How to make sure you get what is promised

• Developers must provide purchasers with a full set of detailed approved documents of the property in the sale and purchase agreement.
• Misleading advertisements may give purchasers right to a civil suit against the developer where the ministry cannot be moved to act.

When you buy houses from the primary market, they are rarely ready built – where we could see the actual quality of its construction or its surroundings. So, being a yet-to-exist product, they are sold using artist impressions, scale models and a myriad of marketing schemes.

These are not art pieces. They are to come with actual dimensions of the property along with the purchase price. Developers are required to submit mock-ups to the housing ministry for its approval. They enable the ministry to check if there are any deviations between the advertisements and the approved versions.

On top of that, developers must provide purchasers with a full set of detailed approved documents of the property. In fact, this has been a legal requirement since 2015, but has not been effectively enforced.

These approved documents are the duplicate copies of the actual plan drawings with dimensions bearing the signature of the land proprietor and the “principal submitting person” i.e. architect. The appropriate authority's seal and signature of approval, normally in the form of a stamp, such as "Diluluskan oleh Majlis Bandaraya Subang Jaya" should also be visible on the top right hand corner of each of the plans.

For landed properties, the approved layout plan and building plan are to be included in the sale and purchase agreement (SPA) as the first and second schedules respectively.

For strata properties, there are the site plan, layout plan, floor plan of the parcel, storey plan of the building, accessory plan and common facilities plan – all duly approved – which comprise the first and second schedules.

After years of poking and prodding by the National House Buyers Association, the Housing Ministry (now renamed Local Government Development Ministry) has finally agreed that there should be a stricter implementation of this regulation, whereby the detailed dimensions of the property and its facilities are to be given to the purchaser at the outset as part of the building plan attached to the statutory SPA. These may take the form of copies of the approved plan on paper, no matter how thick it makes the SPA, or in electronic form with a user-friendly format accessible through the ordinary computer.

Why is this important? An example is the number of houses allowed to be built in the housing estate, i.e. density of the area. It makes all the difference between spaciousness and over-crowding. As this affects quality of life, you may take action against developers which add more units than the approved number. 

The quality of a housing estate may also be affected by the types of houses and other buildings, including shophouses. Their distribution is also to be taken note of as it may affect the convenience of the occupants.

Misleading advertisements

Having said that, purchasers are often given the impression they are only entitled to what is stated in the SPA, which is usually a standard agreement with unalterable stipulations. 

However, more often than not, you may be persuaded by surrounding features too like a playground and open space in the area. While these are advertised as part of the attractions, you are not told about the existence of an “active” graveyard nearby or oxidation ponds.

Also, when you buy into the atmosphere or concept of living of the whole housing estate, does the developer then have the right to dig up the children’s playground for a condominium after the houses are sold?

There are several errant housing developers or their appointed agents who aid, abet and continue to, wilfully or otherwise, flout the laws with their accompanying verbiage, which is seriously misleading through electronic media, digital visual images and other means of alternative advertisements.

Some give amazingly short travelling time to important places without mentioning the mode of transport or normal traffic condition; or say it is in proximity to upmarket areas when in fact it is closer to less affluent neighbourhoods; or that the Petronas Twin Towers are within sight, never mind if they are just specks.  

A few go to the extent of guaranteeing returns on investment, without mentioning how much you need to spend first on furniture, fittings and finishing before you see that potential.

Collateral oral warranty

If the developer promotes such features at the time of sale, then you should note down the said points, the name of the developer’s staff and designation and have your solicitor confirm this in writing.

It may constitute what is known in law as “a collateral oral warranty to the transaction” and may be read into the SPA to make it binding on the developer.

These features are not provided for in the SPA because the SPA is a standard form to be used in a whole range of property transactions where the details vary.

However, it does not mean these details cannot be added. The law allows it (Tun Suffian in Lee Poh Choo vs SEA Housing Corp) but rare is the developer who would do it. That is why you must have your own lawyer, not the legal firm chosen for the purchaser by the developer.

Even with the approved plans attached, you may still have to rely on the collateral oral warranty with respect to things promised by the developer but not mentioned in the SPA and not included in the approved layout plan.

Misleading advertisements may give purchasers right to a civil suit against the developer where the ministry cannot be moved to act.

In a Singapore case, the developer’s brochure had boasted of “a panoramic view of the sea”. The Court held that it gave the purchasers a right to sue if they had been induced to buy because of that claim.

The law, as usual, is clear and strict. Under the 1989 Regulations, developers are required to give “accurate and true particulars” in the advertisements of their housing schemes. Under the amended 2015 Regulation 8(1A): “Any advertisement made by any licensed housing developer shall not contain:

1. offer of free legal fees;
2. projected monetary return gains and rental income;
3. claim of panoramic views;
4. travelling time from housing projects to popular destinations;
5. or any particulars to which a housing developer cannot genuinely lay proper claim”.

On conviction, they can be fined a sum not exceeding RM50,000, or face imprisonment not exceeding five years or both. However, so far, there have not been any prosecutions despite known violations.

This article is written by Datuk Chang Kim Loong, the Honorary Secretary-General of the National House Buyers Association (HBA), a non-profit, non-governmental organisation manned by volunteers.

He was also a councillor with the then Subang Jaya Municipality Council (now conferred Subang Jaya City Council status) in years 2008–2018.

HBA can be contacted at:
Email: [email protected]
Website: www.hba.org.my
Tel: +6012 334 5676