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New Housing Development Regulations
21/12/2002
NST By Shamsulbahri bin Ibrahim & Roger Tan Kor Mee
Housing Developers (Control and Licensing) Amendment) Regulations 2002
Housing Developers (Housing Development Account) Amendment) Regulations 2002
Housing Development (The Tribunal For Homebuyer Claims) Regulations 2002
Housing Development (Compounding of Offences) Regulations 2002
Shamsulbahri bin Ibrahim
Legal Adviser,
Ministry of Housing and Local Government
and
Roger Tan Kor Mee
Advocate & Solicitor
Background
The Housing Developers (Control and Licensing) (Amendment) Act 2002 which was
gazetted on 31 January 2002 came into operation on 1 December 2002. With that, the Housing
Developers (Control and Licensing) Act 1966 will now be known as the Housing Development (Control
and Licensing) Act 1966 (“the Act”).
Together with the Amendment Act 2002, the following regulations also came into
operation on 1 December 2002:
(1) the Housing Developers (Control and Licensing) (Amendment) Regulations 2002
which seek to amend the provisions of Housing Developers (Control and Licensing) Regulations 1989
including the statutory sale and purchase agreements as set out in Schedule G (for landed
properties) and Schedule H (for sub-divided buildings such as apartment/condominium unites) of the
1989 Regulations. After 1 December 2002, the 1989 Regulations will be known as Housing Development
(Control and Licensing) Regulations 1989 (“HDA Regulations”).
(2) the Housing Developers (Housing Development Account) (Amendment) Regulations 2002 will amend
the provisions of the Housing Developers (Housing Development Account) Regulations 1991 which will
be known as the Housing Development (Housing Development Account) Regulations 1991 after 1
December 2002 (“HDA Account Regulations”).
(3) the Housing Development (The Tribunal For Homebuyer Claims) Regulations 2002 which set out the
procedures for the administration of the Tribunal for Homebuyer Claims set up under the Act.
(4) the Housing Development (Compounding of Offences) Regulations 2002 will stipulate that certain
offences under the Act may be compounded by the Controller of Housing (“Controller”).
Housing Developers (Control and Licensing) (Amendment) Regulations 2002
The main amendments are as follows:
(1) a housing developer is not required to follow the statutory Schedule G or H
sale and purchase agreement if at the time of the contract of sale, the certificate of fitness for
occupation (“CFO”) for the property has been issued and a certified true copy of which has been
given to the purchaser.
This is to encourage the “build then sell” concept, which will prevent innocent purchasers
becoming victims of abandoned projects if more developers would adopt this concept by selling
completed properties together with CFO.
(2) a purchaser’s solicitor shall be entitled to a complete set of the contract of sale including
the original and duplicate copies and all annexures free of charge from the developer subject to
the undertaking of the purchaser’s solicitor to return the said documents intact in the event the
contract of sale is not executed by the purchaser within 14 days from the date of receipt of such
documents unless otherwise agreed by the developer.
This new regulation is to prevent the developer or his solicitor from
withholding the pre-printed sale and purchase agreements from the purchaser or his solicitor
unless certain fees have been paid by the latter. It also recognises the right of a purchaser to
independent legal representation, that is, to have his own choice of lawyer representing him.
(3) as regards the sale of a property to which no separate or strata title has been issued at the
time of the sale, the developer can only impose an administrative fee or any fee by whatever name
called not exceeding 0.5% of the purchase price or RM500, whichever is the lower for giving its
consent to an assignment, that is, for a purchaser or subsequent purchaser to resell the property.
However, the developer cannot impose any fee at all for giving his consent if the assignment is
for the purpose of securing financing in whole or in part for the purchase of the property. This
regulation cannot be excluded by any agreement.
This partly confirms the 1992 High Court decision of Justice Datuk Mohamed
Dzaiddin (as the Chief Justice then was) in Lim Seang Mee v Keepahead Holdings Sdn Bhd which was
later upheld by the Supreme Court that a fair reasonable amount for endorsing the deed of
assignment would be a sum of RM500. It also makes it an offence if any developer imposes a higher
fee for giving his consent for the sale or if the developer imposes any fee in any amount at all
for giving his consent to a purchaser for the purpose of obtaining financing.
