the purchase price whichever shall be lower. No administrative fee shall be payable in respect of consent in favour of bank or financial institution or in respect of consent to a reassignment from the bank or financial institution to the Purchaser. The Vendor shall not require the Purchaser or the intended purchaser/assignee to pay the Vendor's solicitor's fee in any event."

New Clause 12 seeks to impose legal obligation on the Vendor to endorse consent to any intended sub-sale or assignment by the Purchaser to any third party within 21 days from date of receipt of such assignment in the event separate document of title has not yet been issued provided the Purchaser shall have fully paid the purchase price and duly complied with all the terms and conditions of the Sale and Purchase Agreement and paid to the Vendor administrative fee fixed at the sum of RM500.00 or 0.5% of the purchase price whichever is lower. The Vendor shall not be entitled to charge administrative fee in respect of consent to assignment by the Purchaser in favour of bank or financial institution and consent to reassignment from the bank or financial institution to the Purchaser or to require the Purchaser to pay the Vendor's solicitor's fee.

Before the amendment of the principal Regulations there were no provisions in the Schedule G Sale and Purchase Agreement in respect of the legal obligation on the part of the Developer to endorse consent to the assignment by the Purchase of his interest under the Sale and Purchase Agreement with the Developer to a new purchaser or any third party. The Developer's duty under the Schedule G Sale and Purchase Agreement is merely to obtain the issuance the separate document of title and to execute valid and registrable transfer to the Purchaser within 21 days of issuance of title. There was also no provision as to the maximum amount of administrative fee the Developer can charge the Purchaser for endorsing consent to the assignment. In consequence of such lacunae in the principal Regulations, the Developer appears to have absolute discretion as to whether to grant consent to resale or assignment by the Purchaser or to grant its consent subject to such terms and conditions as it deems fit. The Developer may demand the Purchaser to pay high administrative fee for endorsing consent to the assignment and may also demand the Purchaser to pay other charges like legal fee charged by the Developer's solicitors in respect thereof.

In the case of Lim Seang Mee v Keepahead Holding Sdn Bhd, the Developer demanded RM2,000.00 as administrative fee to endorse its consent to the Deed of Assignment. It was held by the Judge that on the fact of this case, the fee of RM2,000.00 demanded by the Developer as its administrative fee is inordinately high. A fair and reasonable amount should be RM500.00. Mohamed Dzaiddin J observed in this case that :- "・・ Because of no specific provisions in the Act or Regulations the Developer appears to have complete say as to the amount they are entitled to "squeeze" from the Purchaser. It must be borne in mind that the purpose of the Housing Act is to provide adequate protection to the purchasers. Yet this is one area which the Act fails to control."

The new Clause 12 was introduced to overcome the pressing problems presently faced by the purchasers in assigning their interest under the Sale and Purchase Agreement due to the absence of statutory guideline. The legal principles on assignment that consent to assignment is not necessary for a valid assignment (LKY Hooker Sdn Bhd v Terannigam Savisthri) and that the Purchaser is only required to give notice of assignment to the Vendor (Section 4(3) of the Civil Law Act, 1956) and that the delivery of a copy of the deed of assignment to the Vendor is regarded as served with express notice in writing (Christina Angelina a/p William Bastian and Anor. v Newacres Sdn Bhd) must not be overlooked. The introduction of new Clause 12 is necessary due to the current practices by the lawyers and banking institutions to require the Purchaser to obtain consent from the Vendor for assignment of the Purchaser's interest under the Sale and Purchase Agreement to his sub-purchaser, financier or any third party. New Clause 12 shall not therefore be treated or deemed as statutory endorsement or acceptance of the present practices by the lawyers and banking institutions requiring consent from the Vendor to any assignment by the Purchaser or imposition of any legal obligation on the Purchaser to obtain such consent from the Vendor for assignment of the Schedule G Sale and Purchase Agreement.

