Ask builders for more time to secure loan, buyers urged

The Star 21/05/2001 By Clarence Chua

KUALA LUMPUR: The House Buyers Association has urged buyers to ask developers for more time to secure a loan when buying property whose construction is underway.

"If the developers refuse, don't buy. A minimum three or four months should be given to purchasers to secure a loan so that they will avoid paying interest for nothing," said its secretary-general Chang Kim Loong.

He said those who were unaware they had to settle their dues immediately after they sign the sales and purchase agreement might end up paying interest for being late in settling the progressive payments.

For example, when a buyer intends to acquire a house that is 30% completed, a downpayment of 10% has to be paid upon signing the agreement.

"But before he can secure a loan for the remaining 20%, the developer requires him to pay the remaining sum immediately.

"In failing to do so, interest will be payable to the developer. This is not legally wrong. The developer is also not obliged to explain this to the purchasers as there are no provisions governing such circumstances."

He said that at present only a moral obligation exists on the part of the developers to explain the scenario to unsuspecting buyers.

A spokesman for the Housing Developers Association said buyers should know what they are getting into before buying a house.

"Purchasers should check with the banks as to the time they take to approve the loans required and whether they have the financial ability to make payments before deciding to buy a house.

"If purchasers think they cannot get the money on time to pay, it would be worthwhile to negotiate with the developer for a longer time to pay the remaining sum."

She said it was better to get such an extension in writing but reiterated that the situation would vary from one developer to another.

Federation of Malaysian Consumer Associations vice-president Patrick Sindu said his organisation had received many complaints concerning buyers who said the developers forced them to fork out money immediately.

Calling on the Government to look into this, Sindu said developers should advise buyers that they have the right to impose interest if the payments are not made on time.