What A Purchaser Should Do When Buying A House

The rules and responsibilities of the house buyers can be divided into four categories. They are:

  • The survey stage;
  • When the sale and purchase agreement (SPA) is signed
  • After the signing of the SPA, and
  • When the buyers takes vacant possession (or delivery of the keys).
This week we will focus on the first two categories while the other two will be discussed in the next articles in the series.

SURVEY STAGE
Before making any decision to purchase a house, the buyer should determine the financial strength and capability of the housing developer.
He is advised to visit the developer's office ascertain whether the developer has a valid housing developers license, as well as permits for advertisement and for sale from the Ministry of Housing and Local Government.
He should also check the financial status of the developer, the company directors and its audited financial statements.
It is compulsory for the developer to display such information at is headquarters and branch office as stipulated under section 7 (b) of the Housing Developer (Control and Licensing) Act 1966.
After doing the above check at the developer's office, the buyers is advised to make a visit to the project site to ensure that the type of house and the facilities offered have been provided.
At this stage, the house buyers is advised need to be clear minded and not allow himself to be influenced by marketing hype or strategies propagated by the developers such as claim that the value of the house will double within a short period or that there will be access roads leading to the highway and so on.
If the developer has made any such promises, all these details should be included in the agreement.
The house buyers is also advised to check with the Land Office on ownership, lot number, land usage restricted interest and whatever the land title is freehold or leasehold. If it is on lease, fine out the numbers of the years left.
The checks can be done by paying a nominal free for search service either at land Office or the state Registrar office.
The search will enable the house buyers to know if the land has been mortgaged with the bank. Land which is not mortgaged is better since it shows that financial situation of the company is stronger.
The house buyers need to assess his financial capability such as his eligibility to secure a loan.
He must also pay attention to the interest rate imposed, repayment period and others matters. He is advised not to hurry in order to get the best loan package.
The house buyersis also advised to consider clearly the type of insurance coverage for the loan. This is important in cases of accidents that involve death, handicap for life, etc.
After considering all these factors, the buyers should now be able to make a wise decision when buying a house.
He should not be influenced by the model house or the artist's impression of the house. He should be cool and not rush into registering. Such actions can lead to wrong judgement.
Should a buyers have doubts about the developer, the projects or other matters, he should contact the Licensing and Advice Services Division, Housing and Local Government Ministry at 03-2547033 or fax 03-2523214 or visit the ministry's website, http://www. kpkt.gov.my.
They can also write to the Monitoring and Enforcement Division, Ministry of Housing and Local Government, 4th Floor, Blok K, Pusat Bandar Damansara, 50782 Kuala Lumpur or fax to 03-2525409 or e-mail : enforcement@kpkt.gov.my

WHEN SIGNING THE SPA
Before signing the SPA, the buyer is advised to read and understand the contents. If he has difficulty understanding,the should approach the developer or the lawyer for explanation.
To protect his interests and right, the buyers can appoint his own lawyer. Developer cannot force buyers to use the services of lawyers they have appointment or recommended.
The SPA is a standardised agreement. It can be checked in Schedule G or H of the Housing Developer (Control and Licensing) Regulations 1989.
Before signing the SPA, the buyer is advised to take note of the following matters:

  • Lot number, land area, location, price of the house and its specifications.
  • Completion period (24 months for landed properties and 36 months for subdivided properties.
  • The buyer has the right to seek compensation if the developer fails to hand over vacant possession of the property after 24 or 36 months.
  • The developer has the right to ask for interest from the buyer who fails to settle or is late in making the progressive payment within the 14 days of the stipulated period.
  • For sub-divided properties, the developer asks the buyers to sign the deed of mutual covenant, the buyer is advised to read and understand the contents. If the buyers does not understand it, he can refer to the developer or his appointed lawyer for an explanation.
The buyer should only sign the SPA and pay10% deposit when he satisfied that all requirements are met. He must ensure that the date of the receipt tallies with the date the SPA was signed. The receipt is an official document that can be used as evidence.


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