Strengthen clause to protect house buyers

10/11/2003 The Star By KC Lim, Perak

I refer to your report, "Insurance plan for house buyers proposed", (The Star, Oct 17).

There is no necessity for the Government to introduce an insurance plan for house buyers to protect themselves against developers who do not hand over the property within the stipulated period because Clause 20(2) in the Sale and Purchase Agreement clearly states: "If the vendor fails to hand over vacant possession of the said building, to which water and electricity supply are ready for connection to the said building in time, the vendor shall pay immediately to the purchaser liquidated damages to be calculated from day to day at the rate of 10% per annum of the purchase price."

Despite this clause, house buyers cannot be assured of compensation because it is not strictly enforced. The Government must strengthen the clause to make it really effective.

It does not need to introduce an insurance scheme but an additional clause with words to this effect: "The lawyer, who is preparing the Sale and Purchase Agreement for a house buyer, will be responsible to calculate and inform the end financing institution or the house buyer (cash buyer) to deduct the amount of compensation (if any) for the late delivery of vacant possession from the final payment when the developer asks for it."

As long as the full payment is not in the developer's hand, we can say house buyers are fully protected as far as Clause 20(2) is concerned.