DESPITE CONTRADICTING BASIC BUYER PROTECTIONS ESTABLISHED BY LAW,
304 EOTs HAVE ALREADY BEEN ISSUED
BY Chris Prasad
The Extension of Time (or EOT) provision is a highly contentious issue that has already made its way to the courts. EOTs are extensions granted to developers by the Controller of Housing for the completion of projects over and above the time period under Sale and Purchase Agreement (SPA) regulations and stipulated by Housing Development (Control & Licensing) Act, 1966 amended 2015 (HDA).
At the heart of the matter, currently, are not so much EOTs that have been granted to development projects prior to its initiation and made known to buyers prior to the signing of the SPA. Rather, it is EOTs that have been granted after the signing of the SPA, and in many cases without the knowledge of buyers, which have drawn heated criticism from the public.
Setting the issue alight is a recent case involving buyers of a stratified residential property in Kuchai Lama in Kuala Lumpur. During a judicial review hearing presided by judge Datuk Hanipah Farikullah, the 104 house buyers who took up the case against developer BHL Construction Sdn Bhd were granted Order of Certiorari, quashing the Housing Controller’s decision to amend the time period for vacant possession of the Sri Istana condominium.
This was widely seen as a victory for house buyers, as the judge also ruled that EOTs were “ultra vires” (or beyond the powers) of the HDA, which means the extensions are “irregular” and “contradictory” to protections offered to buyers under the Act.
Now a recent sitting of Parliament has revealed that over 300 EOTs have been issued to developers since the provision came into play. This was brought to light the Minister of Urban Wellbeing, Housing and Local Government (KPKT), YB Tan Sri Noh Hj Omar. The Housing Controller operates under the purview of KPKT.
The National House Buyers Association (HBA), which provided legal representation to plaintiffs in the Sri Istana case, described the situation as “shocking”. It added that the best summary of their reaction would be the letters O-M-G.
“We knew something was awry here with the frequency of EOTs and the questionable nature in which they have been awarded, but a declared total of 304 is stunning, especially for a provision that the Ministry argues has been reserved for extraordinary cases,” HBA’s honorary secretary-general Chang Kim Loong told Property360.
HBA, is of course, not a fan of EOTs in any form citing the court’s ruling of it being an irregular provision that denies buyers protections under the HDA.
“It is the right of every house buyer to be entitled to compensation in the form of liquidated ascertained damages (LAD) for delays, by their housing developer in delivery of vacant possession of the house/ condominium,” he said, adding that the EOT essentially protects the developer against any compensation claims when there is a delay in delivering the property.
Chang explained that the claim for late delivery is a well-recognised right. It is clearly spelt out in the SPA to be 10% per annum on the purchase price. Similarly, it is the right of the Developer to impose interest of 10% (of the purchase price) if buyers are late in their progress payments.
“It is a fair system, so how is it the Controller of Housing can remove protections offered to Malaysians by Parliament itself with the simple stroke of the pen?” Chang asked.
He said the issue of granting EOT has been seemingly rife. It is important to note EOTs were not intended to be a shield for developers in the first place, and it was only meant to be granted in “special circumstances”. However, there has been a great deal of ambiguity about what these special circumstances are and no uniformity behind how and when EOTs can be granted
“By granting of extensions for 10 to 12 months, the Developer effectively extinguishes the purchasers’ claims to compensation. Do they not know the ramification and repercussion to the house buyers? Has granting of EOT been exercised in a just manner?”
Chang believes the KPKT Minister’s recent explanation for granting EOTs is “strange”. The minister said the provision is given to developers with special circumstances or in lieu of hardship or necessity.
“Developers should not be allowed to take advantage of their own wrongdoings, ineptness and bungling. Some reasons are self-inflicted and not an Act of God. The provision is not for run-of-the-mill excuses… the process is not transparent and it reflects a lack of integrity in the law-making process. Furthermore, it opens the door to possible corruption in the housing-construction industry,” Chang said.
The ambiguity behind the granting of EOTs has raised eyebrows even in the development fraternity. In fact, the Real Estate and Housing Developers’ Association (Rehda) is not in support of the provision – especially in the “post SPA” scenario – stating: “Developers should honour agreements to deliver projects on time. Any delay is not the fault of the buyer. The law is the law.”
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