Malaysian Property

HBA Calls for Stricter Vetting

2009-09-17T19:27:00.001-07:00

HBA Calls for Stricter Vetting
By: Ivy Chang

The Ministry of Housing and Local Government has started vetting developers’ marketing brochures and advertisements strictly. From July this year, they have been prohibited from advertising free legal fees and other freebies.

Meanwhile, National House Buyers Association (HBA) honorary secretary-general Chang Kim Loong revealed that more restrictions on property ads are in the pipeline.

According to him, HBA has proposed additional regulations to govern such ads under Regulation 8 but that was not included in the amendments to the Housing Development (Control and Licensing) Regulations 1989 which came into effect from Dec 1, 2007.

Although not codified in law, the ministry’s licensing department is already using some of HBA’s recommendations administratively when approving developers’ ads and marketing brochures, such as that on free legal fees and other freebies.

Among the prohibitions that may be enforced in the future: Projected monetary returns that cannot be guaranteed or are doubtful in nature (such as projected rental returns); claims of panaromic views unless substantiated; claims that a project is situated at or close to popular or upmarket locations unless proved (also, distance of housing schemes to popular places must be in travelling distance and not map distance); and misleading price tags.

Additionally, Chang disclosed developers are not allowed to use the phrase “10:90 or “5:95 concept” unless the ad clearly states that it is a loan scheme.

“Otherwise, it may give the wrong impression that the development is a 10:90 Build-Then-Sell project,” he explained.

Source: New Straits Times, September 11, 2009
Why Blog? The Purpose of Blogging

Regulate Ads To Protect Buyer

2009-09-17T18:48:00.001-07:00

Regulate Ads To Protect Buyer
By Ivy Chang

Flip through newspaper or magazine and you’ll be bombarded by advertisements – picture perfect, too-good-to-be-true products. The advertiser aims to entice, and to do so, advertisements have to attract as many readers’ attention as possible.

Developers employ a number of gimmicks. As a property’s location is valuable when it come to buying, they almost always cash in on this. For example, one advertisement stated that the condominium is located at the high-end Duta area when it’s actually at not-so-up-market Segambut.

Another trick use by both the relatively unknown and the big boys is the claim that the up-and-coming development is “just five minutes from town or city centre”. Sure, if there’s no traffic congestion and you’re Michael Schumacher zooming down the highway.

Yet another gimmick is to state that the property is being developed by some well known developer when in fact it’s one of its subsidiaries. House buyers only discover this isn’t the case when they sign the Sale and Purchase Agreement (SPA).

Recently some investors sued the developer of the Trump Tower Waikiki condo project in Hawaii, the United States, claiming that they were misled into thinking that property mogul Donald Trump was a co-developer when he was merely a licensor who could withdraw the use of his name in the event he terminates his association with the development. The investors are claiming they were misrepresented and are asking for a full refund.

In another case, the Supreme Court of New South Wales, Australia, held that buyers of an off-the-plan property were entitled to rescind their contract and have their deposit refunded because the developer’s realtor had engaged in misleading and deceptive conduct. The inexperienced buyers had relied on baseless representations in advertisements that the value of the said properties would double in five years.

However, in a case from Canberra where the advertisement detailed anticipated supply and demand for Canberra’s Australian Capital Territory hotel/motel accommodation, financial projections, guaranteed leasing and management arrangements, cash flows, expected pre-tax profits, investment returns and likely capital gains, the Supreme Court held that the statement was a “mere puff” and therefore, didn’t constitute misleading or deceptive conduct. This case involved the former Canberra International Hotel.

Here are some real-life gimmick provided by the National House Buyers Association (HBA): Guaranteed five-year return on investment (provided you furnish the unit with not less than RM30,000 on furniture and fittings); only RM98,888 upwards for a three-room condo (this minimum price shown was that of the studio unit as the three-room unit was pegged around RM22X,XXX); and condo living in the city (this refers to three blocks apartments consisting of 600 units with a swimming pool half the size of an Olympics-size pool and two squash courts).

According to HBA honorary-secretary general Chang Kim Loong, such gimmicks usually come with several fine prints at the bottom which, sadly, the house buyers do not read.

“The gimmicks highlighted in the promotion advertisements are attractive and catch the eye of potential buyers. The result is booming sales for the developers at the expense of the homebuyers.”

