The Housing Development (Control and Licensing) (Amendment) Regulations 2007 came into effect on 1 December 2007. The most significant amendment is the introduction of legislated sale and purchase agreements to cater for the build-then-sell concept.
The Housing Development (Control and Licensing) (Amendment) Regulations 2007 came into effect on 1 December 2007. The most significant amendment is the introduction of legislated sale and purchase agreements to cater for the build-then-sell concept.
The Housing Development (Control and Licensing) (Amendment) Regulations 2007 came into effect on 1 December 2007. The most significant amendment is the introduction of legislated sale and purchase agreements to cater for the build-then-sell concept.
Housing Development (Control and Licensing) (Amendment) Regulations 2007
IN THIS ARTICLE, CYNTHIA CHAN DISCUSSES THE RECENT AMENDMENTS TO THE SCHEDULE G AND H SALE AND PURCHASE AGREEMENT AND THE INTRODUCTION OF THE SCHEDULE I AND J SALE AND PURCHASE AGREEMENT FOR 10:90 BUILD THEN SELL CONCEPT.
The Housing Development (Control and Licensing) (Amendment) Regulations 2007 (Regulations) came into effect on 1 December 2007 1 . The Regulations brought into effect the various changes made to the Housing Development (Control and Licensing) Act 1966 (the Act) in April 2007. In line with the long title of the Act, the amendments to the Regulations aim to further protect purchasers which includes the extension of the defects liability period to twenty-four (24) months, the purchasers right to initiate and maintain action on his own volition and the assignment of the property without prior consent of vendor/proprietor.
The most significant amendment is the introduction of legislated sale and purchase agreements to cater for the build-then-sell concept. Under Regulation 11(1A), it is provided that notwithstanding paragraph (1) 2 , every contract of sale for build then sell relating to a housing accommodation together with the subdivisional portion of land appurtenant thereto shall be in the form prescribed in Schedule I (Schedule I Agreement), and where the contract of sale for build then sell is for a housing accommodation in the form of a parcel of a building or land intended for subdivision into parcels, as the case may be, it shall be in the form prescribed in Schedule J (Schedule J Agreement).The build-then-sell is essentially a 10:90 concept whereby the purchaser pays 10% of the purchase price upon the signing of the sale and purchase agreement and then pays the remaining 90% of the purchase price upon the issuance of the certificate of completion and compliance for the property. It is to be noted that the clauses in the Schedule I Agreement and the Schedule J Agreement are almost identical to the clauses in the Schedule G Agreement and the Schedule H Agreement respectively save for the schedule of payment clause (Clause 4 and Third Schedule), and save that the Schedule I Agreement and the Schedule J Agreement do not provide for the last 5% of the purchase price to be held by the developers solicitors as stakeholders until the expiry of the defects liability period.
In the build-then-sell concept the developer will have to obtain more financing from financial institutions to finance the project up to the stage of completion. This way, the purchaser is protected even if the developer abandons the housing development before completion.
In addition to the introduction of the Schedule I Agreement and the Schedule J Agreement, the clauses in the Schedule G Agreement and the Schedule H Agreement are also substantively amended. Some of the significant amendments made to the Schedule G Agreement and the Schedule H Agreement are highlighted below.
Significant amendments to the Schedule G Agreement
Undertaking to refund from the vendor There is a provision now for the vendor to deliver to the purchasers financier a letter of undertaking to refund the loan sum in the event the memorandum of transfer (MOT) cannot be registered in favour of the purchaser for any reason which is not attributable to the purchaser.
Right to initiate proceedings With the amendment, the purchaser can now institute proceedings against the developer in his own name with a notice in writing to the financier either before or within 14 days after the action has been filed.
Interest on late payment Clause 9(2) of the Schedule G Agreement sets out the circumstances 3 whereby the developer is not entitled to charge interest on late payment of any progressive payment installments. In addition to the present circumstances, the developer is also not entitled to charge interest on late payment in the event a separate title has been issued on the date of the agreement and the purchaser has obtained a loan from the financier and the developer delays or fails to execute and deliver a valid and registrable MOT to the purchaser. It is noted that this amendment is only applicable to the Schedule G Agreement.
Consent to assignment/subsale Under the new Schedule G Agreement, the clause pertaining to the payment of administrative fee of RM500.00 for the consent of the developer for assignment/subsale matters has been deleted. The deletion is to avoid inconsistency with the changes made to the Act under which the consent of the developer is no longer required.
Infrastructure and maintenance At the date when a purchaser takes vacant possession of the property, every notice to the purchaser requesting for payment of contribution to the construction of infrastructure and the maintenance of the same from the developer shall be supported by a statement issued by the developer which shall include a list and the description of the infrastructure, the expenditure incurred in the maintenance, upkeep and repair of the infrastructure and the amount of such contribution due to the developer.
Charges for maintenance of services There is a provision now for the refund of the balance of the maintenance services charges paid in advance by the purchaser upon the maintenance services being taken over by the relevant authority (after deducting the amount due to the relevant authority) within 21 days after the date of notification issued by the relevant authority.
Claims to the Tribunal of Homebuyer Claims In order to determine whether the claim to the Tribunal is made within time, the purchaser has to refer to Section 16N(2) of the Act which provides that the jurisdiction of the Tribunal shall be limited to a claim that is based on a cause of action arising from a sale and purchase agreement entered into between the purchaser and the developer which is brought by the purchaser not later than twelve (12) months from the date of the issuance of the certificate of completion and compliance for the housing accommodation or the common facilities of the housing accommodation intended for subdivision, whichever is later, the expiry of the defects liability period, and the date of termination of the sale and purchase agreement by either party and such termination occurred before the date of issuance of the certificate of completion and compliance for the housing accommodation or the common facilities of the housing accommodation intended for subdivision, whichever is later.
