From the various reports and write-ups since the Dep. Prime Minister Dato Seri Najib Razak announced the new 10:90 concept of house purchase and delivery we get the impression that there are a lot of confusion and misunderstanding as to what the announced 10-90 system entails. The present progressive payment system (sell then build-STB) is generally well understood due to the fact that it has been the mode of house purchase for the past few decades. The build then sell (BTS) system is where developers sell only completed houses. A few financially strong developers with developments in prime locations have adopted the complete BTS system and hence it is not a totally alien system. Housing projects that are build and marketed using the complete BTS system need not comply with the statutory standard Sale and Purchase Agreements. It is not difficult to see the vast difference though.

However, the system that was announced by the government

is not a system that is truly BTS. It is actually a midway between the present progressive payment (STB) and the complete BTS. You may call it a variant of the STB or a variant of the BTS, or 'Deferred Payment' basis, it matters little. We would prefer to term it the 10-90 concept so that it portrays a more accurate picture of what the system entails. What is important also, is to understand the mechanics of it.

In the announced 10-90 system a buyer pays a deposit of 10% and thereafter the balance of 90% will only be payable upon the due completion of the house together with the issuance of the Certificate of Fitness (for Occupation). The 10% is paid to the lawyers acting as Stakeholders and the sale is 'locked-in'. For the house buyers, it is still a purchase based on brochures and advertisement on a concept. The 10:90 system is still a "Sell first then Build" model as homes are still yet to be build or completed at the time of signing of the sale & purchase agreement. However the big difference is that if the developer for whatever reasons fails to complete the project or abandons the project, the buyers are insulated from the disastrous fallout.

Obviously, with the introduction of the 10-90 system, a new set of Standard Sales and Purchase Agreements needs to be put in place. The Legal Committee of the National House Buyers Association have put their heads together and have prepared a copy of our proposed draft Sales & Purchase Agreement to cater for the 10-90 system. We have, during a formal dialogue held with senior officials of the Ministry of Housing & Local Government, presented copies of our efforts to Yg Bhg Dato Ahmad Fuad the Ministry's Sec Gen. We term them the Schedule J & K - Sale & Purchase Agreement 10:90 concept.

To better understand the various existing sale transaction and the payment systems for the different types of purchase; the same are enumerated from this table:

Table1: Comparison on the delivery systems

				Completed Properties		Progressive Payment System (Sell-Then-Built)		10:90 payment System
(1).		On the signing of the Sale & Purchase Agreement (SPA)		Pay 10% of Purchase Price		Pay 10% of Purchase Price		Pay 10% of Purchase Price
(2).		Waiting period for Completion of Construction & Notice of Delivery of Vacant Possession		None		Within 24 or 36 months or more upon Architect's Certification of Completion		* Within 24 or 36 months or more upon Architect's Certification of Completion
(3).		Buyer to complete payment/s		3 months from SPA Date (in normal situations)		Progressive payment system (10; 10; 15; 10; 10; 10; 5; 5; 5; 12.5; 2.5; 5 in % (from first 10% payment or SPA Date) while waiting for completion of construction		90% of Purchase Price at 24 or 36 months from SPA Date depending on the regulated contract of sale
(4).		Waiting period for actual occupation with Certificate of Fitness for Occupation (CFO)		None		Within 14 days from Vacant Possession or longer depending on Developers' architect to procure the issuance of CFO.		*Proposed Vacant Possession with CFO
(5).		Waiting period for transfer of individual/strata titles		Varies on whether titles have been issued at the time of signing of SPA		Varies from developer to developer		*Proposed Vacant Possession with issuance of titles

* Proposals made by HBA

As can be seen from the table above, the 10:90 payment system is still a contract to sell (through the signing of the SPA), build then deliver. The term "Built-then-Sell" is hence not appropriate and should not be used in its entirety, when referring to the 10:90 system as the two systems encompass substantially different characteristics.

To avoid further misconceptions and confusions, perhaps we should all refer to this recently announced concept as 10:90 system rather than confusing it as a BTS system.