This is Part 2 of the column which appeared in StarBizWeek on May 25
FLIP through a newspaper or magazine and you'll be bombarded by advertisements picture perfect, too-good-to-be-true products. The advertiser aims to entice, and to do so, advertisements have to attract as many readers' attention as possible.
What happens if you bought a property because you were attracted to the artist's impression and lifestyle represented by the sales brochure but found out later that they don't live up to expectation? Can you take the developer to task?
Developers employ a number of gimmicks.
Scenario 1:
Your apartment faces a landmark view (eg. KLCC ) in the sale brochure. Later, you find that it is being obscured by an equally towering apartment block next door or the view is too distance and obscure
Scenario 2:
Your actual clubhouse is nowhere as glamorous as the one represented in the glossy brochure and the actual gymnasium devoid of those high-tech equipment and facilities
Scenario 3:
You find that your neighbourhood is not thronged with petite caucasian women swimming and sun-tanning at the poolside as represented in the sales brochure
Scenario 4:
Your “uptown Mont'Kiara address” is situated in the vicinity of Segambut. As a property's location is valuable, developers always cash in on this.
Scenario 5:
15 minutes to Petronas Twin Towers (if by flight pun intended) but not through the horrendous traffic of KL city centre.
Scenario 6:
Guaranteed five-year return on investment ROI (provided you furnish the unit with not less than RM30,000 on furniture and fittings); only RM98,888 upwards for a three-room condo (this minimum price is for a studio unit as the three-room unit was pegged at around RM22X,XXX); and condo living in the city (this refers to three apartment blocks consisting of 600 units with a swimming pool half Olympic-size and two squash courts).
NB: Such gimmicks usually come with several fine prints at the bottom which, sadly, housebuyers do not read. Very often, these so-called Guaranteed Contracts are signed with another company other than the developer. These “other company” could just be a shelf company with nominal paid-up capital.
The gimmicks highlighted in the promotion advertisements are attractive and catch the eye of potential buyers. The result is booming sales for the developers at the expense of the nave and unwary homebuyers.
Under the Housing Development (Control and Licensing) Regulations 1989, housing developers are required to give “accurate information and true particulars” in the advertisement of their housing schemes. Those in violation of the terms and conditions of their approved permit can be prosecuted for false advertising and misrepresentation. On conviction, the offending developer is liable to be fined not exceeding RM20,000 or jailed not exceeding five years or both.
Is the developer liable for these “misrepresentations”? Can a developer be sued over these inaccuracies and compensation be made?
Chances are they are not unless these representations are incorporated as part of the sales contract conditions. Besides, more often than not these representations are precluded by an all-too-familiar fine footprint of disclaimer clauses in the tone of “All illustrations are artist's impressions only” or “The brochures do not form part of the contract” among others, sitting in one obscure corner of the brochure in obscure prints which one can only see with a magnifying glass.
The property was sold with the distinction of being developed by some well-known developer when in fact it's one of its subsidiaries or affiliates. House buyers only discover this isn't the case when they sign the sale and purchase agreement (SPA). Another thing to consider is whether the buyers have the stamina to take on the mighty and rich developers who have hordes of touting lawyers waiting to do their mendacity. Aggrieved buyers can take legal action against developers for such misleading or false advertisement but legal fees are expensive. Suing costs money and most people can't afford to take on wealthy developers who can drag the case on for years up to the highest court. Developer knows this and that's why potential buyers must now be smarter and be wary, cautious and exercise watchful prudence of the characteristics and essence to make an informed decision when buying a property.
BTS vs STB
In most cases involving Sell-Then-Build (STB) properties, what you see in the brochures, advertisements or scale models won't be what you get once you obtain the keys of the property. Buyers should expect that the properties will not look exactly the same as portrayed in glossy pictures. Therefore, readers must understand why the National House Buyers Association (HBA) is steadfast for the Built-Then-Sell (BTS) model where you pay only for completed property.
Prior to the absolute BTS, HBA has proposed to the Government, who has agreed to have in place the BTS 10:90 concept. It entails paying 10% for deposit (when signing the sale and purchase agreement) and the balance 90% to be paid only when the property is completed in totality with individual title deed, certificate of fitness (CCC or CFO included) and keys with electricity and water ready. This way buyers get to inspect the property prior to taking vacant possession and departing with 90% of the contracted price.
And so who is to say you have not been pre-warned!
Again, what is legally binding is the plan documents annexed with the agreement which must be a copy of the approved plan.
You should do this right from your showroom trip when you find a property that you are interested. Ask the sale staff to show you firstly, the “approved” layout under (which will be annexed in the First Schedule of the SPA) the planning permission to ascertain whether neighbourhood attributes projected at the sales brochure match those in the “approved” layout.
Following that, ask for the approved building plan (which will be annexed in the Second Schedule of the SPA) to verify again whether those approved matches the artist's impression version of which you are interested. Insist that you obtain an approved copy of the parcel unit that you are purchasing with the approved copy of the accessory parcel of car park bay designated. Identify the Common Facilities Plans to be attached as approved plans in your sale and purchase contract. Behold, they will have no reason to object to your request as the building plan and all related plans ought to have been obtained by then.
Again ensure these approved plans carried the endorsement of the relevant local authority as described earlier.
Notwithstanding the above, to ensure what you have been promised on the common facilities such as swimming pool and if you are getting a club house, barbeque pits, gymnasium with facilities, etc by the sale staff, it is prudent for you to run through the Fourth Schedule (building description) Schedule G (landed ) and Schedule H (stratified property) Second Schedule common facilities and services, with your own lawyer independent from the developer's panel lawyer to ensure they are included before signing the agreement proper.
As the saying goes: Caveat Emptor: “Buyers Beware”.
> Chang Kim Loong is the honorary secretary-general of the National House Buyers Association: www.hba.org.my a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also a NGO councillor at the Subang Jaya Municipality Council. - The Star
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