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Counteractions against counterfeit commitments Counteractions against counterfeit commitments
Share this on WhatsAppBY Prisca Teh Buyers of the Alpinia double-storey terrace houses in the Bandar Putra Kulai township within Iskandar Malaysia, Johor, were... Counteractions against counterfeit commitments
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BY Prisca Teh

Buyers of the Alpinia double-storey terrace houses in the Bandar Putra Kulai township within Iskandar Malaysia, Johor, were unhappy upon handover when they discovered numerous unexpected defects in their homes.

Highlighted in Property360 three weeks ago, the buyers had signed on the dotted line with high hopes because it is a project under IOI Properties Group Bhd, which has been awarded “Top Ten Developer”.

Although IOI has taken responsibility for rectification works, some of the purchasers have complained the defects are so major that their houses are still unfit for occupation till today, almost five months after taking vacant possession. Appeals for compensation have been ignored.

Defects can cause massive delays to housing delivery as well as increase the overall cost to buyers.

Defects can cause massive delays to housing delivery as well as increase the overall cost to buyers.

In response to Real Spaces, the honorary secretary-general of the National House Buyers Association (HBA), Chang Kim Loong, said such cases are not uncommon. There have been defects ranging from hollow tiles to misalignment of walls and leaking underground pipes that resulted in a monthly water bill of RM900!

“Over the years, HBA has recorded thousands of complaints from house buyers who were not satisfied with the condition of their new homes or the way defects were rectified. Construction defects range from complex structural issues, which threaten the integrity of buildings, to simple items relating to aesthetics,” said Chang.

“The quality of houses, although improved over the past decade, has not kept pace with buyers’ expectations in terms of both design and finishes. There is also a lack of a set of industry quality standards that are compatible with public interests and expectations,” he lamented.

Chang also highlighted an article by the Consumers Association of Penang, which stated: “Such problems should have been averted if the developers had not taken a lackadaisical attitude in building quality homes. There are many complaints from buyers that they have been shortchanged by developers because the finishing is poor and the building sometimes leaks or has cracks, and the materials used are of low quality.”

Chang advised: “If you find any defects in the property, make sure you submit the defect list in writing to the developer within 18 or 24 months (whichever is applicable) from the date of vacant possession. The developer will have 30 days from the date of receipt of your list to rectify the defects.”

“The pre-determined Defect Liability Clause in the sale and purchase agreement (SPA) states that the developer is required to repair and make good, at its own cost and expenses, any defects, shrinkage or other faults that become apparent within a period of 18 [or 24] calendar months after delivering vacant possession and which can be attributed to defective workmanship, materials or a failure to construct the property in accordance with the plan and description appended to the SPA within 30 days of having received written notice from the purchaser,” Chang stressed.

“If the developer is responsive, go through the list of defects with the developer to come up with a rectification work schedule. Be prepared to spend time or get someone to be around for the appointed contractors to do their work.
“If the developer is unresponsive, get a quotation from a reputable independent contractor for the cost of repairing the defects. Give the developer a second notice and a stipulated 14-day grace period to do the rectification work. Recover the cost from the developer’s stakeholder sum,” he counselled.

House Buyers Association honorary secretary general Chan Kim Loong at a forum called Property Management Time Bomb held at the Securities Commission Convention Centre,Mont Kiara, KL.

There are many complaints from buyers that they have been shortchanged by developers because of poor finishing and low quality materials used, says Chang

The complaint letter to the developer should be cc’d to the stakeholder lawyer besides a separate letter to the latter not to release the stakeholder sum without the buyer’s consent.

“Since five per cent of the purchase price is retained as stakeholder’s fund, we urge complainants to give written notice to the stakeholder lawyer to withhold release of the said sum until the complainant is satisfied with the remedial works,” emphasised Chang, noting that HBA has a standard letter on its website.

If the developer refuses to pay, Chang said: “You will then have to file a complaint with the Housing Tribunal for Homebuyer Claims under the Ministry of Urban Wellbeing, Housing and Local Government, which was set up to help house buyers.”

He added: “Get a private building inspector, such as from Architect Centre [Sdn Bhd], to present an admissible professional report to the tribunal. Don’t stinge (on this). It costs about RM2,500 to RM3,000.

“For the tribunal filing, no lawyer is needed. It’s only RM10 for filing fee. The developer will be summoned to appear. The tribunal will usually settle the case within 60 days.

“It must be brought to the tribunal not less than 12 months from the date of issuance of the Certificate of Fitness or from the expiry of the defect liability period. Make sure the flaws do not exceed RM50,000.”

One of the Alpinia buyers, Leong, told Real Spaces that the tribunal officer did remind him that the maximum compensation offered through the tribunal is only RM50,000. With the defects and non-compliance-to-building-plan added together, the officer said his claims may exceed RM50,000.

“So he advised me to push the developer to clear the defects first, and if the developer really cannot rectify up to my satisfaction, then only we bring the rest to the tribunal.

“Besides that, the officer advised me to file for civil court case, but I rejected the idea as I am not willing to spend more money and drag the case,” he shared.

Chang concurred: “It’s a David and Goliath fight. Do you have the monetary stamina to cover the quantum of legal fees?”

He advised against class action because the defects and their extent in each house may differ.

On another concern, Chang said that during the mitigation period, the house may not necessarily be left vacant.
“Seek legal advice. Lawyers may advise you to start occupying the house to reduce losses.”

On defects that appear beyond the liability period, Chang said the developer should be liable for serious defects that arise even after the defect liability period, especially if they are structural defects.

Clause 14 of the SPA states that ‘the Building shall be constructed in a good and workmanlike manner in accordance with the description set out in the Fourth Schedule’.

“If the structural defects appear beyond the time frame laid down by the tribunal for filing a claim, you will need to take the developer to court.

“Don’t use the developer’s lawyer. Don’t be penny-wise and pound-foolish,” added.

Unfortunately, Leong admitted they did not take such a precaution as IOI had offered a waiver of the SPA fees, as is commonly practised. In approaching the lawyer for mitigation, they were told blatantly that the firm would defend the developer first.

Meanwhile, Chang advised buyers to purchase a copy of the building plan from the local council. If there is any non-compliance with the Uniform Building By-laws, a complaint can be lodged with the Board of Architects Malaysia (LAM) within the liability period.

Buyers can also lodge a report with the housing ministry.

“It is pretty effective because the developer licence is held by the ministry which has the authority to blacklist a developer if found guilty,” Chang pointed out.

“Besides legal steps, buyers should band together. There is power in numbers, and you can share tasks to lighten the load. The main objective is to convince the developer that you are serious in getting the defects rectified properly,” he said.

Chang also recommended press coverage as a last resort but noted that while the company does not want its name to be tainted, the publicity may also cause a drop in the resale value.

For in-depth enquiries, HBA’s KL office is open every Saturday. But groups are encouraged to email for a prior appointment “so we can ensure there is enough oxygen for all in our small office”, Chang quipped.

Property 360 Online

Property 360 Online is a news portal focused on major issues, views and major market movements in the Malaysian real estate sector.

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