Chang advised that under the Housing Development (Control and Licensing) Regulations 1989, developers are required to give accurate information and true particulars in the advertisement of their housing schemes. He warned that those in violation of the terms and conditions of their approved permit can be prosecuted for their false advertising and misrepresentation.

“On conviction, the offending developer is liable to be fined not exceeding RM20,000 or jailed not exceeding five years or both,” Chang said.

C.K. Ling, a former legal manager with a developer, said buyers can take legal action against developers for such misleading or false advertisement but winning may not be on the cards.’

“Usually, most buyers make a lot of noise which ultimate comes to nought. Suing costs money and most people can’t afford to take on wealthy developers who can drag the case on for years.”

According to her, the buyer has to show that the advertisement was an offer as opposed to a mere puff or invitation to treat and that a binding obligation was created when the developer made an offer which the buyer accepted unconditionally.

What’s more important is the SPA between the developer and buyer. If these misrepresentations are stated in the agreement, then that’s a different matter.

“The representations must be material. You can’t go to court claiming for damages if the brochure depicts a property painted in pink and you get a blue house instead.

“In the majority of cases involved Sell-Then-Build properties, what you see in the brochures, advertisements or scale models won’t be what you get once you obtain the keys of the property. Buyers should expect that the properties will not look exactly the same as portrayed in glossy pictures,” Ling said.

Another example: One owner complained that when he bought his house, the advertisement showed a lake and that he bought it because of the water feature. A few years down the road, the developer filled it up. He and a few other disgruntled owners have been advised that they are unlikely to win in the event they drag the developer to court.

HBA feels the only way to protect housebuyers is for the authorities to regulate advertisement contents and to prosecute offenders when they breach them.

Source: Property, New Straits Times, September 11, 2009
Proven Ways to Make Money on the Internet

Selling of Property

2009-09-15T23:10:00.001-07:00

Selling of Property
By: Bhag Singh

When a landed property carries the joint namesof husband and wife, there is no unilateral right on the husband's part to sell it without his wife's concent.

It is often the case that a property is purchased in the joint names of the husband and wife. The reasons for this are varied. In some cases, the husband and wife contribute equally to the purchase.

However, there are instances where there is no direct monetary contribution by the wife. Yet for different reasons, the name of the wife is included as co-owner of the property. This is not do deny contribution by the wife in a broad sense.

In many such cases, there is a tendency by the husband to think that he is the de facto owner of the property. And with this mindset, he may enter into an agreement to sell the property with both parties assuming that the wife’s signing of the agreement, if any, will be but a mere formality.

However, when the time comes for the document to be signed, the wife may refuse to do so. The refusal is on the basis that being co-owner of the property, she does not agree to the sale.

Should this happen, the question that arises is whether the wife can be compelled to sell her share. And if as a result of her refusal, the transaction cannot be completed, what are the remedies available to the buyer?

Wife’s rights

With regard to the rights of the wife to refuse to sign any document to part with her share, little need to be said. If she is the registered owner of the property, it is she who must agree and not anyone else.

It would be different if she had authorized her husband, in which case he would have been acting as her agent. However, in the absence of cogent evidence, it cannot be assumed that the husband is authorized to sell her part of the property just because he is her husband.

The fact that the wife did not contribute even a sen to the purchase of the property is irrelevant. Even if she did not contribute in looking after the home and family directly, it also would not matter. The property is hers in law.

The position could be different if the wife were not the beneficial owner. This can come about by reason of her holding the property in trust. In such case, it would belong to the beneficiary of the trust who would be the owner. Different considerations would apply.

The buyer

Where does this leave the buyer? He may have paid the deposit and be looking forward to ownership of the property. The transaction is stalled and there is refusal on the part of the wife, leading to the transaction becoming abortive.

Of course, the buyer could file an action for specific performance of the contract. However, the likelihood of the court allowing specific performance of the entire contract where the wife is half owner would appear at the best of times to be unlikely.

It may be asked whether it would be an option for the husband to offer at least to go ahead and transfer his half share of the property to the buyer. This would no doubt show an element of bona fide in the matter where it is inability rather than unwillingness on his part.

Such an approach would have its limitations.

It could work where the subject matter is a big piece of land of which parts could be separately used and at the appropriate time capable of being partitioned.