9. Amendment of Clause 11 (Clause 13 after Amendment)

Clause 11 of Schedule G of the principal Regulations is amended ・

(a) by inserting a new sub-clause (2) to Clause 11:-
 
  ・2)

The Vendor may only claim from the Purchaser any payment resulting from the adjustment up to a maximum which is equivalent to the value of two per centum (2%) of the total area of the said Lot as shown in the final document of title.・ and
 

(b)  in sub-clause (3), by substituting for the words ・i>the party concerned・the words ・b>the Vendor or the Purchaser, as the case may be,

Amendment to Clause 11 by introduction of a new sub-clause (2) is to limit the Vendor痴 claim resulting from the adjustment of purchase price for difference in area of the lot size up to a maximum of 2% of the total area of the said Lot as shown in the final document of title. The said 2% represents a reasonable accuracy tolerance for construction purposes, especially with respect to land sizes. The amendment seeks to prevent excessive claims by the Developer resulting from adjustment of purchase price in cases where the land area as shown in the final document of title when issued is much larger than the land area as shown in the layout plan, such claim being beyond the mean and/or expectation of the Purchaser.

10. New Clause 16

Schedule G of the principal Regulation is amended by introduction of new Clause 16 which applies only to Wilayah Persekutuan Putrajaya as described in Section 10 of the Perbadanan Putrajaya Act 1955:-

Restriction against change to colour code

16.   Notwithstanding the provisions of clause 15, the Purchaser shall not carry out or cause to be carried out any change in the colour of the exterior of the said Building without the prior written consent of the Appropriate Authority.・

11. Amendment of Clause 14 (Clause 17 after Amendment)

Clause 14 of the Schedule G of the principal Regulations is amended by inserting after the words 'quantity surveyor' the words , architect or engineer appointed by the Vendor or with the approval of the Controller any other competent person・

Amendment of Clause 14 is to allow any competent person other than quantity surveyor to be appointed by the Vendor for purpose of apportionment of the appropriate contribution under Clause 14.

12. Amendment of Clause 15 (Clause 18 after Amendment)

Clause 15 of the Schedule G of the principal Regulations is amended ・

(a)

by substituting for the words 'from the date of this Agreement hereto and' the words 'from the date he takes vacant possession of the said Building or from the date the said Property is transferred to the Purchaser whichever is earlier and in the event separate document of title to the said Lot has not yet been issued and the said Property is not transferred to the Purchaser at the date he takes vacant possession of the said Building,' ; and
 

(b) by substituting for the words ・septic tanks・the words ・sewerage treatment system・ and
 
(c) by inserting after the words ・continue to pay the same・the words ・from the date he takes vacant possession of the said Building

Amendment to Clause 15 is made so that the Purchaser is only be liable for all outgoings in respect of the property purchased from the date he takes vacant possession of the said Building or transfer of title whichever is earlier. Before the amendment, the Purchaser shall be liable of same as from the date of the Sale and Purchase Agreement.

13. Amendment of Clause 16 (Clause 19 after Amendment)

Clause 16 of the Schedule G of the principal Regulations is amended by inserting after the words ・quantity surveyor・the words, architect or engineer appointed by the Vendor or with the approval of the Controller any other competent person appointed by the Vendor. The Purchaser shall pay six (6) months・advance in respect of such contribution at the date he takes vacant possession of the said Building and any payment thereafter shall be payable monthly in advance. Every written notice to the Purchaser requesting for the payment of such contribution from the Vendor shall be supported by a statement issued by the Vendor which shall include a list and description of the services provided, the expenditure incurred and the amount of such contribution due to the Vendor in respect thereof.・

Amendments made are intended:-

(i) to allow any competent person other than the quantity surveyor to be appointed by the Vendor for purpose of apportionment of the appropriate contribution for the maintenance of service;
 
(ii) to prescribe the amount and time and manner of payment of such contribution by the Purchaser to the Vendor. The first advance payment of six (6) months shall represent reasonable period of time for such services provided by the Vendor to be taken over by the Appropriate Authority.

