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Making 10:90 work
26/08/2006 Published in NST-PROP A Buyer Watch Article by National House Buyers Association

This mode of housing delivery requires changes to legislation, which should include…

With the Government allowing the 10:90 concept of housing delivery to run together with the Sell-Then-Build (STB) method, we at the National House Buyers Association (HBA) believe some changes to the housing law are necessary for the former to work.’

In light of this, we have drafted two new standard Sale and Purchase Agreement schedules for the Government to consider. We have terms one “Schedule J” (for landed residential property) and the other, “Schedule K” (for stratified residential units).

The Minister of Housing and Local Government can exercise his powers under Section 24 of the Housing Development (Control & Licensing) Regulations, 1989 (revamped in 2002) to introduce these new schedules.

We believe our proposals will offer greater protection to buyers and generally, better regulate the housing industry.

Instead of reinventing the wheel and causing unnecessary bureaucratic delays, the proposals involve the adaptation of the existing Schedules G and H to suit the 10:90 concept, with only the following amendments:


Clause 4: Schedule of payments


We propose that a new sub-clause on the need for periodical reports be inserted here. With it, the vendor must provide purchasers and financiers (if any) with periodical reports on the progress of the construction of their houses, and these must be certified by the architect or engineer in charge of the project.


When construction is at the 80 per cent stage, the vendor must give the purchasers written notice to apply for loans to finance the payment of the purchase price, with the notice supported by a copy of the individual document of title to the property.


Clause 7: Purchasers' right to initiate and maintain action


We would like this clause amended with the insertion of two sub-clauses. One is for the vendor to give purchasers notice in writing for a joint inspection of their buildings, during which all defects found must be rectified at the vendor's cost and expense prior to the issuance of the notice to take vacant possession.


The second sub-clause designed to further protect purchasers' interest is to allow them to visually inspect their houses for all apparent defects requiring rectification before physically taking possession of it.


Clause 11:  Separate document of title / transfer of title.


Amendments here are to require that the vendor:

  • Obtain at its own cost, a separate document of title to a property not later than six months before delivery of vacant possession;

  • Execute a valid and registrable memorandum of transfer of the property to a purchaser within 21 days from the issuance of the separate document of title.

These features will pre-empt problems related to obtaining ownership papers or title deeds, thus closing a major floodgate of complaints that the HBA receives, as well as exonerate the Land Office of blame for a developer's failure to apply for individual titles.


Clause 24: Manner of delivery of vacant possession


In anticipation of the Government's preference that houses be issued with Certificate of Completion and Compliance (CCC) instead of the current Certificates of Fitness for Occupation (CFs), we suggest that a sub-clause be added to provide for this self-certification.


Third Schedule: Payment of purchase price


Here, progressive payment in accordance with the stages of construction should be removed and replaced with payment of 90 per cent of the purchase price once vacant possession of the property has been delivered.


Fifth Schedule: Periodical reports


With our proposal to amend Clause 4, there needs to be the inclusion of a Fifth Schedule on "periodical reports" in both the proposed Schedules J and K.


These periodical reports, duly certified by the vendor's architect or engineer, must be issued to purchasers after the completion of various stages of construction (see accompanying story).




We believe that with the 10:90 concept, when purchasers take possession of their houses, they must not just receive the keys but also the CF or CCC (as the case may be); the ownership papers; as well as a habitable property connected to electricity and water supplies.


We have submitted our recommendations to Housing and Local Government MInistry Secretary-General Datuk Ahmad Fuad earlier this month on Aug 3 and we acknowledge the fact that other amendments that can be incorporated.


We welcome these, so long as they can help to create a balance between developers' and buyers' interest.


Stages of the 10:90 concept sale & Purchase Agreement


  1. The Start

  • Purchaser pays a 10 per cent downpayment to the developer.

  • The downpayment is placed either in an interest-bearing Escrow Trust Account with the lawyer/bridging financier or in the existing Housing Development Account.

  • The Sale and Purchase Agreement is signed.

  1. Construction Stage

Progress reports:

The developer's architects/engineers must provide periodical updates and certify progressive construction work has been carried out for the following stages:

  • Foundation and footing;

  • Reinforced concrete framework;

  • Completion of walls and placing in position of doors and window frames;

  • Roofing, electrical wiring, plumbing (without fittings), gas piping (if any) and internal telephone trunking and cabling (if any);

  • Internal and external plastering;

  • Sewerage;

  • Work on drains; and

  • Work on roads

Notice of near-completion

In anticipation of the near completion of the building, the developer shall give not less than six months prior notice to the purchaser of the scheduled completion. During this period, the purchaser shall obtain a housing loan from a financier.

  1. Post Construction

Notice to inspect:


The developer shall notify the purchase of the join pre-delivery inspection of the property, during which all observable defects shall be noted and rectified before delivery of vacant possession.


The purchaser shall deposit the balance of the purchase price, minus the loan sum, with the purchaser's lawyer, who shall notify the financier. The legal documentation would have been completed by such time and thus the loan sum would be ready for disbursement.

  1. Settlement and Completion of Purchase

Notice of vacant possession:


The developer shall give the purchaser and financier notice of delivery of vacant possession, and provide 21 working days for payments to be made. The mode of payment shall be:

  • 85 per cent to developer

  • 5 per cent to stakeholder's lawyer

  • 2.5 per cent - after 6 months

  • 2.5 per cent - after 18 months

The purchaser will then take vacant possession, or is deemed to have done so upon expiry of 14 days.


The building shall come with either a Certificate of Fitness or Certificate of Completion and Compliance, the keys, ownership papers (strata or individual titles) and be habitable, with electricity and water connection.

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