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Question:-
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“Hi Lawyer Yeo, I am writing to seek your legal advice regarding an issue with my new house. Five years ago, my wife and I got married, and since we both work in Singapore, we decided to purchase a double-story terraced house near the border to make our daily commute more convenient.”
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“At the time of purchase, the developer’s lawyer explained to us that the developer was required to complete construction and hand over vacant possession of our house within 24 months. However, after signing the sale and purchase agreement, the developer continuously delayed the project, citing financial constraints and shortage of labor. It was only three months ago that we finally received a notice from the developer to collect the keys of our new house.”
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“Upon receiving the keys, we immediately inspected our new house and discovered significant construction defects: several windows are malfunctioning, and there are cracks throughout the house. We have lodged multiple complaints with the developer, but they have been unresponsive to date.”
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“Given this situation, could you please advise us on our legal remedies? We would greatly appreciate any relevant information you can provide. Thank you.”
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Answer:
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1. If the developer fails to deliver vacant possession of the property according to the prescribed completion period stated in the Sale and Purchase Agreement (SPA), generally, the purchaser would have the right to claim liquidated ascertained damages (LAD) from the developer for the late delivery.
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2. Under the Housing Development (Control and Licensing) Regulations 1989, the purchasers of residential units will be protected by the statutory contacts, which specifically provide the vacant possession of the landed properties must be handover to the purchasers within 24 months calculated from the date the booking fee/ deposit was given (according to the Federal Court’s decision in the case of PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah and Ng Chee Kuan and Other Appeals). For high-rise properties such as condominiums, the delivery period will be 36 months. The developers cannot amend the terms of the statutory SPAs (Schedule H & G) according to their whims and fancy.
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3. However, if the purchasers are buying the commercial units, then the delivery date will be entirely based on the terms stipulated in the sale and purchase agreement signed between the parties. The purchasers will not be protected by the statutory periods under the Housing Development (Control and Licensing) Regulations 1989.
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4. When facing the developer’s delay in delivering vacant possession, the first thing the purchaser needs to do is to calculate the total days of the late delivery and deduct the exemption period under the Temporary Measures for Reducing the Impact of Coronavirus Disease (COVID-19) Act 2020. After that, the purchaser can submit a demand letter to the developer (this can be done through a law firm). The formula for calculating the compensation is as follows:-
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(Purchase price of the property × 10% × Number of days of delay) ÷ 365 days = Compensation amount
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5. If the developer still refuses to pay the compensation amount after the letter of demand was sent, the purchaser can proceed to engage a law firm to initiate a lawsuit against the developer to claim the compensation. Alternatively, he/she can also lodge a complaint to the Housing Tribunal to claim compensation. For the housing tribunal, the purchaser must take note that he/she must file the complaint within 12 months from the date the Certificate of Completion and Compliance is issued, and the total compensation amount is RM50,000.00 only.
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6. After taking possession of the house, another issue that a purchaser might encounter is defects in the property. These defects can manifest in various forms, such as cracks in walls, faulty door and window fittings, loose tiles, or leaking pipes.
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7. Under the Housing Development (Control and Licensing) Act 1989, homebuyers are generally protected in such situations. Developers are mandated to provide a 24-month defect liability period from the date of handover, during which they are responsible for rectifying any defects that arise.
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8. To effectively address these issues, homebuyers should follow these steps:
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a) Document the Defects: Create a simple diagram of the property and clearly mark the locations of the defects. Take photographs as evidence to support the claims.
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b) Submit a Defect Report: Compile a comprehensive defect report, including the diagram, photographs, and a detailed description of each defect. Submit this report, along with the necessary forms, to the developer’s customer service department.
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c) Obtain Acknowledgment: Request the developer to sign and stamp a copy of the defect report for your records. This serves as written acknowledgment of your notification.
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9. Once the developer has been formally notified in writing, they are required to address the defects within 30 days. If the developer delays and takes no action, the purchaser can send a demand letter (this can be done through a law firm), notifying that the 30-day period has expired. The letter should state that if the developer does not address the issues, the buyer will hire a contractor to make the repairs and include a fee quotation from the contractor.
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10. If the developer still takes no action, the purchaser can send a letter to the law firm that represented the developer in the sale and purchase agreement, requesting the final 5% of the purchase price be withheld. After the repairs are completed, the buyer can then claim this repair cost from the law firm.
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The above is the legal information we would like to share with our readers today with regard to the claim against the developer for late delivery in Malaysia. If you have any legal questions about this legal process, you can contact us via WhatsApp: https://wa.link/q3kmv5
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