Defects in new house
23/02/1999 The Star
FOR many housebuyers, purchasing a house means making a long-term commitment
to repay the loan incurred, sometimes until they retire or even beyond. And
when difficulties arise, a person will sometimes find his plans for income
allocation going haywire.
Earlier we looked at a situation where the Certificate of Fitness (CF) or
Certificate for Occupation is not issued. In this case even if the developer
hands over the house, the housebuyer cannot move in.
But even with the issuance of the CF, a reader found himself in a difficult
position. He writes: "I bought a house from a reputable developer and signed
the Sale and Purchase Agreement on Feb 6, 1996. The developer informed me
to take vacant
possession of the premises on Dec 31,1997 and collect the CF on April 10,
1998.
"After having collected the CF, I found that the premises could not be occupied
due to numerous defects. No proper contractor could be assigned to rectify
them. The fourth defect-complaint sheet was signed on June 9,1998."
The reader wants to know if he can file a claim for compensation for the loss
of period of occupation of the premises against the developer. If he can,
he wants to know the basis of calculation and the chances of success. He also
asks whether he can get any other relief besides the above.
It appears from the reader's letter that the house was completed and handed
over with the CF. The housebuyer can therefore physically and legally move
into the house as far as the housing developer is concerned.
However, the problem is that there are numerous defects in the house which
have not been rectified. And this is despite the fact that the housing developer
has been repeatedly notified, right to the fourth defect-complaint sheet.
As far as the Sale and Purchase Agreement prescribed under the Housing Developers
Act 1966 is concerned, thee damages stipulated at 10% of the purchase price
are only payable if the house is not completed. But since the reader's house
is completed, this clause is therefore inapplicable in his case.
In a situation like this, when the developer does not respond satisfactorily,
the housebuyer must act promptly because the developer is responsible for
rectifying defects; failing that, the developer has to pay for the defects
to be corrected. To
leave the house vacant because the developer has not rectified the defects
is not the right thing to do since any compensation or damages is only for
actual loss suffered.
The housebuyer, who's in possession of the house, should proceed to rectify
the defects by engaging a contractor on his own after allowing the developer
reasonable time to do so.
After this the housebuyer can claim the expenses incurred in rectifying the
defects. However, the housebuyer should bear in mind that he should only do
that which the developer is obliged to do.
The housebuyer should not embark on renovation as it may become difficult
to show what was defective and the cost of making good the defect.
Compensation
Can the housebuyer seek compensation for the period when the house was not
occupied? There is, of course, a loss on account of non-occupation be it direct
or indirect. But the answer to this depends on the reason why the house was
not occupied. Was it because of the many defects?
Or has the house been unoccupied because the housebuyer wants everything to
be perfectly done up before he moves in? In this second case no claim for
compensation can be made. This is because it is the housebuyer's own decision
not to move in that is the cause of the loss.
In the context of a Sale and Purchase Agreement of a house governed by the
Housing Developers Act 1966, the housebuyer leaves it empty and unoccupied
at his own cost unless the defects are so serious as to justify his refusal
in occupying
the house.
In law there is a duty to mitigate losses. A person cannot just watch and
wait simply because at the end of the day, he expects another party to pay
for the loss. A person in this case should take appropriate action.
So do not just wait indefinitely for the developer to rectify defects. If
there is no response from the developer, get it done yourself. After that
make a claim against the developer. You will be better off this way. |
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