Delivery of Vacant Possession in Sarawak

Whether the date of delivery of the vacant possession of the building in Sarawak shall be calculated from the date the booking fee was paid OR from the date the Sale and Purchase Agreement was signed?

The method of calculating the date of delivery of vacant possession in Sarawak is provided in the Form B of Housing Development (Control and Licensing) Regulations, 2014 (hereinafter referred to as ‘Regulations’). Pursuant to Clause 18(1) of Form B of the Regulations, the vendor shall deliver the vacant possession of the building to the purchaser within 24 months from the date the Sale and Purchase Agreement (‘SPA’) was signed. Thus, the date of the delivery of the vacant possession shall be calculated from the date of signing the SPA. However, such a method has been criticised for favouring the developer while putting the purchaser in a vulnerable state¹.

Usually, the booking fee will be paid much earlier than the signing of SPA. Thus, this will affect the buyer’s interest. Suppose the date of delivery vacant possession is calculated from the date of the booking fee being paid, the buyer will receive the vacant possession earlier as compared to the date of SPA being executed.

Not only that, this will also affect the amount of liquidated and ascertained damages (hereinafter referred to as ‘LAD’) payable by the developer to the buyer in cases of late delivery of vacant possession by the developer. Let’s say if the booking fee is paid on 01 April 2021, while the SPA is only signed 4 months after the booking fee is paid, there is a question arise on whether the 4 months shall be taken into account when calculating the LAD?

The term LAD is defined by Federal Court in Selva Kumar a/l Murugiah v Thiagarajah a/l Retnasamy as ‘the contracting parties’ supposedly genuine pre-estimate of the loss to the innocent contracting party when the contract is broken by other’.² For this topic, LAD is the estimated loss that is payable by the developer to the buyer when there is a delay in delivering the vacant possession of the building. As such, there is a question on whether the date of delivering vacant possession of the building should be calculated from the date of the payment of the booking fee or the date of the signing of the SPA.

Similar issue has been decided in a Federal Court’s case of PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor And Other Appeals.³ In which the court ruled in favour of the buyer and held that the calculation of LAD shall begin from the date of payment of booking fee and not from the date of the SPA literally. The decision was made in favour of the purchaser due to the fact that the developer has, at first instance, breached the regulation 11(2) of the Housing and Development Regulations 1989 by demanding and collecting booking fees from the buyer. Thus, the buyer shall not be bound by the plains word of the law as demanded by the developer.

Unfortunately, that is not the case in Sarawak as we follow strictly what is stated in the Regulations. As such, in Sarawak the date of delivery of vacant possession in Sarawak shall be calculated from the date of SPA was signed.

The procedures for handling vacant possession are as follows:-

1. The vacant possession will be handed over to the purchaser who has paid the instalments and sums payable to the vendor within 24 months of the signing of SPA.
2. The purchaser will receive a ‘Notice of Vacant Possession’ from the vendor.
3. The vendor will be liable to pay the purchaser liquidated damages calculated from day to day at the rate of three per centum per year of the purchase price from the expiry date of delivery of vacant possession.
4. In case of late delivery of vacant possession by the vendor, the purchaser can lodge complaints to Sarawak Housing Purchaser’s Claims Tribunal.
5. The claims may be filed with the tribunal online at https://homeapps.sarawak.gov.my. Take note that a fee of RM50 is charged for every filing.
6. Clause 22 of the SPA provides 18 months of Defect Liability Period. During this period, the purchaser can report any problems with their new property for the vendor to repair it.
7. Once the house is fit to move in, the purchaser will receive the Certificate of Completion and Compliance (CCC) which is to be released by the local council. CCC is an official agreement that the property is safe and habitable.⁴

¹Amend Sarawak Law to protect house buyers from exploitation, says MP … Free Malaysia Today. (2022, March 27). Retrieved May 12, 2022, from https://www.freemalaysiatoday.com/category/nation/2022/03/27/amend-sarawak-law-to-protect-house-buyers-from-exploitation-says-mp/
²Selva Kumar a/l Murugiah v Thiagarajah a/l Retnasamy [1995] 1 MLJ 871.
³PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor And Other Appeals [2021] 2 MLJ 60.
⁴‘The Essential Guide To Vacant Possession Of Your New Home’ (Propertyguru.com.my, 2021) <https://www.propertyguru.com.my/property-guides/guide-to-vacant-possession-vp-construction-property-malaysia-15834> accessed 26 May 2022

If you have any questions or require any additional information, please contact our lawyer that you usually deal with.