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Backdating the law

04/01/2003 NST-PROP By Salleh Buang

Probably everyone by now knows that the updated version of the Housing Developers (Control and Licensing) Act 1966 (with its new name) has been in full force since Dec 1. This was the date set by the Federal Government for the Tribunal for Homebuyer Claims (the Tribunal) to start operations.

According to Shamsulbahri bin Ibrahim, the Housing Ministry's Legal Adviser, all the relevant regulations mentioned below are also now in full swing. These are:

(a) The Housing Developers (Control and Licensing) (Amendment) Regulations 2002; these new regulations amended and updated the earlier Regulations of 1989, which contained the standard Sale and Purchase Agreements (SPA) in Schedules G and H.

(b) The Housing Developers (Housing Development Account) (Amendment) Regulations 2002, which amended and updated the earlier Regulations of 1991.

(c) The Housing Development (Compounding of Offences) Regulations 2002; this is also new and sets out the offences under the Act which may be compounded by the Controller of Housing. When offences are compounded, offenders need not be hauled to court.

Before looking at the Tribunal, let us see some of the fundamental changes in the Regulations mentioned in (a) above, to find out to what extent these can benefit the average house purchaser. The following remarks are not be treated as an exhaustive discussion of the law.

From Dec 1 onwards, housing developers need not use the standard SPA (as contained in Schedule G or H) if, at the time the contract of sale is entered into by the parties, the certificate of fitness for occupation (CF) has already been issued by the relevant local authority and the developer is already in a  position to hand it over to the purchaser. This means that the developer can demand full payment for the house - since the house is ready for occupation by the purchaser.

The legislative intent is quite clear. The government is encouraging developers to implement the "build-and-sell" concept as opposed to the present "sell-and-build" which, in many cases, caused much grief to purchasers.

From now on, solicitors acting for purchasers are entitled to receive a complete set of the standard SPA from the developers free of charge. This privilege, however, is subject to the solicitor's undertaking to return the document to the developer in the event that the purchaser refuses or fails to execute it within 14 days of receiving the document. This new procedure guarantees (and recognises) the right of the purchaser to choose his own solicitor.

For purchasers buying houses without titles from their developers, the new Regulations put a cap on the amount a developer can charge the purchaser as administrative charges in the event the latter wishes to resell the house to another party. Under the new Regulations, developers are only allowed to charge not more than 0.5 per cent of the purchase price or RM500, whichever is lower.

As for the new Regulations affecting the Tribunal, the following points need to be remembered:

(a) The Tribunal only hears claims by purchasers, not developers. However, a developer faces with a claim from a purchaser is entitled to file a counter-claim. In such case, even if the purchaser later on abandons his claim, the developer can still proceed with his counter-claim. Every purchaser should remember this before deciding to withdraw his claim against his developer. 

(b) The Tribunal can bear a claim if it does not exceed RM25,000 - unless the parties agree otherwise. If the purchaser's claim exceeds that amount (and the developer does not agree to have it filed with the Tribunal), the purchaser has to take his case to the Sessions Court.

(c) The claim must be made in good time - which is not later than 12 months from the date CF is issued or the expiry date of the defects liability period as set out in the SPA.

(d) Purchasers are expected to conduct their own case, without counsel. However, in special cases where the Tribunal is of the opinion that, because of complex issues of law, parties need to be assisted by counsel, then lawyers may be allowed to attend as well and to represent the parties (both purchasers and developers).

The main objective of setting up the Tribunal is to provide a simple and speedy form of justice for aggrieved purchasers. Opinions are divided as to whether the cap of RM25,000 is realistic or too low.

Ironically, even today, feelings of disappointment have been openly expressed. A case in point is the National House Buyers Association (HBA). Expressing the sentiment of the HBA recently, secretary-general Chang Kim Loong said: "If the Housing Tribunal is only accessible to the house buyers who sign their SPA on or after Dec 1, then we can surmise that the Tribunal will not see any action until problems surface...(much later in the day)..."

I am in complete agreement with Chang. For me, the only logical inference I can draw with the setting up of the Tribunal right now is that the government wants to provide a flexible machinery able to provide immediate relief and remedy to existing aggrieved purchasers without too much of legal hassle. There is certainly no point in having a Tribunal now, but whose job is to wait for at least another two or three years before the first claim can be filed before it.

To sum up, although the Tribunal commenced operations from Dec 1, 2002, why can't we give it jurisdiction to hear disputes arising from SPA's signed as far back as Jan 1, 2000 or even much earlier. Or did someone in the Housing Ministry forget to consider this point?


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