House buyers' dilemma

Personal Money Oct 2003 By S. Gayathri

The legal tussle between several developers and the Housing Tribunal, which led to a landmark High Court decision on Sept 4, has left many house buyers in a dilemma. In the said decision, a High Court in Kuala Lumpur declared that the tribunal does not have the jurisdiction to adjudicate disputes over residential properties bought before Dec 1, 2002.

House buyers in general are crying foul over the decision because it means grievances of owners who signed their Sale and Purchase Agreements (SPAs) prior to Dec 1, 2002 cannot be heard and settled by the tribunal, says Chang Kim Loong, secretary-general of the National House Buyers Association (HBA).

He said house buyers in general and the HBA are shocked with the decision, "The tribunal was formed under the amended Housing Development Act to ensure that house buyers have an authorised body to settle disputes but the landmark decision on the 'retrospectivity' of the tribunal is now a setback."

The impact of the court decision

The HBA believes the High Court decision will now mean house buyers who signed their SPAs prior to Dec 1, 2002 and face problems with their respective developers are left in the lurch.

Chang says the tribunal, a "specialised court", was to deal with grievances of house buyers with their developers through amicable solutions that are speedy and cost effective.

However, if the tribunal's adjudicating powers are limited to cases after Dec 1, 2002, then its effectiveness is also lessened.

Chang adds that the court decision could result in the tribunal dealing with fewer complaints for now because the majority of complaints are on late delivery and delayed issuance of Certificate of Fitness for Occupation (CFO).

Generally, landed property developers need to complete a project within 24 months of the date of the SPA while the duration is 36 months for strata property developers who build condominiums and apartments.

"With this, it is evident that there won't be many cases filed with the tribunal for now on the issue of late delivery and CFOs because it is still a long way to 24 months from Dec 1," highlights Chang.

What can house buyers do?

Though the tribunal was set up to help aggrieved house buyers, limitation of the tribunal's power will affect buyers seeking justice, as they have to revert to the conventional legal system and file a legal suit in the civil court, says a lawyer dealing with property cases. "To average house buyers, this means high legal fees, a longer wait and many legal intricacies but that is the only alternative they have."

He says high legal fees disable many from initiating civil suits against developers but advises that they can always work around the problem either by negotiating the legal fees with lawyers or by approaching the legal aid service division of the Bar Council.

The HBA, a voluntary organisation, is also doing its part by providing free legal advice to the public.

Chang believes every homeowner has the right to seek redress through the legal process but maintains that the tribunal should be allowed to effectively carry out is duties. "Empowering the tribunal is the only way we can ensure every aggrieved house buyers is taken care of because it is affordable and faster," says Chang.

The solution to the problem

Following the landmark decision by the High Court, the government announced that it would appeal against the decision and the HBA is confident that the appeal will bring about positive results.

"The HBA is confident that the verdict of the appeal will take into consideration the interest of the public and ensure that justice prevails.

"Although hopeful of a positive outcome, legal procedures are always subject to appeal up to the highest level of the Federal Court and for house buyers, this is undue delay," stresses Chang.

While awaiting for the decision from the Court of Appeal, HBA wants the Housing and Local Government to consider amendments to the Housing Development Act that will allow the tribunal to adjudicate cases regardless of when the SPA was signed. This would be a holistic approach to solving the problem of the tribunal's retrospective powers.

Chang believes this amendment will add vigour to the tribunal and will serve in the public's best interest.

"The government should also allow the tribunal to look into abandoned housing projects because affected buyers are now unable to refer the problems to the tribunal due to its existing limitations," adds Chang.

He adds that the HBA is positive the amendments to the Act can be made a lot quicker compared to going through the judicial system.

Both HBA and the lawyer consulted feel much of the house buyers' problems can be solved if developers adopt a flexible yet effective "build and later sell" concept. This option, it is believed, will benefit both house buyers and developers in the long run, provided both parties execute their responsibilities with care.