Avoiding legal pitfalls
11/09/2004
NST-PROP
By Salleh Buang
THERE is an old common law doctrine called "the freedom of contract"
which, simply put, means that people are free to make their own
contracts.However, this principle is not applicable if a particular law says
so.
Two examples easily come to mind in Malaysia - one, the Hire
Purchase
Act 1967 and the other, the Housing Development (Control &
Licensing) Act
1966. They are usually referred to as "consumer-oriented
legislation".
Regulation 11(1) of the Housing Development (Control & Licensing)
Regulations 1989 states that every contract of sale and purchase of
a
conventional house on terra firma must be in the form prescribed in
Schedule G. In the case of a unit in a subdivided building (flat,
apartment or condominium), the contract should be in the form
prescribed
in Schedule H.
Regulation 11(2) goes on to state that no housing developer is
permitted
to collect "any payment by whatever name called" except as
prescribed by
the contract of sale.
The legislative intent is abundantly clear. No developer is allowed
to
"contract out" of the standard Sale and Purchase Agreement (SPA),
which
must conform to either Schedule G or H. The developer also cannot
collect
any money until the parties have signed the SPA and thereafter,
further
payments can only be collected in accordance with the terms of the
agreement.
Regrettably, there are so many among us who are still ignorant of
the
law and the situation is made worse by the number of black sheep
developers who never bother to abide by it.
Some have even been known to collect "booking fees" or "registration
fees" despite knowing it is an offence to do so.
There have been instances where developers have gone ahead to sell
their
houses even though they have not obtained the necessary approvals,
licences or permits from the relevant authorities. Yet, have you
heard of
any case where crooked developers were hauled to court and sent to
prison
for their crimes?
With the media now giving attention to the "build-then-sell"
concept, do
take note that under Regulation 11 (1A), the developer need not
comply
with Regulation 11 (1) if "the Certificate of Fitness for Occupation
(CF)
for the housing accommodation has been issued and a certified true
copy,
which has been forwarded to the purchaser" at the time the SPA is
signed.
The intention behind Regulation 11 (1A) is that the standard SPA can
be
dispensed with under a "build-then-sell" situation.
That should count as a significant incentive for our developers (the
experienced and financially equipped) to practice this system of
housing
supply.
Salleh Buang is senior advisor of a company specialising in
competitive
intelligence. He is also active in training and public speaking and
can be
reached at sallehbuang@hotmail.com |