However, it would be impracticable if it were a family residence. The buyer may have wanted to have the property as a whole and dividing the property into two parts may not necessarily mean that the market value of each part is the same.

In the absence of such willingness, the buyer would be left without the property he has agreed to buy. His remedy will be in monetary compensation. The question that rises is: to what extent is the buyer entitled to damages for the property he is unable to acquire?

Measure of damages

He would no doubt be entitled to a refund of any deposit paid.

However, the damages may not stop there. An example is the Court of Appeal case of Malhotra v Choudhury. The plaintiff and defendant, partners in a medical practice, agreed that the defendant buy the property on which the medical practice was carried on.

It was also agreed that if for any reason the partnership was terminated, the plaintiff would have the option to buy back the property at a certain price that was capable of being fixed in the absence of the agreement.

In the course of the conveyance, however, the transfer was to the defendant and his wife.

At the point of time, no significance was seen. However, when differences led to termination of the partnership, the exercise of the option was challenged.

The court held that the defendant was in breach of his contractual undertaking, and not only was he liable to refund the deposit but also to pay damages on the basis of loss of income from the practice which could have been carried on.

A question that arose was whether the defendant ought to be made liable, when in fact he had sincerely wanted to allow the option to be exercised but for his wife’s refusal.

This could be in mitigation of damages though not relevant to the question of liability.

However, in this case, the court referred to the evidence available which showed that it was not the inability but the unwillingness on the part of the defendant to hanour his obligation.

Source: Articles of Law, StarTwo, September 8, 2009

Guide To Bid in Property Auction

2009-08-17T21:01:00.001-07:00

Guide To Bid

1. Who May Bid

i. Intending Purchaser who possess a Bank Draft/Banker’s Cheque be equal to 10% and for bumi lots equal to 5% of the Reserve Price is qualified to become a bidder.

ii. Qualified bidder may delegate another to act as an agent or representative in his behalf. The delegate is required to submit a Letter of Authority and NRIC card photocopy of the intending purchaser.

2. What to Produce at The Auction

i. Bring along the NRIC card to qualify to bid and present it for identification and registration.

ii. Important to submit Bank Draft/Banker’s Cheque amounting 5% of the Reserve Price.

iii. Do bring extra fund as Additional Deposit to subsidize if there is increment on the Reserve Price.

iv. Specify your details required in the Bidder’s Registration Form.

3. What to Note at The Auction

i. Always check the specific amount requested and the Bank Draft/Banker’s Cheque are correctly payable.

ii. Unprepared and unattentiveness during call bids will make you lose a probable opportunity.

iii. Certainly do not bring personal or company cheque as Auction deposits.

iv. To be present earlier to avoid disappointment.

v. It is important to listen to the Auction proceeding very carefully to avoid unawareness.

vi. Observe the details provided are correct in the Contract of Sale before endorsement.

vii. Necessary to switch off or vibrate all your cell phones to avoid interruption during auction.

4. Necessary Documents for Bidding

For an individual bidder:-

• A photocopy of his / her NRIC card (both sides)
• Correspondence address
• Telephone contact no

For a Corporation:-

• A certified true copy of the Company’s Memorandum and Articles of Association.
• Form 24 and 49
• Board of Directors’ Resolution

For Agent / Representative :-

• Letter of Authority from the Intending Purchaser
• A photocopy of the NRIC card (both sides)

5. Homework To Do Before Attendance at Auction

i. Obtain the Proclamation, Conditions and Term of Sale from the Auctioneer.

ii. Make necessary enquiries and confirm essential documents to furnish for participation.

iii. Final check out with the relevant Auctioneer before turning up for auction.

Source: 1klassifieds, New Straits Times, July 31, 2008

How to Buy A Property At an Auction

2009-08-10T17:20:00.000-07:00

How to Buy A Property At an Auction

Step 1
Research the property. Get the its size, amenities, how much is owned against it, and what is the opening bid.

Step 2
Compare the sales prices of similar properties in the area so you have a good idea of what the property is worth. Compare sales of properties with same number of bedrooms, bathrooms, and square footage.

Step 3
Get financing. Typically, homes at auction require a 5-10 percent deposit for an accepted bid, and the remainder must be in place within a specified period of time.

