by Eugene Khoo Yean Shern (Advocate & Solicitor)
What is it?
In terms of property development in Malaysia, it is governed under the Housing Development (Control and Licensing) Act 1966 as well as the Housing Development (Control and Licensing) Regulations 1989.
When you purchase a new residential unit from a property developer, you will have to sign a contract of sale (i.e., Sale & Purchase Agreement (SPA)) with the said property developer. Now, the SPA which you will sign depends on the type of property that you intend to purchase.
For landed properties, the SPA that you sign is a statutory contract under Schedule G of the Housing Development (Control and Licensing) Regulations 1989 whereas for stratified properties, the SPA that you sign is a statutory contract under Schedule H of the same Housing Development (Control and Licensing) Regulations 1989.
Under these statutory contracts of sale, the property developers are bound by the prescribed statutory completion period of 24 months (for Schedule G) and 36 months (for Schedule H) as stipulated in Clause 24(1) and Clause 25(1) of the respective contracts of sale to complete their residential project. In the event the property developer fails to complete the residential project and deliver vacant possession of your property to you within the aforesaid prescribed completion period, it simply means that there is a late delivery of vacant possession by the property developer.
What are the legal remedies?
In Malaysia, the law is well settled that both the Housing Development (Control and Licensing) Act 1966 and the Housing Development (Control and Licensing) Regulations 1989 are social legislation legislated by the legislature (i.e. the Parliament) to protect house buyers against property developers.
In the event a property developer fails to deliver vacant possession of your property to you within the prescribed statutory completion period, the said property developer shall then be liable to pay you liquidated damages calculated from day to day at the rate of 10% per annum of the purchase price of your property from the date of expiry (explained below) until the date you take vacant possession of your property.
For stratified properties (with common facilities), your property developer shall also be liable to pay additional liquidated damages calculated from day to day at the rate of 10% per annum of the last 20% of your purchase price in the event the said property developer fails to complete the common facilities serving the housing development within the prescribed completion period under Schedule H of the Housing Development (Control and Licensing) Regulations 1989.
As a homebuyer in Peninsular Malaysia and the Federal Territories of Labuan, you are entitled to claim liquidated ascertained damages for late delivery of vacant possession of your residential property against your property developer either by way of filing a claim at the Tribunal for Homebuyers’ Claims (TTPR) which is under the purview of the Ministry of Local Government Development (KPKT) or by way of commencing legal action against the said property developer in court. In this regard, it is pertinent to note that there is a limitation period for a homebuyer to file his/her claim for liquidated ascertained damages at the Tribunal. In addition to that, the Tribunal has limited jurisdiction in hearing a homebuyer’s claim. The Tribunal is only empowered to hear homebuyers’ claims which do not exceed the sum of RM50,000.00 unless there is a mutual consent between the homebuyer and the developer for the Tribunal to hear such claim. Be that as it may, an award granted by the Tribunal is up to RM50,000.00 only.
The perks of filing your claim at the Tribunal are inter alia:
- less complex & less time-consuming
- less costs incurred
- legal representation is usually not allowed at the Tribunal
- the Award granted by the Tribunal is legally binding
For claims which exceed the sum of RM50,000.00, you are advised to engage a legal practitioner and commence legal action against your property developer in court.
Calculation of liquidated ascertained damages (LAD)
As explained earlier, in the event there is late delivery of vacant possession of your residential unit, your property developer shall be liable to pay liquidated ascertained damages at 10% p.a. of your purchase price and to be calculated from the date of expiry until the date you take vacant possession of your property.
The Federal Court in PJD REGENCY SDN BHD v. TRIBUNAL TUNTUTAN PEMBELI RUMAH & ANOR AND OTHER APPEALS [2021] 2 CLJ 441 made it clear that the calculation of liquidated ascertained damages must begin from the date of payment of the booking fee, not the date of your sale & purchase agreement. The law on this is trite.
In relation thereto, the number of days delayed by your property developer in delivering vacant possession of your residential unit is thus calculated from the date of expiry of the prescribed completion period stipulated in your statutory contract of sale (Schedule G / Schedule H) until the date you take vacant possession of your property.
Insofar as the issue on calculation of LAD is concerned, approval letters issued by persons other than the Minister in granting extension of time for property developers to complete their residential projects are often relied upon by property developers to lengthen the prescribed statutory completion period and shorten the number of days delayed in delivering vacant possession, thus reducing the LAD sum payable to homebuyers.
Federal Court in ANG MING LEE & ORS v. MENTERI KESEJAHTERAAN BANDAR, PERUMAHAN DAN KERAJAAN TEMPATAN & ANOR AND OTHER APPEALS [2020] 1 CLJ 162; [2020] 1 MLJ 281 expressly ruled that the Housing Controller has no power to waive and/or modify any provision in the statutory contract under the Housing Development (Control and Licensing) Act 1966.
In a recent decision, the Court of Appeal in VIGNESH NAIDU KUPPUSAMY NAIDU v. PREMA BONANZA SDN BHD & ANOTHER APPEAL [2023] 4 CLJ 715further ruled that the Housing Controller has no power to give any extension or to modify the statutory contract of sale entered into by house buyers, regardless of whether the extension is granted before or after the contract was entered. Therefore, property developers are still bound by the statutory contract of sale to complete and deliver vacant possession of their residential projects within the prescribed completion period, failing which the property developers shall then be liable to pay LAD to the aggrieved homebuyers in accordance with the statutory contractual terms unless there is a valid extension of time granted by the relevant Minister.
Conclusion
This article provides you with an insight on what are your rights as a homebuyer and the legal remedies available to you in the event there is an undue delay in obtaining vacant possession of your residential unit(s) from property developers.
End.