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Know what you sign

01/08/2003  Malaysian Business-Housing & Property By National House Buyers Association


YOU have probably heard of the `standard' sale and purchase agreement (SPA), but what is standard? Does it mean everyone is signing the same SPA, and if so, why bother paying attention to the terms and conditions?

This article explains the need for house buyers to know what they are signing.

Yet-to-be-built residential properties

For residential property buyers buying off-the-plan from licensed housing developers, the stipulated contract of sale is Schedule G (for land and building) and Schedule H (for building intended for subdivision).

To familiarise yourself with these sale contracts, get a copy of the Housing Development Act (HDA).
What to check for before you sign

Even if you have engaged a lawyer, it doesn't absolve you of all responsibility. You still have to read all the legal documents and do a certain amount fact checking. Here are some things to look for:

* Date: As time is the essence of a contract of sale, dates are important. Your SPA should be dated the day you paid the first 10% of the purchase price.

* Purchase price/schedule of payments and the price rated per square metre: The full purchase price should be stated, with the schedule of payments as construction progresses included. As the built-up-area could vary after property titles are issued, the price per square metre is the gauge on what you can claim if the area is less than what is shown in the building plan.

* Purchaser's name or names: You have to decide whose name/s the property is registered in. It could be a costly exercise to add or remove name/s after the SPA has been registered.

* Vendor and/or Land Owner's detail: You must know who you are purchasing from and/or whether the vendor has a joint agreement with the land owner to develop the project.

* Land details: If it's leasehold land, what the expiry date of the lease is.

* Name of chargee bank: This is so you know if the land is being held as security by a bank or financial institution that the developer has borrowed money from to finance the development.

* Description, lot numbers and estimate floor/land area of the property: This is important especially for apartment or condominium buyers. Many house buyers have signed SPA without checking, only to find out their units are on a different floor or on different ends of the floors upon handing over of vacant possession.

* Approved layout and building plans: These are plans approved by the local authorities. If you need the schematic drawings of the plumbing and electrical system, you would have to ask the vendor for a copy.

* Building description: Your SPA should include descriptions of the structure, bricks, roofing tiles, roof timber, ceiling, windows, doors, locks, decorations, flooring, wall tiles, sanitary installations, electrical installations, fencing, turfing, internal telephone trunking and cabling, and gas piping (if provided).

It is hard to imagine what all the end product would look like, but the quality of the products should be your consideration. On electrical points, the numbers might not tell you where they would be located.

* Service charges: Although both types of contract of sales require purchasers to pay for services provided by the developer upon vacant possession, Schedule H buyers are able to glimpse the estimated monthly service charges provided in the contract of sale.

House Buyer Alert

We, at the HBA, have come across numerous house buyers who thought they were buying residential properties only to find out that their properties were not under the purview of the HDA. How is this so? You might think you are buying a residential property, but the definition for `housing accommodation' as provided in the HDA does not cover all `residential' properties.

`Housing accommodation', as interpreted in the HDA, includes any building, tenement or messuage that is wholly or principally constructed, adapted or intended for human habitation or partly for human habitation and partly for business premises but does not include an accommodation erected on any land designated for or approved for commercial development; This means that even though you are buying a unit in a `serviced apartment' scheme, if the piece of land the project is built on is approved only for commercial development, the development does not come under the purview of the HDA.


This is the same for people buying land intended to build bungalows. The developer could be selling you the bungalow plots, and you sign another agreement to build with a contractor.

In both of these cases, your contract of sale is not `standard' - the terms and conditions are drafted by the developers' lawyers, which would often be in their favour. Before you sign anything, you should seek the advice of an independent lawyer well-versed in conveyancing.


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