Before the amendment, there was no provision in Clause 16 governing such matter and the Developer appears to have absolute discretion to determine the amount of advanced service charge payment to be collected from the Purchaser at the time of vacant possession. The common practice by Developer is to demand one (1) year advance payment of such service charge by the Purchaser at the date of vacant possession and when the services are taken over by the Appropriate Authority sooner than one (1) year from the date of vacant possession, no refund of such part of the service charge paid is made to the Purchaser.
 
(iii)

 to require that every notice from the Vendor to the Purchaser requesting for payment for such contribution shall be supported by a service charge statement in the prescribed form stating the list and description of the services provided the expedition incurred and the amount of the contribution due. The amendment seeks to prevent excessive service charge claimed and/or collected by the Vendor.

14.  Amendment of Clause 20 (Clause 23 after Amendment)

Clause 20 of Schedule G of the principal Regulations is amended,

(a) by substituting for the words in sub-clause (1) the following words :-
 
  ・1)

Vacant possession of the said Building shall be delivered to the Purchaser in the manner stipulated in Clause 24 herein within twenty-four (24) calendar months from the date of this Agreement.・

(b) by substituting for the words in sub-clause (2) the following words :-
  ・2)

If the Vendor fails to deliver vacant possession of the said Building in the manner stipulated in clause 24 herein within the time stipulated in subclause (1), the Vendor shall be liable to pay to the Purchaser liquidated damages calculated from day to day at the rate of ten per centum (10%) per annum of the purchase price from the expiry date of the delivery of vacant possession in subclause (1) until the date the Purchaser takes vacant possession of the said Building. Such liquidated damages shall be paid by the Vendor to the Purchaser immediately upon the date the Purchaser takes vacant possession of the said Building.・ 

(c) by inserting a new sub-clause (3) to Clause 20 :-
 
  3) For the avoidance of doubt, any cause of action to claim liquidated damages by the Purchaser under this clause shall accrue on the date the Purchaser takes vacant possession of the said Building.・
(d) by inserting a new sub-clause (4) to Clause 20 :-
 
  "(4)

For the purpose of claiming any liquidated damages in the Tribunal of Homebuyer Claims established under section 16B of the Housing Development Act 1966 [Act 118], such claim shall be made not later than twelve months from-

(a)   the date of issuance of the certificate of fitness for occupation for the said Building; or
(b)   the expiry date of the defects liability period as set out in clause 26,

whichever is the later. "

The amendment in item (a) and (b) is to confirm the manner of delivery of vacant possession as stipulated in Clause 21 (Clause 24 after Amendment) which has been amended to impose such additional requirements and duties on the Developer at the time of delivery of vacant possession. The amendment also seeks to confirm that the Vendor shall pay to the Purchaser such liquidated damages for late delivery of vacant possession immediately upon the date the Purchaser takes vacant possession of the said Building.

The amendment in item (c) is to expressly state that the cause of action to claim liquidated damages by Purchaser shall accrue on the date the Purchaser takes vacant possession of the said Building, so as to prevent the Developer from raising the plea of limitation or equitable defences such as delay, laches or acquiescence to the Purchaser痴 claim in cases where vacant possession was delivered to the Purchaser after a long lapse of time from the date of Sale and Purchase Agreement or from the expiry date of delivery of vacant possession under the Sale and Purchase Agreement.

The amendment in item (d) is to state the time limit for any claim for such liquidated damages to be made in the Tribunal of Homebuyer Claims established under Section 16B of the Housing Development Act, 1966 (Act 118).

15. Amendment of Clause 21 (Clause 24 after Amendment)

Clause 21 of the Schedule G of the principal Regulations is amended by ・

(a) in sub-clause (1) by inserting after the words ・the Appropriate Authority・the words n compliance with the relevant provisions of the Uniform Building By-Laws, 1984 ・ and
 
(b) by inserting a new sub-clause (2) to Clause 21:-
  "(2) The delivery of vacant possession by the Vendor shall be supported by:-

(a) a certificate signed by the Vendor's Architect certifying that the said Building has been duly constructed and completed in accordance with all relevant acts, by-laws and regulations and that all conditions imposed by the Appropriate Authority in respect of the issuance of the Certificate of Fitness for Occupation have been duly complied with; and

(b) a letter of confirmation from the Appropriate Authority certifying that the Form E as prescribed under the Second Schedule to Uniform Building By-Laws, 1984 has been duly submitted by the Vendor and checked and accepted by the Appropriate Authority."