Housing Development (Control and Licensing) (Amendment) Regulations 2007 2 Delivery of vacant possession The delivery of vacant possession by the developer must now be supported by a certificate of completion and compliance certifying that the property is safe and fit for occupation and includes handing over the keys of the property to the purchaser.
Defects liability period The defects liability period has been extended from eighteen (18) months to twenty-four (24) months. There is also now a provision for the developers solicitor to retain the 5% stakeholder sum until the developers solicitors receive a certificate signed by the developers architect certifying that the defects claimed by the purchaser (by way of a written notice served on the developer before the expiry of eight (8) months or twenty-four (24) months after the purchaser takes vacant possession of the property) have been repaired and made good by the developer.
Assignment Under the Act, the consent of the developer to an assignment by the purchaser is no longer required. This amendment has now been incorporated into the Schedule G Agreement whereby the purchaser may assign all his rights, interest and title in and to the property without the consent of the developer by giving notice of assignment to the developer provided that the purchase price has been fully paid up and the purchaser has duly complied with all the terms and conditions or if purchase price is not fully paid up, the developer and financier shall have given each other the undertaking under Clause 5(6).
Amendment to Third Schedule (item 4) If a separate issue document of title to the property has not been issued at the time the purchaser takes vacant possession of the property, a sum equivalent to 2.5% of the purchase price will be released to the developers solicitor to be held by them as stakeholders and not to be paid to the developer until a valid and registrable MOT in favour of the purchaser has been delivered by the developer to the purchaser.
Significant amendments to the Schedule H Agreement
Generally, the amendments to the Schedule G Agreement also apply to the Schedule H Agreement. In addition to the amendments to the Schedule G Agreement, the following amendments apply to the Schedule H Agreement:
The definition of management corporation The term management corporation wherever it appears is to be substituted with the words Joint Management Body. This is in line with the amendments to the Building and Common Property (Maintenance and Management) Act 2007 (BCPA) which came into effect in April 2007.
Title The title of the Schedule H Agreement has been amended to read as follows, Sale and Purchase Agreement (Building or Land Intended for Subdivision into Parcels). The amendment has taken into consideration Section 6(1A) of the Strata Titles (Amendment) Act 2007 where any alienated land having two or more buildings held as one lot under final title shall be capable of being subdivided into land parcels and be issued with strata titles.
Adjustment of the Purchase Price There will be an adjustment of the purchase price if there is a difference in area of the parcel in excess of 2%. This is to further minimize the error as to the description of the area of the parcel by the developer.
Payment of service charges There is a new provision for the service charge to be paid into a Building Maintenance Account established under the BCPA. Additionally, the time limit to pay the service charge is now fourteen (14) days from the date of receipt of the developers written notice and the interest chargeable by the developer on the unpaid service charge shall not be more than 10%. Housing Development (Control and Licensing) (Amendment) Regulations 2007 3 Housing Development (Control and Licensing) (Amendment) Regulations 2007 4
Payment of sinking fund There is a new provision for all funds accumulated in the sinking fund opened prior to the establishment of the sinking fund under the BCPA to be transferred into the sinking fund under the BCPA.
Payment of insurance The time limit to pay insurance premium is now fourteen (14) days from the date of receipt of the developers written notice and the interest chargeable by the developer on the unpaid insurance premium shall not be more than 10%.
Completion of common facilities There is a new provision for the developers architect to certify the date of completion of the common facilities. Additionally, a new sub clause has been inserted to state that any cause of action to claim liquidated damages by the purchaser under this clause shall accrue on the date the developer completes the common facilities.
Amendment to the Third Schedule (item 4) When the purchaser takes vacant possession of the parcel, 2.5% of the purchase price shall be released to the developers solicitors to be held by them as stakeholders for payment to the developer within twenty-one (21) working days after the receipt by the purchaser of the written confirmation of the developers submission to and acceptance by the relevant authority of the application for subdivision of the building or land.
CYNTHIA CHAN REAL ESTATE PRACTICE GROUP
For further information on the Housing Development (Control and Licensing) (Amendment) Regulations 2007, please contact
Sar Sau Yee sysar@shearndelamore.com
See Guat Har guat@shearndelamore.com
1 The Regulations have been gazetted vide gazette notification P.U (A) 395. 2 Paragraph (1) provides that every contract of sale for the sale and purchase of a housing accommodation together with the subdivisional portion of land appurtenant thereto shall be in the form prescribed in Schedule G (Schedule G Agreement) and where the contract of sale is for the sale and purchase of a housing accommodation in the form of a parcel of a building or land intended for subdivision into parcels, as the case may be, it shall be in the form prescribed in Schedule H (Schedule H Agreement). 3 The developer is not entitled to charge interest on the late payment of any installment if the delay is due to any one or more of the following: (1) the relevant progressive claim notice from the developer is incomplete or it not supported by the relevant architects or engineers certificate; (2) the chargee of the property, if any delays or fails to issue and deliver a redemption statement and undertaking letter to the purchaser or the purchasers financier; and (3) where the property is encumbered and the purchasers financier refuses to release the relevant portion of the loan equivalent to the progressive payment is insufficient to settle the full redemption sum payable in respect of the property.