Introduction
Low & Partners provides comprehensive and tailored advice for distress purchasers who are affected by some unscrupulous developers failing to deliver their units as promised in the SPA and for some, buying house can be a nightmare when the developer delays in delivering vacant possession or completely abandons the housing project.
Many purchasers are not aware of their legal rights and remedies are available to them.
Housing Development-Delivery of Vacant Possession and Liquidated Ascertained Damages (LAD)
In this article, we have listed all the crucial points a purchaser needs to know about the delivery of vacant possession, such as its requirements, deadlines, and what legal steps can a purchaser take if the developer fails to deliver vacant possession of the property within the timeline stipulated in the Sale & Purchase Agreement (SPA).
FAQ
1. Q: What is vacant possession of a property?
A: Vacant Possession (commonly referred to as VP) in Malaysia is the moment when you are handed the keys to your property and are ready to move in wherein Certificate of Completion and Compliance (CCC) has been issue and water and electricity supply are ready for connection to your said parcel.
2. Q: When does time for delivery of vacant possession of a property start?
A: Depending on the type of development, a developer is required to deliver VP of a property within 24 months or 36 months from the date of the SPA.
Pursuant to Housing Development (Control and Licensing) Regulations 1989 (HDR 1989), the delivery of VP for landed properties (terrace / semi-d) are 24 months and high-rise properties (serviced apartment / condominium) are 36 months.
3. Q: What are the legal remedies available for late delivery of VP?
A: In the event there is late delivery of vacant possession of a residential unit, the developer shall be liable to pay the purchaser LAD at 10% p.a. of the purchase price and to be calculated from the date of expiry until the date the purchaser takes vacant possession of his property.
Please contact us if you wish us to help you calculate your entitlement of LAD.
4. Q: When does the time of delivery of VP begin to run?
A: The latest court decisions protects the purchaser’s interest wherein it is now trite law that the period for delivery of VP commences from the date the purchaser paid the booking fee and not from the date of the SPA.
In other words, purchasers are now entitled to claim a higher amount of damages from the developer.
Please contact us if you wish us to assist you on your claim for LAD against a developer.
5. Q: How can a purchaser claim LAD from a developer?
A: A purchaser is advised to appoint a lawyer to file a claim against a developer for LAD as there are two ways a purchaser may opt to claim LAD.
The first option is to file a claim at the tribunal for homebuyers claim. However please take note that the maximum sum claimable through the tribunal is RM50,000.00.
The second option to commence an action against the developer in Civil Courts and the same must be filed within 6 years of the breach of contract.
6. Q: What happens when the developer continues to delay or fails to deliver the property?
A: In such a situation, a purchase can appoint a lawyer to terminate the SPA and file a claim for a full refund of all the monies paid to the developer until the date of termination, including damages and/or compensation.
7. Q: What are the documents needed to support a LAD claim?
A: Purchasers can forward the following documents to their lawyers for further advice: -
i. A copy of the SPA,
ii. any correspondence with the developer regarding the delay,
iii. any notice of extension of time given by the Minister and the receipt of booking fee paid by the purchaser to the developer (if any).
Please contact us if you wish to forward your documents and obtain further advice.
8. Q: Can the developer be granted an extension of time for delivery of vacant possession of a property?
A: Yes, upon application by a developer, the Housing, Local Government and Urban Wellbeing Minister has the power to extend the completion time of a housing development beyond the prescribed period under the HDR 1989. However, the extension can also be subject to challenge if it was not properly obtained by the developer.