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IMPORTANT DIFFERENCES OF HDA AND NON-HDA PROPERTIES

By:

Bryan Lui (Co-Managing Partner) [bryanlui@luibhullar.com]

Harneshpal Karamjit Singh (Co-Managing Partner) [harnesh@luibhullar.com]

Chandni Anantha Krishnan (Partner) [chandni@luibhullar.com]



INTRODUCTION

Purchasers are commonly confused and would usually perceive that HDA and non-HDA properties are one of the same, but in fact they are hugely different.


In Malaysia, residential properties are sold under two types of contracts. The first is the prescribed form Schedules G, H, I, and J Sale and Purchase Agreement (“Scheduled Contracts”) under the Housing Development (Control and Licensing) Regulations 1989 (“HDR”) and Housing Development (Control & Licensing) Act 1966 (“HDA”). The second is the standard commercial contract.


The Federal Court in the popular case of Ang Ming Lee & Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor and other appeals [2020] 1 CLJ 162 (“Ang Ming Lee”) held that the HDA is a social legislation designed to protect homebuyers and, that the interests of the purchasers shall be the paramount consideration against the developer.


In Ang Ming Lee, the Federal Court ruled that the Housing Controller has no power to waive or modify any provision of the Scheduled Contracts and Regulation 11(3) of the HDR that conferred power to the Housing Controller was ultra vires the HDA.


Therefore, there can be no tampering with the fixed 24-month and 36-month delivery of Vacant Possession (“VP”) of parcel and common facilities for the Scheduled Contracts.


However, such protection is not afforded to a standard commercial contract. Developers can willy-nilly choose any period for delivery of VP.

CERTIFICATE OF COMPLETION AND COMPLIANCE (“CCC”) (“BORANG F”) AND PARTIAL CERTIFICATE OF COMPLETION AND COMPLIANCE (“CPC”) (“BORANG F1”)

CPC / BORANG F1

It has been long believed that CPC / Borang F1 was created to assist Developers to deliver sectional completion of a housing project i.e. delivery of VP for Blocks A and B followed by delivery of VP for Blocks C and D and so on. CPC / Borang F1 is a common feature in standard commercial contracts.


The Federal Court in the recent decision of PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor [2021] 1 LNS 9 (“PJD Regency”) rightly distinguished the CCC and CPC as follows:


“…the CCC is a legal requirement imposed by law which in turn is only issued upon the developer complying with all regulatory laws such as the Street, Drainage and Building Act 1974. This in our view, affords protection to purchasers who would be assured that the relevant authorities have approved the construction. The same cannot be said in respect of the CPC or any other such document not amounting to a CCC.


…the certifications are for different purposes. The Certificate of Practical Completion was issued by the Developer's architect to the Developer's main contractor to show proof that work undertaken by the main contractor in the building contract entered between the main contractor and the Developer, has been completed to the satisfaction of the Developer's architect. On the other hand, the CCC was issued to certify that the Property, together with the common facilities, has been constructed and completed in conformity with the approved plans and requirements of the Street, Drainage and Building Act 1974 and its by-laws.”


CCC / BORANG F

However, CPC / Borang F1 has no place in the Scheduled Contracts. Section 3 of the HDA is clear and states as follows:


“certificate of completion and compliance means the certificate of completion and compliance given or granted under the Street, Drainage and Building Act 1974 and any by-laws made under that Act certifying that the housing accommodation has been completed and is safe and fit for occupation but does not include partial certificate of completion and compliance”.


This provision can also be found in Clause 1 of the Scheduled Contracts. Hence, the only recognizable Certificate under the Scheduled Contracts is the CCC.


It is obvious that the draftsmen and lawmakers were of the opinion that the CCC is indeed a legal requirement which could only be issued upon the compliance of the regulatory laws i.e. the Street, Drainage and Building Act 1974.


ISSUES WITH CPC / BORANG F1

The issuance of CPC / Borang F1 as the measure for delivery of VP in a standard commercial contract has caused a myriad of problems such as the the completeness of the project as a whole and the safety and fitness aspect of the project. Until a matter concerning validity of the CPC / Borang F1 vis-à-vis a standard commercial contract is considered and ruled by the apex court, such problems will continue to occur regularly.


CALCULATION OF LIQUIDATED ASCERTAINED DAMAGES (“LAD”) – HOW TO CALCULATE YOUR LAD ENTITLEMENT?

The Federal Court in PJD Regency has made it clear. The calculation for LAD begins from the date of payment of booking fees and not the Sale and Purchase Agreement.


Such calculation applies for both HDA and non-HDA properties.


An example:

If you have a prescribed form Schedule H Sale and Purchase Agreement dated 01.02.2017 but you paid booking fees on 01.01.2017. The calculation for LAD starts from 01.01.2017. Vacant Possession shall be delivered within 36 months thereof.


Time stops when you are delivered VP. However, if your Developer delivers VP without the CCC / Borang F then time stops when the CCC is issued and procured. We refer to Clause 27(1) of the prescribed form Schedule H Sale and Purchase Agreement which states as follows:


“The Developer shall let the Purchaser into possession of the said Parcel upon the issuance of a certificate of completion and compliance…”


Remember you are entitled to ten per centum (10%) per annum of the purchase price calculated from day to day for late delivery of the Parcel and ten per centum (10%) per annum of the last twenty per centum (20%) of the purchase price calculated from day to day for late delivery of the completed common facilities.


LAD CALCULATOR

To ease your calculations, check out Messrs Lui & Bhullar’s LAD Calculator at https://www.luibhullar.com/ladcalculator


The Partners of Messrs Lui & Bhullar have formulated a proprietary LAD Calculator which you can use for free.


We will not burden you with the mathematical formula of the said calculator, ALL YOU NEED TO DO is to key in the relevant information for it to work. The proprietary calculator calculates the LAD for both the unit and common area.


Should you have any inquiries, do reach out to our team via the contact form on our website or e-mail us at admin@luibhullar.com


Image by Free-Photos from Pixabay

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