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
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 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
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
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
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
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