Clauses in the SPA That Homebuyers Need to Be Aware Of in Malaysia

BY MESSRS LUI BHULLAR

Clauses in the SPA That Homebuyers Need to Be Aware Of in Malaysia

Buying a home is one of the most important financial decisions a person can make. To protect homebuyers, the Malaysian government has standardised the Sale and Purchase Agreement (SPA) under the Housing Development (Control and Licensing) Act 1966 (HDA 1966) and Housing Development Regulations 1989 (HDR 1989). Yet, many homebuyers unknowingly overlook critical clauses in the SPA that significantly affect their rights and obligations.

This article highlights the key SPA clauses every Malaysian homebuyer must understand and explains how a qualified home buyer lawyer or HDA lawyer in Malaysia can protect your interests.

🏠 Difference Between an HDA-Governed SPA and a Non-HDA SPA

In Malaysia, not all Sale and Purchase Agreements (SPA) are created equal. Whether your SPA is governed by the Housing Development Act 1966 (HDA) or falls outside its scope determines your rights, protections, and legal remedies as a homebuyer.

Here’s what every property purchaser must know:

✅ HDA-Governed SPA

This applies to:

• Residential properties sold by licensed housing developers before completion (under construction).

• Covered by Schedule G or Schedule H under the Housing Development (Control and Licensing) Regulations 1989 (HDR 1989).

Key Protections:

• Fixed format SPA mandated by law

• Liquidated Ascertained Damages (LAD) for late delivery

• Defect liability period (24 months)

• Mandatory issuance of CCC

• Disputes can be brought to the Housing Tribunal Malaysia

✅ You are entitled to stronger protections, and your rights are enforceable with the help of an experienced HDA lawyer in Malaysia.

❌ Non-HDA SPA

This applies to:

• Subsale properties (buying from another individual or investor)

• Commercial properties (e.g., shoplots, SOHO, SOVO, SOFO)

• Completed residential units not sold by licensed developers

Risks and Limitations:

• Terms are negotiable and may heavily favour the seller

• No guaranteed LAD or defect liability

• No access to Housing Tribunal

• You must rely on general contract law or civil litigation

✅ Buyers are advised to have a real estate lawyer Malaysia draft or review the SPA to avoid unfair clauses.

Pro Tip: If you are unsure whether your property qualifies for HDA protection, consult a home buyer lawyer or SPA dispute lawyer Malaysia early in the transaction to assess your legal position.

📃 What Is a Standard SPA Under the HDA?

The SPA for residential properties developed by licensed housing developers must follow either Schedule G (landed property) or Schedule H (strata property) formats under the HDR 1989. These standardised agreements aim to balance the interests of both developers and purchasers.

🔍 Key Clauses Homebuyers Must Be Aware Of

1. 🕒 Clause on Delivery of Vacant Possession and LAD

Under the SPA:

• Landed properties must be delivered within 24 months.

• Strata-titled properties must be delivered within 36 months.

If the developer fails to deliver on time, Clause 22 entitles the buyer to Liquidated Ascertained Damages (LAD)—typically 10% per annum of the purchase price, calculated daily.

Common Issues:

• Developers failing to inform buyers of the handover

• Disputes over when the delivery period starts

✅ You may need a lawyer for late delivery house cases or to initiate a claim LAD under HDA.

2. 🛠️ Clause 30 – Defect Liability Period

This clause holds the developer responsible for:

• Repairing defects, shrinkages, or faults in the building within 24 months from the date of vacant possession.

• Responding to written complaints within 30 days.

• Reimbursing buyers if they hire a third party to fix defects after non-compliance.

Common Defects:

• Water leakage

• Cracked tiles

• Poor paint finish

• Uneven floors

✅ A property lawyer Malaysia can help enforce your rights under this clause.

3. ❌ Clause on Misrepresentation

Though not always explicitly stated in the SPA, Malaysian contract law (including Section 18 of the Contracts Act 1950) protects buyers against false representations made by developers or their agents.

This covers:

• Inaccurate brochures

• Verbal promises about facilities

• Misleading completion timelines or unit sizes

✅ Speak to an HDA litigation lawyer if you suspect misrepresentation by the housing developer.

4. 🛡️ Clause on Certificate of Completion and Compliance (CCC)

The SPA stipulates that the developer must deliver vacant possession together with a valid CCC. This certificate indicates that the house is safe and habitable.

If the property is handed over without CCC or before completion of essential safety features, this may be a serious breach.

✅ Engage a housing dispute lawyer Malaysia to take legal action against unsafe property delivery.

5. 📑 Clause on Schedule of Payment

The SPA outlines a progressive payment schedule tied to construction milestones. These payments must align with the stages certified by the architect or engineer.

Issues arise when:

• Developers request payment ahead of the construction stage

• Buyers overpay due to vague invoicing

✅ A real estate lawyer Malaysia can review and ensure the developer follows the proper payment structure.

🧾 Additional Important Clauses

• Clause on Common Property (for strata): Clarifies what parts of the development are shared.

• Clause on Maintenance Charges: Sets the initial rate and payment schedule.

• Clause on Termination: Conditions under which the agreement can be rescinded.

🏛️ Where to Enforce Your Rights

Homebuyers may file claims:

• With the Housing Tribunal Malaysia (TTPR) – for claims under RM50,000

• Through civil litigation – for complex or high-value disputes

✅ Our Housing Tribunal Malaysia lawyers offer expert representation across all states.

📍 Service Locations

We assist homebuyers throughout Malaysia:

• Property lawyer Kuala Lumpur

• Housing dispute lawyer Selangor

• HDA lawyer Johor Bahru

• LAD claim lawyer Penang

• Nationwide consultations are available online

✅ Why You Need a Home Buyer Lawyer

Hiring a qualified lawyer ensures:

• Your SPA is reviewed for hidden risks

• You understand your legal rights and responsibilities

• You're protected from unscrupulous practices by developers

Our team of HDA lawyers in Malaysia and homebuyer legal consultants are ready to assist with LAD claims, SPA disputes, defect liability, misrepresentation, and more.

📞 Speak to a Lawyer Today

Facing issues with your Sale and Purchase Agreement? Don't wait until your rights are lost due to time limits or inaction.

👉 Contact us today for a free legal consultation on your SPA, LAD claim, or defect dispute.

📞 Contact Messrs Lui & Bhullar today for a Free consultation.

• 📧 Email: general@luibhullar.com

• 📞 WhatsApp: +60143000970 / +60143000960