The Act is here but when is
the SPA?
25/04/2002
NST-PROP
By Salleh Buang
The Housing Development (Control and Licensing) Act 1966 (amended last year)
is ready for implementation and enforcement but where is the standard Sale
and Purchase Agreement, wonders Salleh Buang
In earlier press statements by the Housing Minister, Datuk Seri Ong Ka Ting,
we were told that the Housing Development (Control and Licensing) Act 1966 -
(amended 1ast year) would come into force on February 1, 2002, after it is
gazetted. Subsequently, we were told that the Act would come into force when
the members of the Housing Tribunal have all been appointed.
Several people queried me recently whether these people have in fact been
appointed. I must say that I am still not sure. If only government websites
are kept up-to-date such queries need not be asked.
Be that as it may, the point is that the Act is here, ready for
implementation and enforcement. One question, however, still remains. Where
is the SPA (the standard sale and purchase agreement), which is currently
based on either Schedule G and H of the Housing Developers (Control &
Licensing) Regulations of 1989?
You cannot have one without the other, so says the words of an old evergreen
melody. The same thing can be said of our housing laws. Whilst the revamped
Act is now in place, future housing purchasers still need to know their
expanded rights vis-a.-vis the housing developers, and they can only known
them if these rights are spelt out clearly in black and white in the SPA.
If Housing Ministry figures can be accepted as correctly portraying the
recent housing scenario in the country, we should not forget that last year
(2001) alone, the Ministry received 1,823 complaints from house purchasers.
This is a worrying upward trend from previous years - 446 complaints in
1990, increasing to 737 in 1997.
The nature of the complaints is only too well-known. They range from shoddy
and defective work, to missing Certificate of Fitness (CF), late delivery,
flagrant breach of the SPA, lack of amenities, and inadequate infrastructure
such as access roads and drains.
If the revamped Act is fully enforced by the Controller, hopefully, we will
see a downward trend in complaints in the coming years. Perhaps, by year
2005, the Ministry might actually achieve its "zero- complaint" target.
In the past, there have been cases of developers handing over vacant
possession of "completed" housing units to their purchasers without having
first submitted a proper application for CF to the relevant local authority.
They did this in order to avoid having to pay liquidated damages for delayed
completion. Under the SPA, buyers have the right to claim damages if their
houses are not completed on their due dates.
Clause 21(1) of the SPA (as contained in Schedule G of the 1989 Regulations)
sets out the "manner of delivery of vacant possession". It states that
before a developer can hand over vacant possession of a completed house to
his purchaser, four conditions must be fulfilled:
1. The Architect has issued a certificate certifying that the construction
of the building has been duly completed;
2. Water and electricity supplies have been connected to the said Building;
however, this has now to: be read in the light of an amendment in the law in
force from August 1, 1994, which only requires the developer to ensure water
and electricity supply is “ready for connection";
3. The developer "has applied for the issuance" of a CF from the appropriate
authorities; and,
4. The purchaser has paid the purchase price in full to the developer.
With regard to condition three above, the average house buyer probably does
not have the slightest idea whether the developer has indeed made a "proper
application" for CF from the local authority.
Will the new Act improve the situation in the future? Some legal
commentators think so. They refer to the several new paragraphs which have
been added to the existing section 7. Under the new paragraph (h), a
developer is now required to inform the Controller of Housing of the
"handing over of vacant pos- session'; of the completed house, together with
a certified copy of the Architect's certificate certifying that the house
has been duly completed and that "water and electricity supplies are ready
for connection".
Besides that, under new paragraph (i), the developer is required to inform
the Controller if "the appropriate authority has refused to accept the
submission of any document" relating to the issuance of CF. And under new
paragraph (j), the developer is required to "exercise !ill such diligence as
may be required” for the issuance of CF.
As mentioned earlier, the revamped Act has established the Housing Tribunal
(its full name being the "Tribunal for Homebuyer Claims"). Purchasers who
have claims (not more than RM25,000) against their developers can refer
these claims to the Tribunal. They need not file their actions in court,
which has been the only way for them to seek legal remedies in the past.
These matters too need to be spelt out in the SPA. The Housing Ministry
cannot expect the average house buyer to go searching the Act in order to
know rights in this matter.
Under the revamped Act, there is also a new provision , (section SA)
relating to an early termination of the SPA.
This situation arises when the developer fails to commence his housing
project within six months of the date of the agreement and when at least 75
per cent of all the purchasers have decided that they do not wish to
continue with the purchase.
This matter too needs to be spelt out fully in the SPA, because each and
every purchaser who agrees to terminate the agreement will want to know what
are his rights in respect of the money which he had paid to the developer,
as well as his responsibilities if the house has been charged by him as
security for a housing loan.
The revamped Act is here because Parliament has finally done its work
(though not without an inordinate delay). For the SPA to see the light of
day, the 1989 Regulations have to be revamped as well. That is the task of
the Housing Minister alone.