The most common and serious problem faced by the housebuyers is the delay in the issuance of Certificate of Fitness for Occupation ("CFO"). Under the old Schedule G Sale and Purchase Agreement, the Developer is under no obligation to deliver vacant possession to the Purchaser together with the CFO within the 24 months' period and that vacant possession does not give the Purchaser right of occupation. Consequently, the delay in issuance of CFO has caused serious hardship and financial losses to the housebuyers.

The crux of the problems relating to delay in issuance of CFO could be because of:-

(i)

 the Developer's application for CFO is incomplete or not in compliance with all the requirements necessary for the issuance of CFO, resulting in the application been rejected by the Appropriate Authority. For instance, some Developers fail to submit the Form E together with copies of all letters of clearance or approval (surat sokongan) from the relevant technical agencies which are required by the Appropriate Authority for issuance of CFO. Examples of such technical agencies are JKR, JPP, JPS/IWK, JBA, TNB, Jabatan Bomba & Penyelamat Malaysia, LA Landscaping Department, LA Engineering Department, LA Planning Department, LA Health Department, LA Jabatan Perkhidmatan Bandar; OR 

(ii) the delay or inefficiency of the Appropriate Authority issuing the CFO. 

To solve the problems faced by the housebuyers due to delay in issuance of CFO:-

(A)

amendment is now made to Clause 21(1) to ensure that at the time of delivery of vacant possession, the Vendor shall have applied for Certificate of Fitness for Occupation from the Appropriate Authority in compliance with the relevant provisions of the Uniform Building By-Laws, 1984.
 

 

By-law 25(1) of the Uniform Building By-Laws 1984 states that:-

"Certificate of Fitness for Occupation of a building shall be given when ・
 

  (a)

the qualified persons during the course of the work have certified in form E as set out in the Second Schedule to these By-laws that they have supervised the erection of the building, that to the best of their knowledge and belief the building has been constructed in accordance with these By-laws and any conditions imposed by the local authority and that they accept full responsibility for those portions which they are respectively concerned with and the local authority or an officer authorised by it in writing for the purpose has inspected the building.
 

  (b)

all essential services, including access roads, landscape, car parks, drains, sanitary, water and electricity installation, fire lifts, fire hydrant and others where required, sewerage and refuse disposal requirements have been provided."
 

 

Further protections are given to the Purchaser by the introduction of the new sub-clause (2) to Clause 21 which now requires the Developer to deliver vacant possession to the Purchaser together with certificate of due completion and compliance from the Vendor's Architect and the written confirmation of the Appropriate Authority that the application for CFO submitted by the Developer (by way of Form E as prescribed under Second Schedule to the Uniform Building By-Laws) has been duly checked and accepted by the Appropriate Authority.
 

(B)

 the Housing Ministry's assurance that directives have been given to all local authorities issuing the CFO that:-

  (i) all applications for CFO submitted by the Developer are to be checked and confirmed to be in compliance with all requirements for issuance of CFO before such applications shall be accepted by the Appropriate Authority; and
 
  (ii) Upon acceptance of the Form E, the Appropriate Authority is to issue its written confirmation that the Form E submitted by the Developer has been duly checked and accepted by the Appropriate Authority; and
 
  (iii) once such applications have been duly checked and accepted by the Appropriate Authority, CFO shall be issued or deemed to be issued within 14 days from the date such applications are accepted by the Appropriate Authority; and
 
  (iv) the Appropriate Authority will submit a written report/explanation to the Housing Ministry in respect of such cases where the CFO is not issued within 14 days from the date the relevant application is accepted by the Appropriate Authority and in any other cases of undue delay in the issuance of CFO by the Appropriate Authority.
 
(C) Amendment was made to by-law 25 of the Uniform Building By-Laws 1984 to provide for the issuance of the CFO by the Appropriate Authority within 14 days from the date of acceptance of Form E submitted by the qualified person by the Appropriate Authority, failing which CFO shall be deemed to be issued immediately after the expiry of the said 14 days period.
 
