No licence to developer
16/02/1999 The Star
ONCE again there is strong interest in the purchase of properties, and
readers have posed questions pertaining to it, especially in relation to
housing developers.
On this occasion, instead of a complete and full length article, short
questions which are posed are answered. Other readers may in future want
to structure their questions in a similar fashion to which brief replies
may be made.
What is the difference between a housing developer and a licensed housing
developer?
Obviously a licensed housing developer is a housing developer who is
licensed. Essentially a person or body engaged in the business of housing
development. should obtain a licence. Otherwise they would be in breach of
the Housing Developers Act 1966.
However, not all persons or corporate bodies engaged in housing
development are governed by the Act. These are:
* Any society register incorporated under any written law relating to
co-operative societies;
* Any body or agency established and incorporated by statute and under the
control of the Federal Government or the government of any state; and
* Any housing developer exempted from any or all of the provisions of the
Act by the Minister by notification published it the Gazette. Of course,
in this case since no licence is involved, even though an entity is in the
business of housing development, such an entity is not allowed to use the
words housing developer or any other word or words indicating that it's
carrying on the business of housing
development.
Is it true that developers have a legal obligation to complete and hand
over properties to buyers within 24 months or 36 months depending on
whether these are landed properties or compartmentalised units?
The question is rather general, but it is true that developers on
occasions are obliged to complete construction of the building and hand it
over to the buyer within a specified period.
However, this depends generally on whether such an obligation is imposed
on the developer in the agreement between the buyer and the developer. If
it's not stated in the agreement, there will be no consequential
obligation.
But if the property is housing accommodation and the transaction is
governed by the Housing Developers Act I966, the-law does impose such an
obligation. For landed property, the period fixed is within 24 months and
for compartmentalized
units, it's 36 months.
Housebuyers are under the impression that they are protected by the
Housing Developers Act 1996. Is this indeed the case?
Statements made from time to time have the tendency to create the
impression that property buyers are protected by the Act in an absolute
sense.
This is due to the ignorance of the buyers and also an overwhelming desire
to believe that the law protects them even on occasions when it does not.
Not every buyer of landed property is automatically protected under the
Act. The Act only extends protection in specific situations.
Firstly, only purchasers of housing accommodation are protected. If you
purchase an office unit or industrial or commercial building, you are not
automatically protected within the scope of the Act.
Next, the Act only applies to licensed housing developers and not the
unlicensed ones. And as explained earlier not all those engaged in housing
development need be licensed.
If a person has signed a Sale and Purchase Agreement with a housing
developer, can he withdraw if he is willing to have his 10% deposit
already paid, forfeited?
This issue has been discussed earlier, but in brief the answer cannot
always be a simple yes.
This is because only the developer can terminate the Sale and Purchase
Agreement on the grounds that no payment was made after the initial
payment of 10% of purchase price. The housebuyer cannot, by virtue of non-
payment, discharge himself of his obligations.
The refusal by a housebuyer to make further payments is a repudiation
which the developer can accept. If accepted, it brings the contract to an
end. But if the repudiation is rejected, it results in the agreement
continuing to be in force.
In the latter case, the developer can continue to charge interest and
demand full payment when the house is completed. Usually matters do not
reach this stage as the developer is likely to come across other buyers
along the way. This is when
the developer accepts the repudiation as termination of the contract. |
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