faq about house buying....

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credits to faq published by ministry of housing and local government.


FAQ-PROBLEMS FACED BY HOUSE BUYERS AGAINST HOUSING DEVELOPERS

Question 1

Many complaints have been received regarding housing developers asking for the deposit even though the Sales and Purchase Agreement (SPA) has not been signed. Is there any regulation allowing this practice?

Answer

Housing developers are not allowed to collect any payment before the signing of the SPA. This prohibition is in accordance with Regulation 11(2) of the Housing Development (Control and Licensing) Regulations 1989. Only payments stipulated in the SPA and the third schedule of the installment payment schedule-SPA document are allowed to be collected.

Question 2

What rules must a housing developer abide by before he can sell a house to a buyer?

Answer

Besides having a valid Housing Development's Licence, any developer wishing to sell his houses must obtain an advertisement and sales permit from the Controller of Housing as stipulated by Regulation 5 of the Housing Development (Control and Licensing) Regulation 1989. The landowner must also be a party to the sales contract in accordance with Regulation 10 of the said regulation.

Question 3

Some developers impose a condition that before returning the deposit, a purchaser must find another buyer. Is there such a ministry regulation? Is the practice allowed?

Answer

This practice is not in any regulation but is not against any act or rule in force.

Question 4

What actions can be taken against developers who have absconded and abandoned the housing project? What can buyers do?

Answer

A few actions can be taken against errant developers to protect the buyer. Usually the ministry will call the developers to explain the real situation or problems they face and take steps to alleviate the situation. If they are found to be in breach of any provision under the Housing Development (Control and Licensing) Act 1966, they can be prosecuted.

Home buyers can take legal action against the housing developers based on the terms stipulated in the Sales and Purchase Agreement or write to the ministry so it can investigate the matter and take further action.

Question 5

What action can a house buyer take if the developer refuses to return the deposit or booking fee even though the Sales and Purchase Agreement has not been signed?

Answer

A buyer should not make any payment to the housing developer before the Sales and Purchase Agreement has been signed. The developer is also prohibited from taking any payment. If a developer refuses to return the deposit or booking fee, a buyer can write an official complaint to the ministry so it can take the necessary action either to direct the developer to return the money or to take legal action against the developer for infringing Regulation 11(2) of the Housing Development (Control and Licensing) Regulation 1989






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Question 6

What advice do you have for house buyers during this current economic slump?

Answer

Buyers are advised to be careful in dealings involving the purchase of a house. Check if the developer holds a licence, advertisement and sales permit, as well as the location, development plan of the project, and ensure that the deposit is paid simultaneously with the signing of the Sales and Purchase Agreement

Question 7

What should a buyer do if a developer fails to pay the late delivery charges claim or fails to pay 100 per cent of the amount claimed?

Answer

For claims of less than RM25,000, a buyer can refer the matter to the home buyers tribunal which came into effect on 1 December 2002.

Question 8

What should a buyer do if he finds out that the project has been abandoned? Can he seek compensation?

Answer

If a particular project has been abandoned, the buyer must report the matter immediately to the ministry for further action. The buyer can enter a caveat for the property to safeguard his rights (usually the same caveat is made after the signing of the SPA), get legal opinion of the appropriate action to be taken, and claim damages from the developer or seller.

If it comes to the attention of the buyer that the property is going to be auctioned off, the buyer must immediately get an injunction to stop the auction. (Further action to be taken by the lawyer appointed.)
Question 9

What actions can be taken by the ministry against such a developer? Can it be blacklisted or its licence be revoked?

Answer

In dealing with the problem of an abandoned project, the ministry抯 priority is to cater to the needs of the house buyer and ensure the project is completed. The ministry will periodically hold discussion and mediation sessions with the relevant developer, house buyers and finance companies to find a solution so the project can be completed. But if the developer is found to be purposely delaying a project without any valid reasons, the ministry can blacklist the developer and take necessary action. If the developer is found to be in violation of any particular law, court action will be taken.

Question 10

Some house buyers have been cheated by developers claiming to be developing a particular project but in actuality the developers are collecting the registration fee to make money from the interest accumulated in their bank account. When a buyer complains, they return the money.

Answer

After receiving a complain, the ministry will conduct an investigation. Action will be taken against the developer if there is concrete evidence

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Question 11

Do co-operatives, corporatised agencies, and agencies belonging to the Federal and State Governments come under the purview of the Housing Development (Control and Licensing) Act 1966 (Act 118)?