(4) any advertisement and sale must be in accordance with the advertisement and sale permit as
approved by the Controller. When applying for the permit, if the developer supplies any misleading
statement, false representation or description of the particulars or information in the approved
building plans and proposed advertisement or any other information as required by the Controller,
he will be committing an offence under the HDA Regulations. In this respect, advertisement
conveyed through the internet or in films such as via videotape, compact disc or video or digital
compact disc will also be caught under the HDA Regulations.
(5) applications to renew the housing developer’s licence or the advertisement and sale permit
have to be made 60 days before their expiry.
(6) other amendments include requiring the developer to provide more particulars when applying or
renewing the licence and permit under the HDA Regulations. For example, the developer when
applying for the housing developer’s licence is now required, among other things, to provide an
estimated statement of projected cash flow and the latest form of annual returns to the
Controller.
With these amendments, we wish to draw the attention of all the parties
including the developer and his solicitors, architects, engineers and quantity surveyors and all
those who aid, abet, counsel, procure or command the commission of the above offences that the
penalty for contravening the HDA Regulations is a fine not exceeding RM5,000 or to a term of
imprisonment not exceeding 3 years or to both upon conviction.
Housing Developers (Housing Development Account) (Amendment) Regulations
2002
There are substantial amendments to the Housing Developers (Housing Development
Account) Regulations 1991. The HDA Account Regulations govern the operation and management of a
housing development account which every licensed housing developer is required to open under the
Act within 14 days after the issuance of the housing developer’s licence.
Exemption
The developer is exempted from the HDA Account Regulations, that is, to open
and maintain a HDA Account if at the time of the sale, CFO for the property has already been
issued and a certified true copy has also been given to the purchaser. Again, this is to promote
the “build then sell” concept.
Opening of the HDA Account
Within 14 days after being informed by the purchaser of the name and address of
his financier, the developer has to notify the purchaser’s financier of the name and address of
the bank in which the HDA Account is kept and its account number.
Deposit made by the developer
The sum of RM200,000 which the developer is required to deposit with the
Controller when applying for the housing developer’s licence can be made by way of
(a) cash;
(b) bank guarantee; or
(c) having a balance of RM200,000.00 at any one time in the HDA Account.
Deposit of all monies paid by purchaser
The developer is required within 2 banking days after the payment is made in
cash, to issue a statement to the purchaser that such payment has been credited into the HDA
Account.
Purchaser’s financier to pay direct into the HDA Account
A new regulation 4A has been inserted to require the purchaser’s financier to
deposit, within 21 working days after receiving invoice sent by the developer in respect of the
progressive payments relating to the purchase of the property by the purchaser, directly any
payment made into the HDA Account with a statement to the developer and the purchaser that such
payment has been made. Further, any payment to the developer’s solicitor as the stakeholder shall
be paid directly to the solicitor with a statement to the developer and the purchaser that such
payment has been made.
Withdrawals of monies from the HDA Account
The main amendments are as follows:
(a) the payment of legal fees in respect of the sale and purchase agreement of
the housing accommodation will no longer be an item which justifies a withdrawal of any money from
the HDA Account.
(b) withdrawals of monies from the HDA Account for the cost of carrying out soil investigations;
earthworks; foundation works; building works; external works; site and boundary survey for each
lot; infrastructure works; relocation of squatters; works related to infrastructure preparation
instructed by the appropriate authorities; and other works have to be in proportion to the housing
accommodations that have been approved under the developer’s licence.
(c) monies in the HDA Account may also be withdrawn for the purpose of meeting:
(i) any cost and expense incurred by persons specified by the Minister in carrying out the Minister's direction or decision under section 11(1A) of
the Act;
(ii) the payment of any liquidated damages pursuant to the housing development;
(iii) the payment of any defect, shrinkage or other fault pertaining to the project during the defect liability period.
Conditions for withdrawal of monies from HDA Account.
Whenever a claim is made by the developer from the HDA Account, a copy of the
notice of claim shall concurrently be submitted to the Controller.
Withdrawal of surplus monies from HDA Account
The developer can only withdraw any surplus monies in the HDA Account after:
(a) the issuance of the CFO for the housing development;
(b) the approval of the Controller; and
(c) deducting the:-
(i) the amount required to complete the housing development and the sale and purchase under all the sale and purchase agreements in respect of the
housing development;
(ii) 10% of the amount referred to in paragraph (i) for contingencies and inflation;
(iii) all the claims on liquidated damages that have been settled.
Withdrawal on furnishing of banker's guarantee.
