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Price adjustment pending strata title
14/10/2000 NST

IF you have just received the keys to your brand new stratified unit and think that it signifies the end of your business relationship with the developer, think again.

The delivery of vacant possession and the issuance of the certificate of fitness for your condominium, townhouse or apartment may not quite signify the end of your house-purchasing saga.

If you scrutinise clause 11 of the standardised Schedule H agreement of the Housing Developers (Control and Licensing) Regulations, 1989, you will realise that the position, measurements and boundaries of your unit are only estimates and not guaranteed to be correct.

If it is discovered that the measurements and boundaries of your unit as shown in the building's plan are different from those in the strata title issued, then the purchase price of the unit expressed on a per square foot basis will be adjusted accordingly.

Pending the issuance of the strata title, you should anticipate the possibility of the price adjustment because it could result in your having to make a further payment.

However, if the adjustment results in the developer owing you money instead, you could have problems collecting if the developer has wound up operations.

The question you may ask now is whether accessory parcels are to be included in a price adjustment exercise. Accessory parcels refer to areas outside the boundaries of your home and include car-parking bays and gardens (in the case of townhouses).

In most stratified developments, developers will allocate one car-parking bay to each unit, and by legislation and judicial pronouncement, this can only be used in conjunction with the strata parcel and cannot be dealt with or disposed of independent of the strata parcel.

This effectively removes any possibility of an owner of the strata parcel selling the allocated car-parking bay independent of it. It is also not uncommon for developers to construct extra car-parking bays for purchase by strata parcel owners.

Notwithstanding the fact that such additional car-parking bays are over and above the normal single allocation, condominium owners are still restricted from selling the additional car-parking bays independent of the strata parcel.

Despite the fact that the strata parcel is inextricably bound to its accessory parcels, owners ought to note that the built-up area of the latter cannot be combined with that of the former in computing the rate of adjustment as provided for under the Schedule H agreement.

For a start, it is unworkable in terms of formulating a practical way of computing the adjustment of the purchase price for two parcels with differing construction costs.

The strata parcel may cost anything from RM200,000, while a cement-rendered car-parking bay could cost about RM16,000 to build. But by far the most compelling reason for excluding accessory parcels from the equation rests on the fact that it is the strata parcels that form the subject of the sales, not accessory parcels.

Accessory parcels and common areas are built to enable owners to have exclusive possession and enjoyment of their strata parcels and no more. So, to answer your question, your car-park or garden cannot be included in a price adjustment exercise.

 

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