  By-law 25(1) of the Uniform Building By-Laws 1984 states that:-
 
  ・c)  upon satisfaction of the requirements under subparagraphs (a) and (b) the local authority shall issue the certificate of fitness for occupation to the qualified person within 14 days from the date of the submission of Form E.
 
  (d)  if the qualified person does not receive the certificate of fitness from the local authority within the prescribed period, the application for the certificate of fitness for occupation shall be deemed to have been approved.
 
  (e)

 the local authority then shall issue the certificate of fitness for occupation to the owner of the building.・

16. Amendment of Clause 23 (Clause 26 after Amendment)
 

Clause 23 of Schedule G of the principal Regulations is amended by inserting after the words "as stakeholder for the Vendor" the words "and subject sub-clause (2), the Vendor's solicitors shall release such costs from such sum to the Purchaser within fourteen (14) days after receipt by the Vendor's solicitors of the Purchaser's written demand".

The amendment to Clause 23 seeks to prescribe the manner in which the Purchaser who has duly given notice and duly carried out rectification work to the building himself shall request for the release of the such rectification cost from the stakeholder sum held by the Vendor's solicitors and the time period within which the Vendor's solicitors shall release such cost from the stakeholder sum to the Purchaser.

17. Amendment of Clause 25 (Clause 28 after Amendment)

Clause 25(1)(a) is amended by substituting for the words ・at the time when such registered letter would in the ordinary course be delivered・the words upon the expiry of the period of five (5) days of posing of such registered letter・

The amendment seeks to fix the time period of five (5) days from date of posting as the time such letter required to be sent by registered post in the Agreement shall be deemed to be received by the other party.

18. Amendment of Clause 28 (Clause 31 after Amendment)

Clause 28 of Schedule G of the principal Regulations is amended ・

(a)

 in the definition of "Appropriate Authority" in paragraph (a) by inserting after the words "thereto" at the end of that definition the words "and include any corporations or private agencies licensed by the Appropriate Authority to provide electricity, telephone, sewerage services and other related services";

The amendment to the definition of "Appropriate Authority" to be in line with the privatisation of such services.

(b) by inserting after definition of "Appropriate Authority" the following definition :
  "(aa) "Controller" means the Controller of Housing appointed under the Housing Developers (Control and Licensing) Act, 1966;" and 

Introduction of new Clause 28(aa) on definition of "Controller".

(c)

in the definition of "ready for connection" in paragraph (ba) by substituting for the words "water and electrical" the words "electrical points and water" and by inserting after the words "Appropriate Authority" the words "or its authorised agent" .

The amendment to the definition of "ready for connection" seeks to make clear that it is electrical points only (rather than electrical fittings and fixtures) which shall be installed by the Vendor.

19.  Amendment of Third Schedule

The Third Schedule of Schedule G of the principal Regulations is amended ・

(a)

by substituting for the words "fourteen (14) days" in section 2 the words "twenty one (21) working days";
 

(b)

 by substituting for sub-section 2(f) the following sub-sections:-
 

 

"(f)

the sewerage works serving the said Building

5

RM

 

(g)

 the drains serving the said Building

5

RM

 

(h)

the roads serving the said Building

5

RM "  

(c)

by substituting for the words in Section 3 the following words:-
 

 

"3.

 On the date the Purchaser takes vacant possession of the said Building, with water and electricity supply ready for connection."

12.5

RM

(d)

by inserting after section 3 the following new section 4:-

 

"4.

Within twenty-one (21) working days after receipt by the Purchaser or the Purchaser痴 solicitors of the separate document of title to the said Lot together with a valid and registrable Memorandum of Transfer to the Purchaser duly executed by the Vendor or on the date the Purchaser takes vacant possession of the said Building whichever is later."

