How many of us have based our decision to buy a home on colourful brochures and enticing lifestyle illustrations? Many prospective house buyers usually have little knowledge of what aspects to look for when acquiring a home.

The construction of a project involves numerous parties and legislation, and when problems arise, help in any form is often time consuming and costly. The onus is on prospective house buyers to be well educated on their rights and to seek help from all sources available before they make their first payment.

It is important that buyers know their rights and how to use them. The Housing Development (Control & Licensing) Act 1966 (Amended 2007) ("Housing Act") controls the development of 'housing accommodation'. "Housing Accommodation' may not be same as what you think you are buying. Buyers of service apartments and vacant bungalow lands were often surprised when told they have bought a commercial property. However, this is now regulated and controlled thro’ the said Act amended since 12.4.2007. 

In a recent newspaper article on a new trend in housing development - gated communities - house buyers were advised to be aware that there is no proper legislation on this type of schemes. There is too the amendment to the STA that regulates ‘gated concept’ but are awaiting the guidelines.

Development schemes may be called by various names coined by developers - such as condominium service apartments, ‘condotel’, cluster bungalow, resort homes, bungalow homestead, country homes, golf course villas - but these are only concepts of the development projects. It is a good idea to find out the legalities, for example, whether these developments are controlled by the Housing Act.

Extra Precaution

When purchasing a strata-title property, such a condominium or apartments, there are several additional precautions to take. For this type of property, you own not only your unit or strata lot, but also a share of the common property. Common property usually includes pipes, wires and other services contained within a floor, wall or ceiling of a building shown on the strata plan. It may also include facilities such as parking, recreational facilities and common storage areas, as well as the roof and the exterior walls.

Before you sign the sales contract, have your lawyer review all the documents, including the 'deed of covenants', bylaws, rules and regulations etc. It is recommended that purchasers of strata-title properties check out if the strata-title fees have been paid before the commencement of construction by the developer. Pay particular attention to any references to building repairs, defects and special funds (sinking fund). Know the payments that you will have to bear in order not to be caught unaware.

You should also be aware of the legal requirements around the formation of a Joint Management Body (JMB) or Management Corporation (MC), as the case may be of a strata-title building. Remember that the quality of the strata-title property you buy and, thus, the continuing value of your unit, will be significantly influenced by how well the Management Corporation performs its duties. If you intend to purchase one, be prepared to take an active interest in the affairs of the management corporation and ensure that the management council is being properly accountable to the strata unit owners.

Buying a stratified property requires you to acquit yourself with household words – abbreviations like COB, JMB, BCP, STA, MC, etc and terms like share units, accessory parcels, by-laws, etc. as compared to a landed property where there are less laws to read.

New doesn’t mean perfect

Complaint One:
`When the house was handed to us, we found some cracks etc. We made a report listing all the defects. When we checked again after a few months, not all the defects were rectified. What do we do now?'

Complaint Two:
`I received the keys to our dream home a day prior to Chinese New Year, and to our dismay, the property had many defects, ranging from minor problems to major misalignment of the walls and beams. The developer is rectifying the minor defects but is not willing to align the walls or beams that have been placed improperly. I wish to seek your advice on how I can have the process for rectification expedited as we have paid in full and are still unable to occupy the house.'

Complaint Three:
`I got the keys to my house last year and rented it out. After a few months, my tenants complained that their water bills are as high as RM900 per month. I checked and noticed that the underground pipe was leaking. I made a complaint to the developer, but as of last month, the problem has yet to be fixed.'

Complaint Four:
`The floor tiles in my apartment's living room were not properly fixed. When one walks over them, they give a certain hollow, quaky sound. There are at least 30 floor tiles with this problem. Also, the edges of the walls where the tiles meet were not properly done. I submitted a complaint form, but the developer has not done anything to rectify them. Now, it's been almost 12 months, and every time we call to enquire about the repair work, they tell us they could not find the right colour tiles to match. We were told that the only alternative is for us to change all the tiles. The developer will only bear the cost of the workmanship!'
 
Over the years, the HBA has recorded thousands of complaints from house buyers who were not satisfied with the condition of their new homes or the way defects were rectified. Construction defects range from very complex structural issues, which threaten the integrity of buildings, to simple items relating to aesthetics. After receiving the keys to their houses, these buyers' smiles soon fade when they are caught in a situation of getting the multiple defects in their homes rectified satisfactorily.

The new generation of house buyers expects their homes to be defect-free. The quality of houses, which although has improved over the past decade, has not kept pace with buyers' expectations in terms of both design and finishes. There is also a lack of a set of industry quality standards that are compatible with public interests and expectations. There is presently no benchmarking. This has resulted in many disputes over the rectification of defects as developers, contractors and house buyers have different expectations.

Many buyers are disheartened when they find so many defects in their new house that should never have been there in the first place. Such problem should be averted if the developer or their appointed contractors or the contractors’ contractors had not taken a lackadaisical attitude in building quality houses.

Defect Liability Clause

The pre-determined `Defect Liability Clause' in the sale and purchase agreement (SPA) states that the developer is required to repair and make good, at its own cost and expenses, any defects, shrinkage or other faults that become apparent within a period of 18 or 24 (whichever is applicable) calendar months after delivering vacant possession and which can be attributed to defective workmanship, materials or a failure to construct the property in accordance with the plan and description appended to the SPA within 30 days of having received written notice from the purchaser.

The second part of the clause states that the purchaser shall, at any time after the expiry of the 30-day notice, notify the developer of the cost of repairing and making good of the said defects by giving the developer a grace period of 14 days.

What to do

In layman's language, this is what a buyer has to do if he finds defects in his new home:

a) List all defects in writing as soon as they are apparent; take pictures of them if possible (the camera with the time and date). If you think the task is too tedious and comprehensive, you could then engage a building inspector (normally double up as architect and building surveyors) for a detailed inspection report. Important to note is to bargain and confirm their pricing prior to engagement and appointment.

b) Make sure the developer receives the defects list either by registered post or acknowledgement of receipt.

If the developer is responsive:
a) The developer has 30 days from the date of receipt to do the rectification works.
b) Go through the list of defects with the developer, for a discussion on the rectification work schedule.
c) Be prepared to spend time or appoint someone to be around for the appointed contractors to do their work.

If the developer is unresponsive:
a) Get a quotation from a reputable independent contractor for the cost of repairing and making good the defects.
b) Give the developer a second notice and a stipulated 14-day grace period to do the rectification work.
c) Recover the cost (any sum) of the repair from the developer's stakeholder lawyer after having given written notification to require the stakeholder to withhold release of the stakeholder sum.

What next?

Besides the legal steps, buyers should band together. Contact neighbours who have similar difficulties in getting defects rectified. You may have more in common than you think. There is power in numbers.  A united group with a common interest generates synergy that equips you to better resolve outstanding issues. Together house buyers have the advantage of numbers. Even political pressures may be generated because, as the saying goes, politics is a game of numbers. The main objective is to convince the developer that you are serious in getting the defects rectified properly.

The National House Buyers Association (HBA) is a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, check out its website at www.hba.org.my or email info@hba.org.my