Step 4
Know your price limit. Auctions work on creating an atmosphere of agitation and excitedness. Don't get swept up in the moment. Know how much you are willing to spend and stick to it.

Step 5
Be prepared to walk away. Don't feel as if you have to buy something. If the deal isn't right for you, it's not a deal.

Source: 1Klassifieds, New Straits Times, May 8, 2009
Related Blog: Interior Design Blog

Tips on How to Prepare for An Auction

2009-06-16T17:14:00.000-07:00

Prospective bidders are advised to adhere to the following guidelines prior to bidding at the auction sale.

** Read and fully understand all the Terms and Conditions of Sale.

** Conduct an official search on the parent tittle at the Land Office and/or other relevant authorities.

** Inspect the property

** Verify pertinent particulars of the documents.

** Verify the postal address of property with the relevant authorities and /or the developer.

** Seek legal advice on the Terms and Conditions of the sales.

** Make necessary enquiries with the relevant authorities and/or the developer on the Terms and Conditions to the sale, prior to the bidding at the auction sale.

Source: 1Klassifieds, New Straits Times, Wednesday, June 17, 2009.
Related Blog: Interior Design Blog

Better Protection for House Buyers

2007-10-05T15:58:00.000-07:00

Better Protection for House Buyers
By: Yeoh su Hui

Prior to Dec 1, 2002, the definition of “housing developer” under the Housing Development (Control and Licensing) Act, 1966 (Act 118) did not include the words “firm or society (by whatever name described)”.

Further Section 2(1) provided that the Act did not apply to any society registered or incorporated under any written law relating to cooperative societies and any body or agency established and incorporated by statute and under the control of the Federal Government or the Government of any State.

As a result, housing developers who are societies, cooperatives and state and statutory corporations, such as Perbadanan Kemajuan Negeri Selangor (“PKNS”), Perbadanan Kemajuan Negeri Melaka (“PKNM”), Penang Development Corporation (“PDC”), Koperasi Tunas Muda (“KTM”)(collectively called “the exempted developers”) did not have to comply with the provisions of Act 118, notwithstanding that these non-licensed developers were undertaking huge housing projects.

These exempted developers were not required to apply for a housing developer’s license or an advertisement and sales permit when undertaking a housing development project. The contract of sale for the sale and purchase of the housing accommodation entered into between the purchasers and these exempted developers did not have to comply with the form prescribed in Schedule G or Schedule H of the Housing Development (Control and Licensing) Regulations 1989 (“the Regulations”).

Housing developers who required to be licensed under Act 118 will have to complete a particular stage of construction of the housing accommodation before they can claim any monies or progress payments. Further, the defect liability period prescribed under the Regulations is 18 months after date the purchaser takes vacant possession of the housing accommodation. A licensed housing developer is required to complete and deliver vacant possession of the housing accommodation within 24 months (landed properties), or 36 months (apartments or condominiums), as the case may be.

These exempted developers need not follow the schedule of payments prescribed under the Regulations. Some of them were collecting progress payments upon commencement of construction of a particular stage of work of the property instead of upon completion of the same. Instead of the 18 months’ defect liability period, some of these exempted developers gave their purchasers only a 12 months’ defect liability period.

Further, when these exempted developers do not complete the housing accommodation within the 24 months or 36 months prescribed by the Regulation, they do not contravene any statutory provisions as they are not governed by Act 118. Purchasers who bought housing accommodation form these exempted developers did not have benefit of the statutory protection granted under Act 118 and the Regulations. Any relief or remedy sought by the purchasers against these exempted developers will have to be based on the terms and conditions of the actual contract sale.

Many purchasers felt short-changed as the law did not provide any protection for them in the event they were to purchase housing accommodation which are developed by these exempted developers.

Situation After Dec 1, 2002

The Housing and Local Government Ministry and various non-governmental organizations, such as the Consumer Association of Penang (“CAP”) were very concerned that exempted developers were not governed by Act 118.

On Dec 1, 2002, Act 118 was amended by deleting Section 2. The definition of “housing developer” was also amended to read as “any person, body of persons, company, firm or society (by whatever name described), who engages in or carries on or undertakes or causes to be undertaken a housing development.”