2.5

RM

(e)

by substituting for the words ・upon handing over of vacant possession・in existing Section 4 the words ・on the date the Purchasers takes vacant possession of the said Building・

The amendment in item (a) is to allow the Purchaser more time to make progressive payments as set out in Section 2 of the Third Schedule within 21 working days (previously 14 days) after receipt by the Purchaser of the Vendor's written notice.

The amendment in item (b) to Section 2 of the Third Schedule by deleting the previous subsection 2(f) and inserting new subsections 2(f), (g) and (h) is to facilitate payments by the Purchaser when the particular stage of work is duly certified as completed.

The amendment in item (c) to Section 3 of the Third Schedule is to reduce the percentage of purchase price payable upon vacant possession from 15% to 12.5% and in item (d) the introduction of new section 4 where 2.5% of the purchase price shall be payable within 21 working days after receipt by the Purchaser or the Purchaser's solicitors of the separate document of title to the said Lot together with a valid and registrable Memorandum of Transfer in favour of the Purchaser duly executed by the Vendor or handing over of vacant possession whichever is later is relevant in cases where separate documents of title have not yet been issued at the time of the vacant possession.

Before the amendment, the Purchaser shall pay full purchase price upon vacant possession irrespective of whether separate document of title has been issued or registered in favour of the Purchaser. There are many instances where the Purchasers who have paid the full purchase price but have to wait for years before separate document of title in respect of the property purchased is issued. This is clearly an exception to the ordinary contract for sale of land where the Purchaser shall only pay the balance purchase price when the Vendor has delivered the original document of title and executed valid and registrable transfer in favour of the Purchaser and also a deviation from the Torren System of land law where registration of title is of upmost importance to protect the interest of the Purchaser. After the amendment, in the event separate document of title has been issued before or at the time of vacant possession, the Developer shall be entitled to the payments of both 12.5% and 2.5% of the purchase price under Section 3 and Section 4 respectively of the Third Schedule at the time of delivery of vacant possession to the Purchaser. However, in the event separate document of title has not yet been issued at the time of vacant possession, the Developer shall only be entitled to claim payment of 12.5% of the purchase price under Section 3 of the Third Schedule at the time of vacant possession, the remaining 2.5% of the purchase price payable under Section 4 shall only be paid to the Vendor within 21 working days after the separate document of title shall have been issued and the Developer shall have delivered the separate document of title together with the duly executed valid and registrable memorandum of transfer to the Purchaser or his solicitors.

Conclusion

Substantial changes are made to the Sale and Purchase Agreement by the Amending Regulations to strike a healthy balance between the interest of the housebuyers and the housing developers.

The amendment seeks to offer greater statutory protection and to improve the position of the housebuyers. After the amendment:-

(a)

 the Purchaser shall be informed of the tenure of the Land before signing of the Sale and Purchase Agreement; 

(b)

any approval given by the Purchaser to the Vendor to charge or further charge the Land after the execution of the Sale and Purchase Agreement shall be invalid unless such approval given is in exchange of the disclaimer letter from the relevant bank or financial institution to exclude the property purchased by the Purchaser from any foreclosing proceeding which might be taken against the Land. 

(c)

The Purchaser shall be entitled to terminate the Sale and Purchase Agreement in the event of failure to obtain any Loan from the Financier for the purchase of the Property due to his ineligibility of income and shall obtain the refund of all moneys paid less 1% of the Purchase Price to be retained by the Developer. 

(d)

The Purchaser shall be entitled to pay part of the Purchase Price direct to the existing chargee of the Land (in the event the Land is so encumbered) to redeem the property purchased prior to payment of the balance purchase price to the Vendor progressively in accordance to the Schedule of Payment set out in the Third Schedule of the Sale and Purchase Agreement.  

(e)

Notwithstanding the Purchaser shall have assigned all his rights title and interest arising under the Sale and Purchase Agreement to his end-financier to secure the repayment of the housing loan by way of Deed of Assignment Absolute rather than Deed of Assignment by way of Charge only, new Clause 7 confirms the right of such Purchaser to enforce the Sale and Purchase Agreement and to initiate and maintain action against the Vendor in his own name at any court or tribunal in respect of any matter arising out of the Sale and Purchase Agreement. 

