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interested buyers to verify the physical and
legal conditions of the properties before they
purchase. Banks expect interested buyers to
have already done their due diligence before
signing on the dotted line, which is a binding
contract. Themargin of financing in the
secondarymarket is also lower than the
primarymarket. This being the case, therewill
be calls for a “Fair HousingAct” as has been
done in other jurisdictions.
MORE THANOPINION
Having served as the chairman of the
Consumer Claims Tribunal as well as the
president of the Tribunal for Home Buyers’
Claims, I can take judicial notice of the fact
that therewere numerous cases filed relating
to goods, whichwere sold on an “as is where
is” basis. Someweremore expensive than
residential houses, yet had numerous claims
on non-compliance of warranty and defects.
Agood examplewould be themotor industry.
Ahouse delivered on a full BTS basis or on a
10-90 basis will still be encumberedwith
issues relating to late delivery of vacant
possession and defects plus non-compliance
of approved plans.
One is often reminded of themaxim
“caveat emptor”, whichmeans “let the
buyer beware”. Former Australian attorney-
general Lionel Murphy once said: “That
principlemay have been appropriate for
transactions conducted in villagemarkets. It
has ceased to be appropriate as a general
rule. Now themarketing of goods and
services is conducted on an organised basis
and by trained business executives. The
untrained consumer is nomatch for the
businessmanwho attempts to persuade the
consumer to buy goods or services on terms
and conditions suitable to the vendor. The
consumer needs protection”.
LEGISLATIVE CONTROL
The Housing Development (Control
and Licensing) Act 1966 provides
such protection. The preamble of the
act states that it is to provide for the
control and licensing of the business
of housing development in Peninsular
Malaysia, including the protection of the
interests of purchasers and for matters
connected therewith.
In SeaHousing Corporation Sdn Bhd
v Lee PohChee [1982] CLJ 355 Suffian LP
stated that theHousingAct was “… to
protect homebuyers, of whomare people of
modest means, fromrich and powerful
developers”. Parliament found it necessary
to regulate the sale of houses and protect
buyers by enacting the act.
InKhawDawYau vKinNamRealty
Development Sdn Bhd [1983] 1MLJ 35,
where the developer had jumped the gun
and sold some bumiputra lots to non-
bumiputra purchasers, V. C. George J.
expressly stated: “The scheme of the
HousingDevelopers (Control and
Licensing) Act 1966 and the Rules of 1970 is
to provide ameasure of protection to
ON FRIDAY
NOVEMBER 28, 2014
R
EFERRING
to the letter fromUrban
Wellbeing, Housing and Local
GovernmentMinister DatukAbdul
RahmanDahlan datedNov 21, I fully
support his view that the implementation of
BTS (Build-Then-Sell) will lead to a shrinking
of the housing industry.
There has been claims by the House
Buyers’ Association of Malaysia (HBA) and
others, that BTS is THE remedy to address
housing issues faced by purchasers. No
doubt their intention may be noble, I beg to
defer as to the mandatory introduction of
BTS, mainly because we have the most
benevolent social legislation in place (in the
country), namely the Housing Development
(Control and Licensing) Act 1966 and its
various Regulations made thereunder. It is
indeed a path less-travelled, breaking
benevolent legislation intended to protect
purchasers from being exploited by
unscrupulous developers.
NOBE ALL, ENDALL
TheHousingDevelopment Act introduced a
comprehensive law to protect house buyers.
Unfair practices andmisleading conduct by
developers were given legal control, and
purchasers’ rights to guarantees, quality of
houses and enforcement powers were clearly
spelt out in the act.
Selling houses via BTSwill deprive house
purchasers fromobtaining any formof
protection nowguaranteed under the act as
the scheme of the act was established to cover
houses under construction until the issuance
of the certificate of completion and
compliance (CCC), although the regulation
has an option schedule relating to the “10-90”
scheme. No conditions can be imposed on
houses sold via BTS, in regard to the right to
sell at the price of the seller’s choice, and to
whom it can be sold as this is protected under
Article 13 of the Federal Constitution.
Matters like bumiputra discounts also
cannot be imposed. Buying a product on an “as
is where is” basis also does not guarantee the
product is free fromdefects and problems. In a
nutshell, the term“as is where is” simply
means that the buyer will inherit all of the
physical and legal conditions of the property
they are going to buy, as it is. Bluntly, you get
everything that comes with a property at its
present conditionwhen you buy it, including
the good, bad and ugly.
Most purchaser claims aremainly related
to late delivery of vacant possession and
defects plus non-compliance of approved
plans as comparedwith non-completion of
houses. As an example, if a property is in dire
need of repair, or has illegal occupants, has a
problemwith the title, or is located beside a
garbage dump or cemetery etcetera, the buyer
expressly agrees to buy the property in such
condition. Any costs related to “fixing” any of
these problems will come under the account
of the buyer.
This is the reason banks highly encourage
BY
PRETAM SINGH DARSHAN SINGH
purchasers of housing accommodation
to a housing development against
unscrupulous developers.”
On legislative control over developers’
licensing requirements, it may not bewrong
to state that the housing development
business is one of themost regulated ones.
Ahousing developer, therefore, must be in
possession of a valid licence issued under the
act before it undertakes any housing
development; section 5 (1).
THE TRIBUNAL
The Tribunal for Homebuyers Claims is an
independent body established under the act
with the primary function of hearing and
determining claims lodged by Purchasers
under the act. It is also subject to the
provisions of the act. The primary objective of
establishing the tribunal is to provide an
alternative channel or facility, apart from the
court, to the purchaser tomake claims for any
loss suffered in a less cumbersome and speedy
manner and at minimal cost.
Almost all cases in the tribunal are settled
within 120 days and one has to pay a fee of only
RM10. The procedure is simple and all awards
are binding upon the developers. Non-
compliance of a tribunal award is a criminal
offence. Any partywho fails to complywith an
award commits an offence and on conviction,
can be fined up toRM5,000 or be imprisoned
up to two years, or both.
In all, BTSmay not be the “be all and end
all” to settle house purchasers’ grievances. It
is apparent that there already exists sufficient
legal framework to enhance purchaser
protection, perhaps unparalleled in the world.
Somemay perceive these provisions as
insufficient. However, I would say that the
way forward then, would be to enhance due
compliance rather than chart a newpath
through unknown choppywaters, which
might put the purchaser in an even
tighter spot.
Followour column next week to learn
of some of the principal duties of a
licensed developer.
Email your feedback and queries
to:
[email protected]X
>Standing ingood steadof our adequate
legal framework
Addressing
purchaser
grievances