Dissolution of a Joint Management Body

What terrifies house buyers most? Not getting the right price for their home, choosing the wrong developer or facing the paperwork?

More often than not, it turns out to be ‘facing the paperwork’, and in no small part due to the fact that most house buyers does not bother to read their contracts before signing.

Only purchases from housing developers of yet-to-be-completed properties are subject to the prescribed forms of contract of sales.  With the Housing Development (Control and Licensing, Amended) Regulations 2007 coming into effect from 1st December, 2007, yet another round of changes to the prescribed forms take place.

This amendment substitutes the previous two forms of contracts of sales and includes two (2) new ones to allow for the inclusion of the two (2) different modes of progress payment - as well as land parcels.  And they are enumerated below:
 

If you intend to sign on for a unit from a housing developer, it is only in your interest to know exactly what type of contract of sale would be applicable.  For instance, some buyers - who have read about the Housing Development (Control and Licensing, Amended) Act 2007 [Act 1289] having taken effect from 12th April, 2007 - and are perhaps hoping that the increase in the defects’ liability period from 18 months to 24 months would apply to their contracts purchased after April 12th may be disappointed.

On the other hand, those looking to purchase units in service apartment developments and who have waited anxiously for the inclusion of such properties under the Housing Development (Control and Licensing) Act 1966 need only search for projects launched from 1st December, 2007 for their forms of contracts of sales to be applicable.

Old or new?

The ‘savings clause’ in the Housing Development (Control and Licensing, Amended) Regulations 2007 allows sale and purchase contracts of a housing accommodation signed between 12th April 2007 and 30th November, 2007 to continue in full force and effect; notwithstanding any inconsistencies with or contrary to any provisions in the amended Regulations.

For buyers who have or are intending to make their purchase after 1st December, 2007, the new prescribed forms of contracts of sales would only apply if the project has no other signed contract of sale before 1st December, 2007. This means that the new prescribed forms of contract of sales would only apply to new launches after 1st December, 2007.

The ‘savings clause’ reads, inter-alia:

“Savings

16.(1)Nothing in these Regulations shall affect the validity of any contract of sale for the sale and purchase of a housing accommodation entered into after the commencement of the Housing Development (Control and Licensing, Amended) Act 2007 [Act A1289] but before the date of the coming into operation of these Regulations and such contract shall continue to have full force and effect notwithstanding anything inconsistent with or contrary to any provisions in these Regulations.

(2)Where on the date of coming into operation of these Regulations, a contract of sale for the sale and purchase of a housing accommodation has been signed in any phase of housing development, the contract of sale of the principal Regulations shall continue to apply to all housing accommodations in the said phase of housing development as if the principal Regulations have not been amended by these Regulations until all the housing accommodations in the said phase of housing development have been sold.”

Completion of particulars in sales contracts

Previously, house buyers have often been confused when certain portions of the prescribed forms of contract of sales have been left blank by the developers.

Fret no more.  The amended Act has included a new regulation – Regulation 11B - Incomplete contract of sale – which imposes a fine “not exceeding ten thousand ringgit” upon conviction for any developer who executes a contract of sale in which any particulars required in the prescribed form of contract of sale is not filled in or incomplete.

Salient features of the new prescribed contract of sales

The end-financier can require the developer to undertake to refund the loan amount, in the event the Memorandum of Transfer of the property cannot be registered in favour of the purchaser, for any reason not caused by the purchaser upon receipt by the developer of an unconditional undertaking from the end-financier.

The delivery of vacant possession has to be supported by a Certificate of Completion and Compliance (CCC) issued by the project’s Principal Submitting Person who is either an accredited  architect, certified engineer or a registered building draughtsman recognised by the Architects Act.  The CCC is a certificate given or granted under the Street, Drainage and Building Act 1974 and any by-laws made under that Act certifying that the housing unit has been completed and is safe and fit for occupation but does not include partial CCC.  This means that the buyer can occupy his or her property upon vacant possession delivery; unless there are major defects affecting the property. 

The developer has to repair or make good any defect, shrinkage or other faults which becomes apparent within a period of twenty-four (24) months from the date of the vacant possession, upon receiving written notice from the purchaser.  The developer’s architect has to sign a certificate to certify that the defect, shrinkage or other faults have been repaired and make prepare the relevant sum – in advance – to be held by the developer’s stakeholder lawyers, which can then be released to the developer accordingly.

In Schedule H, the developer’s architect has to certify the date of completion of the common facilities.

These types of contracts’ forms are for developments marketed as ‘build-then-sell’ or  the ‘10:90’ concept.  There are only two progressive payments – 10% of the purchase price upon the signing of the sale and purchase agreement and the remaining 90% balance of the purchase price upon the issuance of the CCC.

Remember; you are in charge

Does it still sound complicated?

Here are some suggestions.  First, get yourself a copy of the Housing Development (Control & Licensing), Act 1966 which contains the latest amendments, including the amendments on the Housing Development (Control and Licensing) Regulations, 1989. The prescribed contracts of sales are within the Regulations part. Read the contract that applies to your intended purchase until you thoroughly understand each provision.

If you are still in doubt, the volunteers at HBA will be able to assist you on the types of contracts’ forms at our Advice Centre on Saturdays between 1 p.m. to 5 p.m.  For more information, visit our website at www.hba.org.my.

Remember; it’s your house and your money – so you are in charge.  Good luck!

The National House Buyers Association (HBA) is a voluntary, non-governmental organization manned by unpaid volunteers. For more information, check out their website at http://www.hba.org.my