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Pitfalls of buying a model house

27/04/2001 NST-PROP By Salleh Buang

THERE is a strong urge bordering on an irresistible compulsion for people with money and no patience to buy an existing model house, also called a show house, built by a housing developer on the occasion of the launch of a new project, or a new phase of a project.

Buying a show unit means having the advantage of seeing what you purchased, unlike throwing down a hefty deposit on a house which has yet to be built - and not knowing for certain whether it will indeed be built and completed on the agreed date.

And if you also take into consideration the number of delayed and abandoned projects around the country, buying such a property might make you feel that you have really made a wise move, because the element of uncertainty about completion has been removed from the equation. There is, unfortunately, a dark side to such a purchase-something that most people
do not realise or anticipate.

For 29 year old Teoh Boay Lian, that small error in judgment on her part has become a never-ending nightmare. Teoh did not realize when she bought her bungalow show house for over half a million ringgit some three years ago that the property had only been given "a year's permit" by the Seberang Perai Municipal Council.

She was not aware when she signed the sale and purchase agreement that the developer had not submitted any building plans for the show unit to the local authority. She subsequently discovered that in the absence of approved building plans, the show house "could not be issued" with a certificate of fitness of occupation (CF).

According to her, she was assured by the developer that when she signed the sale and purchase agreement the CF would be issued within three months. Now, three years later, the CF has yet to be issued, and Teoh does not know when, if at all, it can be issued so that she can immediately move in to her home.

In the meantime, the property is no longer in its former pristine condition. According to Teoh, cracks have appeared all over the house, the floors have caved in and the beams are infested with termites. In short, the condition of the house is rapidly deteriorating and immediate remedial action is needed to arrest its decay.

Despite all this, Teoh is not too concerned with the condition of the house. What she wants is for the developer to hand over the house in good condition with the CF, or failing that to refund her money.

Most people would regard Teoh's problems as being merely a personal matter between her and the developer. She had made an error in judgment in purchasing the show unit possibly without getting adequate advice, and she now has to pay for her mistake.

I would beg to differ. To me, it is more than a mere breach of contract. It is also more than just non-compliance or contravention of the Housing Developers (Control and Licensing) Act 1966, a law passed by Parliament with the salutary objective of protecting purchaser's interests or the non-compliance or contravention of our planning laws.

Beyond all these legal considerations, I think it raises a more fundamental issue - a question of attitude. It raises a question of commitment. It also poses a question of professional standards, a question of readiness in shouldering responsibility and accepting blame - not just on the part of the developers, but also the regulators (the local authority and the Housing Ministry), the financiers (the bank who granted and released the loan) and the professionals who were directly or otherwise engaged or employed in the transaction.

In time, I would imagine Teoh will resolve her predicament, one way or another. But the question that begs to be answered is whether developers, authorities, financial institutions and buyers have learned anything from the fiasco and in the process, have taken steps to instill in the housing industry a greater sense of moral responsibility and accountability.

For the millions of would-be purchases out there, I hope the answer will be a positive one.


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