1. What governs the rights and obligations of developers and purchasers of properties?

The sale and purchase agreement is the primary definitive document which governs the rights and obligations of developers and purchasers of properties.

2. How are purchasers’ rights safeguarded?

Sale and purchase agreements for the purchase of properties from a developer are prescribed by an act of Parliament.

When purchasing land and building, the statutorily prescribed sale and purchase agreement is found under Schedule G of the Housing Development (Control and Licensing) (Amendment) Regulations 2015 (“the Regulations”) made pursuant to section 24 of the Housing Development (Control and Licensing) Act 1996 (“the Act”).

For the purchase of a building or land intended for subdivision into parcels, the prescribed sale and purchase agreement is found under Schedule H of the Regulations.

The developer cannot contract out of the prescribed contracts under the Regulations.

3. When does the developer have to deliver vacant possession to the purchaser?

When purchasing land and building, the prescribed time for a developer to deliver vacant possession to the purchaser is 24 months from the date of the sale, which is in accordance with Clause 24(1) of Schedule G.

When purchasing a building or land intended for subdivision into parcels, the prescribed time for a developer to deliver vacant possession to the purchaser is 36 months from the date of the sale, which is pursuant to Clause 25(1) of Schedule H.

4. What if the developer fails to deliver vacant possession to the purchasers within the prescribed time?

The developer will be liable to pay liquidated ascertained damages, more commonly known as LAD, to the purchasers.

5. What are liquidated ascertained damages under a sale and purchase agreement for property?

Liquidated ascertained damages is a pre-agreed compensation amount to be paid by the developer to the purchaser in the event the developer fails to deliver vacant possession within the prescribed time under the sale and purchase agreement.

6. How much can the purchaser claim for late delivery of vacant possession of the property?

Liquidated damages is calculated from day to day at the rate of 10% per annum of the purchase price as set out in the sale and purchase agreement from the expiry of the prescribed time for the developer to deliver vacant possession to the date the purchaser takes delivery of vacant possession.

7. Where should the purchaser file his claim for liquidated damages?

Purchaser may either file a claim against the developer in court or with the Tribunal for Homebuyer Claims (“Tribunal”). However, if the purchaser’s claim exceeds RM50,000, the Tribunal does not have the jurisdiction to hear the matter. Under such circumstances, the purchaser will be required to file his claim in court.

8. What if an extension of time was given by the Controller of Housing?

The Controller of Housing does not have the power to grant an extension of time in relation to delivery of vacant possession and any extension of time given will not affect the purchaser’s right to claim for liquidated damages (See Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other appeals [2020] 1 MLJ 281).

9. What else can a purchaser claim?

For purchasers of a building or land intended for subdivision into parcels, the purchaser may also be able to claim liquidated damages against the developer’s failure to complete the common facilities serving the housing development.

10. What is the prescribed time for the developer to complete the common facilities?

The prescribed time for the developer to complete the common facilities is 36 months from the date of the sale and purchase agreement.

11. How much can the purchaser claim for late completion of the common facilities?

Liquidated damages is calculated from day to day at the rate of 10% per annum of the last 20% of the purchase price as set out in the sale and purchase agreement.

12. What if the purchasers do not take actual possession of the property?

Upon the expiry of 14 days from the date of a notice from the developer requesting the purchaser to take possession of the property, whether or not the purchaser has actually entered into possession of the property, the purchasers are deemed to have taken delivery of vacant possession.

13. What is the prescribed time for purchasers to bring an action against the developer?

In the case of a claim in the Tribunal, the purchasers will need to file their claim against the developer within 12 months from either the date of the certificate of completion and compliance, the expiry of the defect liability period, or the date of termination of the sale and purchase agreement, whichever is the later.
In the case of bringing a claim in court proceedings, the purchasers have a limitation period of up to 6 years from the date of accrual of the cause of action to file their claims

By Christine Toh

 

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Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.