House buyers' interest woes

NST 18/06/2003 By R.K.L.

IN the process of buying a house, there are perhaps no more contentious issues than payment of interest, both for late payment to the developer and payment for late delivery or LAD.

In the first instance, when a buyer is late, the Sale & Purchase agreement allows the developer to charge 10 per cent per annum interest. You would have thought that nothing could be simpler. Well, you are wrong.

In some instances, the length of communication and delay caused by the developer's solicitors in furnishing information requested by the buyer's bankers' solicitors results in payment from the bankers being delayed.

In this instance, obviously one cannot be charged interest for late payment. However, the developer's sales accounting system often fails to cater for this, and the end result is the buyer being laden with charges that were not his fault in the first place.

Under normal circumstances, one can just ignore these charges but not when it involves buying a house. The developers do not release the keys if any charges including late interest charges are payable.

This puts the buyer in a spot. If you pay, you are going to have a tough time trying to get it back and if you don't, you will not get your house keys.

Generally, people pay and appeal later, but this is a laborious and excruciating experience. One gets the run around. To avoid this, the legislation or guidelines should be amended to prohibit holding back of keys for any reason other than payment of purchase price due. All other debts are civil debts; recovery should be on a normal civil legal course, not as a lien on property.

On the other hand, when the developers have to pay LAD, buyers do not have any lien or charges to take action against. The developers give you the run around.

What is needed is for a irrevocable bank guarantee to be put in place to pay these LADs at the outset of  housing projects. This will ensure that developers behave, as bankers will be on their tail and house buyers will receive the LAD without must hassle.

We need to equalise the balance between the buyers and sellers/developers.

R.K.L

Petaling Jaya