A call for protection

Standard SPAs for non-residential properties will help curb abuses by developers

NST-PROP 21/02/2004 By Nicholas Mun

THE inequitable nature of Sale and Purchase Agreements (SPAs) for non- residential properties that tends to put purchasers in a position of complete disadvantage calls out for Government intervention to level this area of the property development playing field.

The National House Buyers Association secretary-general Chang Kim Loong said investors of non-residential properties also need the protection of the law to ensure that they do not fall prey to errant developers.

"We feel that there should be a standard SPA that more or less corresponds to that which has been provided for residential properties," Chang said.

In the course of advising buyers of their rights, Chang has come across some cases where buyers find themselves in a seriously disadvantaged position due to the one-sided nature of the terms in the SPAs that favour the developer.

"One of the areas that need to be addressed is the schedule of progress payments. In some instances, the buyers are liable to pay the developer upon commencement, as opposed to completion of a certain stage in construction."

Chang told PropertyTimes that such clauses are open to abuse by errant developers.  "There have been cases where some companies mobilise their machinery at their project site just to fulfil the contractual requirement that work has commenced so that they can demand payment. After that, they can quite easily abscond with the money without having done any actual work," he said.

Chang also said the relevant authorities should look into the sale of serviced apartments and even bungalow plots.

"By virtue of being outside the scope of the Housing Development Act, developers have a free rein in determining the terms and conditions of sale. But the fact of the matter is, many of the purchasers are buying these properties for their own occupation and as such deserve protection."