At last a victory for house buyers against property developers in Malaysia

At last a victory for house buyers against property developers in Malaysia

On Feb 27, 2017, the High Court made a landmark ruling that the Housing Controller has no power to grant an extension of time to developers who delay the completion of housing projects.

Barring an appeal against the decision, this was indeed a rare legal victory and justice for house buyers who have been suffering for decades under the thumbs of developers and authorities who exploit the laws to the disadvantage of house buyers.

“The plight of abandoned housing project house buyers are even more acute and serious, to say the least. They are left at the mercy and ‘generosity’ of so called White Knight developers.

“House buyers are left out in the cold whenever a developer goes bust or bankrupt. They are not considered secured creditors, and are thus almost always left out in terms of compensation,” Gerakan Deputy Speaker Syed Abdul Razak Alsagoff said.

He said the decision “is thus a landmark legal victory of sorts for house buyers because developers and authorities now cannot exploit the law and their powers to deny house buyers their right to compensation for late delivery as stipulated in sale and purchase agreements”.

On the plight of abandoned housing project victims, Syed Razak said “it is time to tackle the problems to protect house buyers from losing or jeopardising their life savings”.

Syed Razak, who is Gerakan’s nominee to contest N.37 Bukit Lanjan in the coming 14th General Election (GE14), said “the abandoned housing project woes of Malaysians are long overdue”.

“They need protection from the law against unscrupulous developers who abandon their projects and flee with the buyers’ life savings.

“Such unreliable developers almost always get away with the hard earned life savings of buyers because they (developers) know how to exploit the loopholes of the laws to protect themselves from any moral responsibility or legal backlash.

“A housing project is abandoned, the property development company goes bankrupt but the developer laughs all the way to bank.

“They continue to enjoy the lifestyle of the rich while the victims of abandoned housing projects are saddled with loan debts which they have to repay almost the rest of their life,” he added.

Syed Razak urged federal lawmakers and the federal government to “really sit down and seriously come up with legal solutions to protect the interest of the poor house buyers and their life savings”.

“Seriously consider implementing the build-and-sell policy on property developers. This will ensure that only genuine property developers are in the market and the house buyers are fully protected,” he added.


The following are two The Star Online news reports and a report by online news portal Free Malaysia Today on the High Court’s landmark decision in favour of house buyers:

"Nation

Home > News > Nation

Tuesday, 28 February 2017

Court: No power to grant extension

BY M. MAGESWARI, ROYCE TAN, THEAN LEE CHENG, and EUGENE MAHALINGAM


Take them to task: According to the liquidated damages clause, condo buyers can claim 10 per annum of the purchase price for the delay.

KUALA LUMPUR: The Housing Controller has no power to grant an extension of time to developers who delay the completion of housing projects, the High Court has ruled in a landmark judgment.

This means a housing developer has to pay compensation to the affected buyers for delays in the delivery of vacant possession.

High Court (Appellate and Special Powers) judge Justice Hanipah Farikullah also held that the regulation which empowers the Controller to modify terms of the contract of sale was ultra vires the Housing Development, Control and Licensing Act.

The judge said this in allowing an application for judicial review by 71 buyers of the Sri Istana condominiums in Old Klang Road against the Housing Controller and Urban Well-being, Housing and Local Government Minister.

Their lead counsel Datuk Wong Kok Leong told The Star the judge held that the minister’s decision to grant the developer an extension of time to complete the project via a letter dated Nov 17, 2015 was invalid.

In the letter, the minister had granted the developer a 12-month extension to complete the project.

“This means that the Housing Controller has no power to grant an extension of time to housing developers for any delay in completing their projects,” Wong said.

“Now, the developer has to pay the liquidated damages (a pre-determined sum) for late delivery of vacant possession of those condominium units.”

Wong called the decision a landmark judgment as many project developers seek extensions to complete their projects in Malaysia.

“This is a victory for all house buyers. With this ruling, the housing developer can’t just go to the Housing Controller for an extension of time to complete the project in order to avoid paying the liquidated damages to house buyers.

“This is because if an extension of time is allowed, house buyers lose their rights to claim damages for late delivery of vacant possession,” he added.

Wong explained that according to the liquidated damages clause, the condo buyers can claim 10% per annum of the purchase price for the delay.

In their application for judicial review, the condo buyers stated that they wanted to quash the decision allowing BHL Construction Sdn Bhd an extension of time for the delivery of vacant possession from 36 months to 48 months.

They also asked the court for a declaration that Regulation 11(3) was ultra vires of the Housing Development Act (Control and Licensing) Act.

Wong said the judge has ordered the parties to address the issue of costs on the next date for case management.

