Sold Useless Houses
Source: Utusan Konsumer July 2001

The problems with CFs and how to avoid them

House buyers wait over 11 years because of CF problems

Because of the CF delays created by these developers, buyers have been forced to spend double what they might on housing, in that they have to pay the purchase price of homes which they cannot occupy and for the rentals of the homes they are currently occupying.

Buyers are in a state of limbo because they have to put up with the hassle of moving elsewhere if their tenancy agreements expire and to enter into new tenancy agreements without knowing the exact date of completion of their homes.

While buyers have been losing sleep over these problems with their unhabitable homes, developers have been escaping unscathed.

A large number of complaints made to the Complaints Section of the Consumers' Association of Penang are CF-related housing problems.

These complaints include:

• The issuance of architect certification although construction has not been completed
• The granting of vacant possession without CF application
• The granting of vacant possession although construction works, and amenities connection, have not been completed
• The long delay in obtaining CF after the delivery of vacant possession

In early 2000, CAP received a report of a case whereby the developer of a condominium in Kuala Lumpur had issued vacant possession of the condo to the buyers, but the construction of the condo and its surrounding infrastructure had not been completed.

The outrage was that the architect for the project had certified that the project had been completed. The buyers had received vacant possession when the infrastructure and internal finish had not been completed and the electricity and water were not ready for connection.

CAP took the matter up with the Architects Board, which later confirmed that the Architect Certificate was incorrect and the Architect was fined RM5,000.

The buyers had to deal with getting their CF almost a year after they received vacant possession of the condominium.

But more importantly, how did it come to be that the Architect could actually issue an Architect Certificate for a project that had not been completed? One can only conjecture if there have been other Architect Certificates that have been issued for other incomplete projects.

CAP advises buyers to constantly check the architect's certification against the progress of the construction work, and any discrepancies can be reported to the Architects' Board.

Developers who give vacant possession without even applying for CF

Many housing developers have interpreted the application for the CF as stated in the Act to be the whole application process, which included obtaining endorsement letters from the relevant agencies for the electricity, water, sewerage, roads and other infrastructure. These agencies include Tenaga Nasional Berhad (TNB), Water Authority Board (PBA), the Public Works Department (JKR), and the like.

This means the developer usually issues the vacant possession first and then applies to all the agencies for the endorsement letters, which have to be attached to the CF application form that has to be submitted to the district council.

This is why application for CF usually takes such a long time.

If the Act clearly defines the application for CF as the submission of the CF application form to the relevant authority, together with all the endorsement letters from all the agencies, then the developer has no choice but to take the 24 or 36 month time period seriously and complete the project on time.

As it is now the developers just rush to deliver the vacant possession for the property before the 24 or 36 month period, so that they would not have to pay damages to the buyers for not completing the project on time. Then they take their time with the CF application.

The complaints that CAP has received from buyers show that there are some developers who have given vacant possession without applying for the CF at all, and there are others who have given vacant possession for buildings that have not been completely furnished with proper infrastructure or are not ready for electricity or water connection.

No CF

CAP's queries to the local council found that the developer had not applied for the CF at all. So the buyers were landed with a flat they could not move into because it is an offence to occupy a premise and until June 2001, no action had been taken on the developer by the Ministry of Housing.

The developer of Taman Indah in Penang also delivered vacant possession for the flats without applying for the CF. Buyers received vacant possession in July 1999, 9 months from the date of the sale and purchase agreement, but application for CF was only made in June 2000, 11 months later.

To date no action has been taken on the developer for this offence.

House completed but infrastructure incomplete - no CF

The developer of the Wisma Tenaga low cost flats in Seberang Perai, Penang, gave vacant possession for the flats in December 1989, 30 months from the date of the sale and purchase agreement. The architect issued a certificate of practical completion in May 1991 and the developer applied for the CF in July 1991, 19 months after vacant possession was given.

Unfortunately for the buyers, who had already had to wait one and a half years for the CF application, the district council did not issue the CF because the developer had not constructed a perimeter monsoon drain around the project area.

In defiance to the council and to the Act, the developer refused to construct the drain and in fact sued the council. After much legal proceedings, the High Court ruled in the favour of the district council, whereby the developer was ordered to construct the drains.

Today, 11 years later, the drains have still not been constructed, and the buyers cannot occupy their flats. The flats are now in a deplorable condition due to vandalism.

Developer doesn't follow quota, buyers penalized

The developer of the Taman Indah low cost flats in Batu Maung, Penang handed over vacant possession of the property in June 1998, 46 months from the date of the sale and purchase agreement.

But the developer had seemingly inadvertently violated the Penang State Government's policy in selling low-cost housing, as some flats had been sold to those who already owned homes, and the flats had not been sold according to the ethnic group quota set by the State Government.

So the State Government did not issue the CF for the property. However,  it wasn't the developer who had to bear the brunt of this penalty, it was the buyers. Not only had the developer not informed the buyers that there was a problem obtaining the CF, the flats were vandalised and left in a state of disrepair, as well as occupied by drug addicts.

Finally, 30 months later in December 2000, the council issued the CF although they had found serious defects in the flats because the project had been abandoned for too long and the buyers were from the lower income group. But now the buyers have to pay for these defects to be rectified.  No action was taken against the developer.