Plug loopholes in National Land Code
22/07/2003 NST BY Dr A. Soorian

THE National Land Code is one of the most difficult documents to decipher. There are loopholes in the enactment that need to be plugged.

The recent case of those who bought their homes for cash in Lukut, Negri Sembilan, is a case in point.

Normally, a developer takes out a bridging loan whereby the property is charged to a bank.

The house buyer enters into a sale and purchase agreement by paying 10 per cent of the purchase price and makes stage payments to the point that the housing loan becomes payable. This is referred to as end financing.

The bank that releases the end financing makes sure that the property is free from encumbrances and is not charged to any other financial institution. However, a problem arises when the purchaser pays in cash for a home. A receipt is issued by the developer and the house buyer is led to believe that all is safe. But the developer continues to get money from the bank using the property as collateral.

Later, it comes to pass that the developer is unable to repay the bank to redeem the said property and the bank proceeds to foreclose the property leaving bona fide cash purchasers in shock.

The National Land Code must be amended to plug this loophole.

Dr A. SOORIAN

Seremban