Regulation 10 is deleted and this means the developer can no longer withdraw
monies in the HDA Account by furnishing to the Controller a banker's guarantee for such amount.
Withdrawal of all monies in HDA Account.
Regulation 11 has been amended to provide that withdrawal of all monies
remaining in the HDA Account now require the approval of the Controller. Previously, the developer
could withdraw all the monies in the HDA Account without any approval from any authority when the
housing development has been completed and the solicitor for the developer has certified that the
obligations of the developer in respect of transfer of title under all the sale and purchase
agreements in that housing development have been fulfilled.
Controller may use money in the HDA Account
The new Regulation 11A entitles the Controller to use the monies in the HDA
Account to ensure the completion of the development if he is satisfied that the development of a
housing development is detrimental to the interest of the purchasers.
Auditor to make annual report
The new Regulations 12A and 12B provide that every auditor of a developer shall, within 6 months
after the close of the financial year of such developer, make an annual report to the Controller
as to the HDA Account and shall state in every such report whether or not in his opinion:-
(a) each and every deposit and withdrawal recorded in the account are in
accordance with HDA Account Regulations;
(b) the accounting and the records examined by him are properly kept; and
(c) if the auditor has called for an explanation or information from the officers or agents of the
developer, such explanation or information has been satisfactory.
Further, the auditor is required to immediately lodge a report to the Controller together with a
full statement and relevant documents if he found any fraudulent act or misappropriation of money
in the HDA Account and the auditor is bound to supply any information or document if requested by
the Controller.
Penalty
The new Regulation 13A stipulates that any person who contravenes any provision under the HDA
Account Regulations shall on conviction be liable to a fine not exceeding RM5,000 or to
imprisonment for a term not exceeding 3 years or to both. In our opinion, “person” here includes
the auditor, the purchaser’s financier and the banks which permit withdrawals of monies from the
HDA Account in breach of the HDA Account Regulations.
Housing Development (The Tribunal For Homebuyer Claims) Regulations 2002
The Tribunal Regulations set out detailed but simple procedures for a homebuyer to file a claim
against the developer. In order to preserve uniformity of laws, the procedures are almost similar
to that of the Consumer Claims Tribunal established under the Consumer Protection Act 1999.
The main points to note are these:
Jurisdiction
The Tribunal will hear only claims brought by a homebuyer. A developer is not
entitled to institute or file any claim in the Tribunal, but he can raise a counter-claim when
responding to the claim filed by the homebuyer. The Tribunal will still hear the counter-claim
even if the homebuyer’s original claim is later withdrawn or struck out.
The Tribunal should always attempt to assist the disputing parties to negotiate for a settlement
before it proceeds to determine the dispute unless it is not appropriate for the Tribunal to do so
or the parties are unable to reach an agreed settlement.
The Tribunal only hears a claim where the total amount in respect of which an award of the
Tribunal is sought does not exceed RM25,000 unless the parties agree in writing that the Tribunal
shall hear the claim in excess of the amount. However, the agreement must be entered into before
the claim is lodged or if the claim has been lodged, at any time before the Tribunal has recorded
an agreed settlement of the claim. Otherwise, the homebuyer should file his claim in excess of
RM25,000 at the Sessions Court.
The claim must be based on a cause of action arising out of the sale and purchase agreement or a
previous dealing between the homebuyer and the developer no later than 12 months from the date of
issuance of the CFO for the property or the expiry date of the defects liability period as set out
in the sale and purchase agreement.
Homebuyer
A “homebuyer” is a purchaser who has bought a property or has a dealing with a
licensed housing developer including the second purchaser who has bought the property from the
first purchaser. In other words, the Tribunal will not hear any third or subsequent purchaser of
the property.
Legal representation
Unlike the Tribunal for Consumer Claims where legal representation is
absolutely disallowed, lawyers are allowed in the Tribunal if in the opinion of the Tribunal the
matter in question involves complex issues of law and the party will suffer severe financial
hardship if he is not represented by a lawyer provided that if one party is allowed to be
represented by a lawyer then the other party shall also be so entitled.
Housing Development (Compounding of Offences) Regulations 2002
These regulations provide that certain minor offences under the Act may be compounded by the
Controller or any officer authorized by the Controller. The offer to compound an offence is for a
period of 14 days, and if full payment of the sum offered is made on or before the expiry of 14
days, no further proceedings shall be taken against such person. Otherwise prosecution will be
instituted without further notice. |
