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The rights of purchasers
The Malay Mail 12/01/2001

Legislation passed by parliament are in most cases meant for the protection of the public.

Undoubtedly the Housing developers (Control and Licensing) Act 1966 is intended to "protect purchasers". Just look at the cases that had been decided by the courts since the 1980s.

The 1980s saw several leading cases where developers were prevented from escaping liability by relying on some standard clauses in the sale and purchase agreements as provided for the in the legislation. In SEA Housing Corp Sdn bhd v lee Poh Choo (1982 2 MLJ 31) the purchaser Lee Poh Choo sued SEA Housing for breach of contract and for the title to the house which was purchased from the developer.

There was a five-month delay in the completion of the house. The developer relied on a clause in the agreement that stated that a developer could be excused if the delay was caused by circumstances beyond its control.

The High Court held that the 1966 Act and the 1970 Rules (the applicable Rules then) were enacted specifically to protect the interests of the public and as such, the developer could not "contract out" of the law. The developer appealed the decision and the federal Court dismissed the appeal, disagreeing with the developer that it is was open to it escape liability by inserting Clause 32 in the agreement.

A year down the line in the case of Khau Daw Yau v Kin nam realty Development Sdn Bhd (1983) 1 MLJ 335 the High Court held that "the scheme of the Housing Developers (control and Licensing) Act 1966, and the rules of 1970 is to provide a measure of protection to purchasers of housing accommodation in a housing development against unscrupulous developers."

The intention of Parliament as expressed through the courts' interpretation clearly shows that the 1966 Act and Regulations were enacted for the protection of purchasers. The question then is does the present law (the 1966 Act and the regulations) really and adequately protect the interests of purchasers? Many believe that it needs to amended to reflect the changing times. This is a cogent argument as many a developer have been exploiting loopholes to avoid being under the scope of the legislation.

The doctrine of freedom to contract means anybody is free to make a contract with another, and is free to make a contract with another, and is free to negotiate and agree upon any term or condition of the contract that is acceptable. If an agreement cannot be reached, both parties are free to walk away.

This doctrine operates well only when both contracting parties are of the same standing. Another way of putting it is that the playing field that both parties are on is level.

Sadly most dealing that stem from and are connected to the sale and purchase of property

Do not take place on a level playing field from the house you buy to loan you obtain for the purchase. Under such circumstances when one party is in a much stronger position than the other, then the former will invariably dominate the latter. In real the world, this translates to hardnosed business practices and the "take it or leave it" stance.

Such economic realities are what these laws are all about. In terms of the housing development the 1966 Act and regulations compel the parties to enter into contracts that have been drafted and approved by the authorities. For standard housing units, the contract is contained in schedule G of the 1989 regulations while for highrise buildings, it is contained in schedule H.

Notwithstanding the protection that exists, one still needs to be aware of the fact that no system of protection is perfectly effective and so there are still problems that can crop up in the purchase of your homes. But this is the protection that we have to live with and until and unless it is amended (improved) it would useful if we knew our rights under the existing standard agreements.

That the home you purchase is free from any restriction and encumbrance, save for the conditions expressed or implied affecting the title.

Upon execution of the agreement, the units must not be encumbered except with the prior approval of the purchasers.

That your home will be completed on time and as the law expressly states that "time shall be the essence of the contract in relation to all provisions."

To obtain a document of title (in the case of a standard housing unit) or strata title (for a sub-divided building).
To execute valid and registrable memorandums of transfer to you the purchasers (subject to the payment of the purchase price by the purchasers).

That your home will be constructed in a "good and workmanlike manner" in accordance with the description set in the Fourth Schedule of the SPA and in accordance with the plans approved by the relevant authorities.

That the developer will construct infrastructure such as roads, driveways, drains, culverts, water mains and sewerage plants which serve the whole housing project in accordance with the requirements and standards of the relevant authorities. Furthermore, the infrastructure must be maintained and kept (with purchasers contributing to the cost of such upkeep) until it is handed over to the relevant authorities.

The developer is to provide services such as refuse collection, cleaning of public drains and grass cutting on the road reserves from the time of handing over vacant possession till the relevant authorities take over the duty. Again, purchasers have to contribute a fair proportion of the cost.

The developer is to lay all necessary water, electricity and sewerage mains serving the project. The connection of internal water, electricity, sanitary and gas installations (if any) of the units to the mains must also be applied.
However, the duty does not make it obligatory to ensure there is water and electricity flowing into the units upon their completion (the effect of an amendment in the regulations in 1994).

The developer is to comply with any written law for the time being in force (a number of developers have been taken to court for contravening several provisions of the Environmental Quality Act 1974 and the Occupational safety and Health Act 1994).

The developer is to apply for CFs for occupation and to ensure there shall be no delay in the issuance. To this end, a developer is required to "duly comply with the requirements" of the relevant authorities.

The developer is to remedy defects, shrinkages and other faults during the defect liability period (which has been determined to be 18 months from the date a purchaser has been given vacant possession of his units).


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