This meant that after Dec 1, 2002, the exempted developers described above come within the purview of Act 118 and the Regulations. Any society, co-operative or state or statutory corporation who undertakes a housing development will now have to apply for the requisite developer’s license and the requisite advertisement and sales permit, prior to the launching of the units of housing accommodation for sale to the public.

The contract of sale entered into between the society, cooperative or state or statutory corporation and the purchasers are required to be in the form prescribed in Schedule G or Schedule H of the Regulations.

Amendment to Act 118 in 2007

There have been concerns expressed by certain purchase as to whether transaction with these societies, co-operatives, state or statutory corporations are governed by the recent amendments to Act 118 which came into force on 12th April 2007.

A new Section 22D of Act 118, stipulates that the consent of the housing developer is not required for an absolute assignment of the proprietary right or interest in a housing accommodation, provided that a proper notice of the assignment has been given to the housing developer in accordance with the provisions contained in Section 22D.

Section 22D applies to any housing accommodation where separate or strata title for the housing accommodation has not been issued by the appropriate authority and it is clear that this new Section 22D will apply to any such transactions with these societies, co-operatives, state or statutory corporations.

Conclusion

With the inclusion of societies, co-operatives, state or statutory corporations in the definition of “housing developer”, there is now better protection for purchasers who purchase properties developed by these developers, and purchasers no longer have to worry about the terms and conditions contained in the contract of sale as it would have to be in the form prescribed in Schedule G or Schedule H of the Regulations.

The writer is a member of the Conveyancing Practice Committee, Bar Council, Malaysia www.malaysiabar.org.my

Note: This column is brought to you by the Malaysian Bar Council for your information only. It does not constitute legal advice. You should therefore seek professional legal advice for your specific needs. Neither the Malaysian Bar nor Sun Media Corporation Sdn Bhd shall be liable to any reader who suffer losses as a result of relying on this column.

Source: TheSun, Friday, October 5, 2007
Related Blog: Interior Design Blog
OBOads.com - Advertise your Products for FREE

Understanding the New CCC

2007-09-25T15:43:00.000-07:00

Understanding the New CCC (Certificate of Completion and Compliance
By: Y P Cheong
propertyplus@thesundaily.com

CCC stands for the certificate of completion and compliance and is a new term introduced by the Street, Drainage and Building (Amendment) Act 2007 (Amendment Act), which came into force on April 12, 2007. The CCC is meant to replace the certificate of fitness for occupation (CFO).

Under the former system, the CFO was issued by the local authority (LA) under the Uniform By-Laws of the Street, Drainage and Building Act 1974 (Act 133).

The former system was overly cumbersome, time-consuming and subject to abuse. It was not unusual for inordinate delays to occur due to many factors including: non-compliance by the developer for the submission of Form E and its enclosure to the LA, additional conditions imposed by the LA at the time of application of CFO, the involvement of many technical agencies and the lack of technical officers to process the CFO.

Purchasers of properties encounter numerous problems whenever vacant possession is delivered to them by developers and the purchasers could not occupy or renovated their properties because the CFO was not issued.

New System of CCC

The new CCC, based on self regulation, is issued by the private sector. The responsibility is transferred from the LA’s to professionals (architects, engineers and building draftsman) of the project. It seeks to provide better protection for house buyers, cut red tape or bureaucracy in local government and create a more efficient public delivery system. The CCC applies to new projects while those currently under construction will still be issued with CFOs.

Principal Submitting Person

The CCC will be issued by a principal submitting person (PSP), which is a radical chance indeed. The PSP is a professional architect, engineer or building draftsman who submits building plans to the LA for approval. He must be registered under the relevant law relating to registration thereof, e.g Architects Act 1967 or Registration of Engineers Act 1967 (Revised 1974).

The PSP’s responsibilities include submitting building plans for approval by the LA, supervising the erection and completion of the building in conformity with the approved plans and the requirements of the provisions of Acts or by-laws, ensuring all technical conditions imposed by the LA have been duly complied with and ensuring that the building is safe and fit for occupation.

