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13/10/2004 Published in Malaysian Business - Housing & Property By National House Buyers Association of Malaysia

Buyers not ready for self-declaration by developers’ architects.

The Certificate of Fitness for Occupation (CFO) is the house buyer’s entry card into their new house. Without it, house buyers cannot occupy their house. As for subdivided buildings, no strata title will be issued without a CFO.

Under the new amendment to the Housing Development (Control & Licensing) Act, 1966 revamped 2002, developers have to ensure that the application for the CFO (Form E) has been accepted by local authorities before vacant possession can be delivered to house buyers. Without delivery of vacant possession, developers will not be able to collect the final 20% instalment and risk being liable for late-delivery compensation.

Prime Minister Datuk Seri Abdullah Ahmad Badawi has made a bold proposal for the CFO, now issued by the local council, to be replaced with self-certification by professional consultants. This supposed to save time, cut red tape to improve the public delivery system and free local council officials to concentrate on enforcing compliance with planning and building regulations. It also supposed to cut down opportunities for corruption. More important, this move will make professional consultant of development projects responsible for the fitness of buildings for occupation as a step toward the national integrity that our Prime Minister is pushing for.

Based on HBA’s understanding of the matter, there are some potential pitfalls if the implementation of self-certification is not studied thoroughly and if there is anything less than close coordination between the relevant departments. The adverse ramifications could be more far-reaching for buyers than the benefits that may be derived from such a streamlining exercise.

Professionals are paid by developers

Currently, architects are the fiduciary guardians of the regulated sale and purchase between the buyers and developers under the Housing Development Act. Even under this arrangement, HBA has seen a large number of buyers’ complaints against not just errant developers but also the professionals they hire.

There appears no sign that such complaints will diminish, judging from the high incidence of shoddy workmanship, premature and/or inaccurate certification and premature hand0over of vacant possession before the application of CFO. If there is a common thread that can be found in all instances, it is that the architects were under pressure and coerced into submitting to the developers; wishes.

Self-certification also brings engineers into the equation. Take the example of the ‘slower’ inspection by the authorities of roads and drains. If inspectors are special of compliance with the road specifications, they would ‘core’ the relevant section for a lab test. With the removed of line of defence, an errant developers may be tempted to cut corners by getting its consultants to certify that the roads are in order.

It will be hard for the consultants to stand up to pressures when confronted with the harsh reality that only the ‘obliging’ consultants will survive in such circumstances. After all, the developers are the paymasters of the architects and engineers. Consultants with integrity may find themselves out of business in no time if they do not toe the line.

External Audit

What the current system requires is an external audit as a pre-requisite to the issuance of CFOs. This system of ‘counter-checking’ can be slow and time consuming, but it prevents errant developers and professional from having a free rein to the purchasers’ detriment. Even with statutory penalties and a host other deterrents, such breaches of trust are on the rise. Where would we be if they are removed altogether?

Complete deregulation only works when all parties learn to respect the rights of others, which in HBA’s view is a Utopian dream. Perhaps, a combination of self-certification for some technical aspects with rules clearly set out and mandatory checks on these aspects that involve life and safety with stringent rules to be observed should be adopted. And in so far as liability is concerned, a party that verifies a building is fit for occupation must accept legal liability on the same basis as local councils.

Potential for irreparable harm

The costs of false declaration to the public are high:

  • structural and non-structural failure
  • repair costs, legal and other expenses will have to borne by the buyer
  • reduction in the property’s value
  • impact ( financially and emotionally) on one health
  • victims would not have the stamina and resources to seek claims and compensation

In the case, it is the house buyer who has to suffer the consequences of a wayward professional. The only punitive power the Architect Act, 1967, and Architect Rules, 1967, have is to deregister and strip wayward professional of the title of “architect’.

To achieve re dress, an aggrieves buyer has to sue the professional in question in the Court of Law for negligence and torts, as well as bear legal fees and costs.  Sometimes, architects, engineers and consultants cannot be brought to account because of their insolvency, death or disappearance, or because of their use of private limited companies to shield them from personal liability.

Public Interest

The Government cannot allow private sector interest to rule where there is an element of bias. The local authorities set the conditions of development approvals, and it is appropriate that the councils should maintain responsibility of enforcing those conditions. HBA is of the opinion that local authorities should retain responsibility for issuing the final CFO and enforcing the Uniform Building By-law (UBBL) as they are closet to what is actually happening in the building industry from approval stage and can, therefore, best monitor compliance.

While efficiency may be gained by such deregulation, it carries a serious risk of default on the developers’ part. What is required is strict compliance and enforcement, not absolute removal of such a tier. The problem within the government departments, such a s inefficiency, delays, and corruption, should be dealt with. Perhaps, the local council should hire more qualified staff and personnel. The Government had amended the UBBL laws and put in place the 14-days rule to ensure that local; authorities approve the CFO within that time frame or deemed approved thereof.

The CFO is a measure designed to safeguard the property buyers’ interest by ensuring the unit is completed to specification and is in a habitable state. By removing the last tier of check and balance, professionals will have absolute power. Cutting out the CF process may give byres their house much faster, but it misses a key point- building moral fibre.


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