Answer

Under Section 2, co-operatives, corporatised agencies, and federal and state agencies are no longer exempted from the provisions of the said act. This includes the application of licences, permits and sales advertisements, deposit payment rules and enforcement.

Question 12

Does the 憇ervice apartment

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Question 16


What are the changes made to the Housing Development Account to prevent the developer from abusing the money kept in the account?

Answer

The recent changes made are as follow:-
1.) Financial institutions must issue cheques for claims by housing developers in the name of the housing developer抯 account. This means the name of the bank and the account will be stated on the cheque. This is to ensure all payments received are deposited into the Housing Development Account and not any other account.
2.) For buyers paying cash, the developer must issue a letter stating that the amount paid has been deposited into the Housing Development Account.

Question 17

What is the auditor抯 role in auditing the Housing Development Account?

Answer

Every licensed housing developer must make a yearly report to the Controller regarding the Housing Development Account and must state in the report whether in his opinion:-

1.) Each and every deposit and withdrawal recorded is in accordance with the regulations stipulated;
2.) Accounting record is properly kept; and
3.) If an auditor requests for information or explanation from the officers or agents of the developer, satisfactory answer must be given.

The licensed housing developer auditor must, if there is any misuse of money in the Housing Development Account, report the matter to the Controller enclosing a detailed statement of account and the relevant document. The auditor is bound to produce any information and document if requested by the Controller
Question 18

A developer gives the excuse that the Housing Development Account does not allow the withdrawal of money from the account for the purpose of paying late delivery charges (LAD). How can this be overcome?

Answer

To solve this problem the new regulation provides the follows:-

Withdrawal can be made:-

By the minister exercising his powers
For payment for late delivery charges
For remedial work

Question 19

According the present law, developers can withdraw the surplus money from the Housing Development Account after the submission of the application for a certificate of fitness of occupation (CFO) and handing over vacant possession.

Answer

The withdrawal of the surplus money can be made only after obtaining a written approval from the Controller of Housing

Question 20

What are the compoundable offences?

Answer

a) Offences under Act 118 which are compoundable:-

Fails to make known any change of information in the licensing, advertisement and sales permit;
Fails to display the housing development抯 licence;
Fails to display the advertisement and sales permit;
Fails to display the list of company directors;
Fails to display the last audited balance sheet;
Fails to appoint an auditor;
Fails to gazette the last audited balance sheet;
Fails to submit the six monthly progress report (7F);
Fails to inform the Controller of Housing of the handing over of vacant possession;
Fails to inform the Controller of Housing of the refusal of the local authority to accept documents regarding the certificate of fitness for occupation;
Fails to inform the Controller of Housing of the issue of separated strata titles or strata titles;
Fails to abide by the conditions imposed on the licence given under Section 5 of Act 118.
b) Offences under the Housing Development (Control and Licensing) Regulation which are compoundable:-

i) The information found in the advertisement and sales permit is different from what was approved by the Controller of Housing.

ii) The developer did not include the information in the advertisement as stipulated by Regulation 6 (1) in the Housing Development (Licensing and Control) Regulation 1989 such as:-

Housing developer抯 licence number and expiry date;
Advertisement and sales permit number;
Name and address of the licensed housing developer and authorised agents, if any, as approved by the Controller of Housing;
Tenures and encumbrances (if any);
Building description of the proposed housing accommodation;
Name of the housing development, if available;
The expected date of completion of the proposed housing development;
The selling price of each type of housing accommodation;
The number of units of each type of housing accommodation; and
The name of the appropriate authority approving the building plans and the reference number.
iii) No written approval was obtained from the Controller of Housing for the use of names or signs for any construction site that is part of the licensed housing development [Regulation 7(1) Housing Development (Control and Licensing) Regulation 1989].

c) Offences under the Housing Development (Housing Account) Regulation 1991 which are compounded are:-

i) Failure to inform the Controller of Housing of the establishment of a Housing Development Account after 14 days of the granting of the housing development licence;
ii) Failure to issue a receipt to the buyer stating that the money has been deposited into the Housing Development Account after two working days of receiving a cash payment;
iii) Failure to submit a copy of the demand notice for the Housing Development Account to the Controller of Housing;
i.) Failure of the auditor to prepare the annual report in relation to the Housing Development Account to the Controller of Housing.



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