(f)

The Purchaser will have more time to make progressive payments of the purchase price within 21 working days (previously 14 days) after receipt by the Purchaser of the Vendor's written notice. 

(g)

The Vendor shall not be entitled to charge the Purchaser interest on late payment in certain instances expressly identified in Clause 9 (as amended) where the delay in payment of instalment is not due to fault of Purchaser. 

(h)

New Clause 12 lays down the guidelines for the endorsement of consent by the Vendor to the assignment by the Purchaser of his right and interest under the Sale and Purchase Agreement and the Property to any third party and the amount of administrative fee chargeable by the Vendor in respect thereof. 

(i)

 In the event the land area of the property purchased as shown in the final document of title when issued is bigger than the land area as shown in the Layout Plan annexed to the Sale and Purchase Agreement and such differences exceed 2% of the total land area, the Vendor's claim resulting from the adjustment of purchase price under Clause 13 (as amended) shall be limited to a maximum of 2% of the total land area of the said property as shown in the final document of title. 

(j)

The Purchaser shall only be liable for all outgoings in respect of the property purchased from the date he takes vacant possession or transfer of title whichever is earlier, instead of previously from date of Sale and Purchase Agreement. 

(k)

The service charge payable by the Purchaser to the Vendor for maintenance of services by the Vendor prior to handing over of such services to the Appropriate Authority shall be by way of 6 months' advance payment at time of vacant possession and thereafter by monthly payment until such services are taken over by the Appropriate Authority and the amount of such service charge shall be justifiable and commensurate with the cost and expenses of such services with reference to the service charge statement to be issued by the Vendor in prescribed form. 

(l)

The Vendor shall only be entitled to deliver vacant possession to the Purchaser after the Vendor has applied to the Appropriate Authority for the issuance of CFO and has duly complied with all the requirements of all relevant acts, by-laws and regulations and the Appropriate Authority which are necessary for the issuance of the CFO. The Vendor shall deliver to the Purchaser at the time of vacant possession documentary evidence as prescribed in the Clause 24(2) (as amended) of such compliance. 

(m)

Subject to the fulfillment of the relevant conditions in Clause 26 (as amended) by the Purchaser, the Vendor's solicitor shall release to the Purchaser the cost of rectification of the defect of the completed house incurred by the Purchaser from the stakeholder sum held by the solicitors within 14 days from the date of receipt of the Purchaser's written demand. 

(n)

Any registered letter sent by one party to the other shall be deemed to have been received upon the expiry of 5 days from the date of posting of such registered letter. 

(o)

In the event separate document of title has not yet been issued at the time of vacant possession, the Purchaser shall only pay the last 2.5% of the purchase price within 21 working days after receipt of the separate document of title together with a valid and registrable and duly executed Memorandum of Transfer from the Vendor.

The Schedule G Sale and Purchase Agreement has also been amended in several areas aimed at ensuring a more efficient and flexible system for the construction and delivery of housing units. After the amendment:-

(a)

The Developer shall have the flexibility to commence and complete construction works in such sequence as required by the modern construction methods and that progress certifications or progress billings do not have to follow the sequence as set out in the Third Schedule of the Sale and Purchase Agreement. 

(b)

It has been made clear that in the event the Purchaser shall fail to make payment of the purchase price in accordance to the Third Schedule within the stipulated time period or commit any event of default stated in Clause 10(1) (as amended) the Vendor shall have the option whether to terminate the Agreement (after due notice given) or to treat the Agreement as subsisting. 

(c)

Apportionment of the appropriate contribution payable by the Purchaser under Clause 17 and Clause 19 can now be made by a quantity surveyor, architect or engineer appointed by the Vendor or with the approval of the Controller any other competent person. Previously such apportionment can only be made by quantity surveyor appointed by the Vendor. 

(d)

The Developer shall be entitled to claim 5% each respectively of the purchase price upon completion of each stage of work in respect of the sewerage works, the drains and the roads serving the said building. Previously the Developer could claim up to 15% of the purchase price upon completion of all the above three (3) stages of works.

 

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