| Buying a home under construction becomes distressing when the developer fails to complete the project on time or abandons it. Purchasers may already have paid deposits and progressive loan instalments while the promised home remains unavailable. Malaysia’s housing-development legislation provides statutory protection for qualifying residential purchases from licensed developers. Time for delivery of vacant possession The prescribed sale agreements under the Housing Development (Control and Licensing) Regulations 1989 set deadlines for delivery of vacant possession. The traditional Schedule G period for a landed property with an individual title is 24 months, while the Schedule H period for a subdivided building or strata property is 36 months. The precise statutory form and any valid legal extension applicable to a particular development must be checked. Liquidated ascertained damages Where vacant possession is delivered late, the purchaser may be entitled to liquidated ascertained damages, commonly called LAD, calculated according to the prescribed agreement. This right is statutory and contractual in nature. A developer cannot ordinarily avoid it merely by asserting that construction difficulties were beyond its control, although the effect of any lawful extension, legislative measure or specific court decision must be considered. When does the LAD period begin? A long-running issue concerned whether time ran from the formal sale and purchase agreement or from an earlier booking-fee or deposit payment. Regulation 11(2) prohibits a licensed housing developer from collecting payment before the prescribed sale agreement is signed. Despite that prohibition, some purchasers were asked to pay sums described as booking fees, reservation fees or initial deposits. In PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Anor and related appeals, the Federal Court rejected an approach that would allow developers to benefit from an unlawful collection practice. For the affected statutory contracts, the calculation of LAD was held to begin from the date the purchaser paid the booking fee, rather than only from the later formal agreement date. The decision emphasised that housing legislation is social legislation intended to protect purchasers and that its safeguards should not be bypassed through industry practice. Why the payment date matters If a developer takes money months before signing the formal agreement, measuring the completion period only from the agreement date would effectively extend the developer’s time through its own prohibited conduct. Starting from the booking-fee date preserves the statutory purpose and can materially increase the purchaser’s LAD entitlement. Receipts, bank transfers, reservation forms, correspondence and the signed agreement should therefore be retained. How can a purchaser pursue a claim? First, identify the contractual completion deadline, the actual date of valid delivery and any disputed extension. Second, calculate LAD using the prescribed formula and supporting payment chronology. Third, send a properly documented demand. Depending on the amount, timing and jurisdiction, a purchaser may consider the Tribunal for Homebuyer Claims or court proceedings. Limitation periods, tribunal monetary limits and filing deadlines must be checked promptly. A purchaser should also distinguish late-delivery LAD from claims for defects, failure to complete common facilities, misleading representations or an abandoned project. Different remedies and agencies may be involved. Before paying any pre-contract sum to a housing developer, seek clarification about the statutory prohibition and insist on proper documentation. If vacant possession is late, obtain legal advice early so that the correct commencement date, delivery date and forum can be established. |
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Posted by David Chau & Artika on 25 Jul 26
Malaysia