Six Essential Services for Issuance of CCC

There are six essential services for the issuance of CCC:

>>Confirmation of electrical supply (TNB)
>>Confirmation of water supply (water authorities)
>>Confirmation of connection to sewerage treatment plant or mains (JPP)
>>Clearance form lifts and machinery department, if applicable (JKKP)
>>Clearance for active fire fighting systems except for residential building not more than 18m high (Bomba)
>>Roads & Drainage

Rectification by LA

The LA may inspect the building site at any time on its own initiative or due to complaints. In the event of failure to comply with the approved plans, the Act or by-laws in the erection and construction of the building, the LA may issue to the PSP:

(a) A written notice requiring compliance within a period specified in the notice, as the Local Authority thinks fit, in order that the non-compliance be rectified; and

(b) A directive in writing to withhold the issuance of CCC until such non-compliance has been rectified.

The LA may itself cause any work to be executed or any measure to be taken if it considers such work or measure is necessary to rectify the non-compliance of its directive and the costs shall be borne by the owner of the building. The costs shall not be subject to any appeal or review in any court.

The LA is also responsible for approving permission of planning application and building plans: pressing charges against the PSP and professionals and reporting to the relevant professional board; inspection of old buildings and continuing to issue CFO’s for projects approved before the CCC’s date of enforcement.

Offences Under The New System

The Amendment Act has introduced the following new offences and penalties:

>>Not a PSP but issues a CCC;
>>Issues CCC without forms (relevant forms under by laws);
>>Issues CCC despite direction to withhold – in contravention to direction of LA to withhold issuance;
>>False/fraudulent declaration:
Knowingly makes/producers/causes to be made any false or fraudulent declaration, certificate, application or any form under by-laws knowing it/they have been forged, altered or counterfeited;
>>Use knowingly: Uses the above form knowing it/they have been forged, altered or counterfeited:
>>Occupation without CCC; Occupies or permits to be occupied any building or part thereof without a CCC (This has a wide-ranging effect as it can cover purchasers, tenants, occupiers, owners, trustees, etc):
>>Liable on conviction to fine not more than RM250,000 or imprisonment not more than 10 years or both: and
>>Increased general penalty; The penalty for the offence of not abiding by the orders of the LA is increased and includes imprisonment for term not exceeding three years and a fine of up to RM10,000

Offences by Architects

False and negligent certification of the CCC by an architects is an offence under the Architect (Amendment) Act 2007 and is grounds for disciplinary action. An enhanced penalty may be imposed by the Disciplinary Committee. The fine is increased form RM10,000 to RM50,000 and the period of suspension of registration is increased form one, to two years.

Offences by Engineers
The Registration of Engineers (Amendment) Act 2007 established a disciplinary committee that is empowered to conduct a hearing of any misconduct or complaint made against any registered Engineer referred to it by an Investigating Committee. In the case of false or negligent certification of the CCC, the fine is increased to RM50,000 and the period of suspension is increased to two years.

Offences Under the Housing Development (Control and Licensing) Act 1966

In a related matter, section 22F(1) of the 1966 Act provides that any architect or engineer, as the case may be, who issues a progress certification knowing that the works therein referred to have not been completed in accordance with the provisions of the sale and purchase agreement shall be guilty of an offence and shall, on conviction, be liable to fine which shall not be less that RM 10,000 but which shall not exceed RM 100,000 or to improvement for a term not exceeding five years or to both.

Sub-section 22F(2) also provides that any person who knowingly and willfully aids, abets, counsels, procures or commands the commission of an offence under subsection 22F(1) shall be liable to the punishment provided for the offence.

Saving Provisions

The former system of issuance of CFO continue to apply where:

>>Work of erection has not commenced within 12 months from date on which plans and specifications of building were approved; if work commenced on or after April 12, 2007 (Commencement Date), (without prejudice to any penalty):
>>Work of erection commenced immediately before commencement date;
>>Work suspended immediately before coming into operation of Act and is to resume on after Commencement Date; and
>>Erection of building without approval of plans and specifications by the LA under the Act immediately before Commencement Date provided that an application for approval is made to the LA on or after Commencement Date and the application is approved.

The writer is a member of the Conveyancing Practice Committee, Bar Council, Malaysia www.malaysianbar.org.my

Note: This column is brought to you by the Malaysian bar Council for your information only. It does not constitute legal advice. You should therefore seek professional legal advice for your specific needs. Neither the Malaysian Bar nor the Sun Media Corp Sdn Bhd shall be liable to any reader who suffers losses as a result of relying on this column.

Source: TheSun, September 1, Friday, 2007
Related Blog: Interior Design Blog