When contacted, SFC Mohamad Rizal said the judge also allowed a similar application involving another group of condominium buyers involving the same developer and project. - The Star Online


Nation

Home > News > Nation

Tuesday, 28 February 2017

A fair and right judgment, says housing developer

BY M. MAGESWARI, ROYCE TAN, THEAN LEE CHENG, andEUGENE MAHALINGAM

PETALING JAYA: Barry bought a RM1mil property. The developer did not complete the project within the time limit as stipulated in the sale and purchase agreement. Under the law, Barry can claim for late delivery charges, legally known as liquidated ascertained damages (LAD).

“Two months ago, the developer negotiated with us to pay 70% of the compensation, or RM280,000 of LAD. My lawyer who handled my SPA advised me to stand firm on the 100% that I’m entitled to and offered to help me get the full sum of RM376,000,” said Barry, who has yet to receive any payment.

But he is relatively lucky compared to some buyers who have been offered zero compensation.

In fact, in recent times, many buyers have been helpless against developers who have successfully applied to the Urban Wellbeing, Housing and Local Government Ministry to approve an extended deadline of delivery – which means no LAD needs to be paid to buyers.

That was until a landmark decision yesterday where the High Court (Appellate and Special Powers) ruled that the Housing Controller does not have the power to extend the delivery deadline of a property against what is printed in the sale and purchase agreement (SPA).

MKH Bhd managing director Tan Sri Eddy Chen Lok Loi said if the delay is not caused by natural disaster, it is the moral obligation of the developer to pay compensation.

“It is a fair and right judgment,” said Chen, whose company has developed multiple projects in Kajang, Selangor.

Chen said two days ago, the Government extended the completion date for one of their projects. The project was delayed for a month.

“I told my staff that we have to pay. So the moment we hand our keys to the buyers, it will be accompanied by a cheque for the late delivery.

“But this is my company’s stand although the (Urban Wellbeing, Housing and Local Government) ministry has absolved MKH from paying late charges. But I cannot speak for others,” he said.

In the past few years, developers have been applying for an extension of time as a form of “insurance” should they fall behind delivery deadline.

The National House Buyers Association in a statement yesterday said the court’s decision meant that the Housing Controller did not have the power to grant an extension of time, waive or modify the terms and conditions under the sale and purchase agreement.

Datuk Seri Abdul Rahman Dahlan, who was Urban Wellbeing, Housing and Local Government Minister between May 2013 and June 2016, could not be reached for comment. - The Star Online

Delays are developers’ responsibility, says Rehda

Robin Augustin

| February 28, 2017

The Real Estate and Housing Developers Association also urges developers to plan their projects ahead to avoid delays in delivery.


PETALING JAYA: Developers must be responsible for any delays when it comes to completing their projects, says the Real Estate and Housing Developers Association (Rehda).

Rehda national treasurer Muztaza Mohamad explained that once an agreement is signed between the property buyer and a developer, the onus falls on the developers to deliver the home.

“Any delay is not the fault of the buyers. It’s ours or that of other people,” he told reporters after a forum.

Muztaza was asked to comment on a High Court decision to set aside the order by the urban wellbeing, housing and local government minister to give a 12-month extension to a developer to complete his project.

He said the “law is the law” and urged developers to plan ahead to ensure homes are delivered on time.

This included only selling the property when it is 50% completed. “You must plan from day one of the project,” he said.

Yesterday, Justice Hanipah Farikullah, who allowed the judicial review application by 104 house buyers, said the minister’s decision to rely on a regulation to allow the extension was against the Housing Development (Control & Licensing) Act.

BHL Construction Sdn Bhd was involved in the construction of a condominium at Jalan Kuchai Lama, Kuala Lumpur where 104 plaintiffs had entered into a sale and purchase agreement with them.

One of the conditions of the agreement required that the developer hand over vacant possession within 36 months or be liable to pay a penalty for late delivery.

The developer failed to complete and hand over the units to the 104 purchasers on time, and wrote to the controller of housing under the ministry for an extension of time. His request was rejected.

The developer then appealed to the minister who, on Nov 17, 2015, allowed an extension of 12 months.

That decision would have allowed the developer to hand over vacant possession of the houses to the buyers from 36 months to 48 months.

The aggrieved purchasers sought legal remedy in the courts last year.

Under the Housing Development (Control & Licensing) Act 1966, developers have to hand over the keys to house buyers within 24 to 36 months from the date of the agreement.

If a developer fails to complete and hand over the units within the prescribed time, it would have to pay the buyers liquidated ascertained damages (LAD) of 10% per annum of the purchase price. - FMT"

N.37 LET BUKIT LANJAN SOAR WITH SYED ABDUL RAZAK ALSAGOFF