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.
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