Wednesday, June 5, 2013

House-buyers beware of DIBS




OF late, there have been a few housing developers who proudly advertise that the sales of their product are offered are with “interests payment borne by developers”. Such schemes are known as DIBS, that is developers' interest-bearing scheme.

A particular one even boldly states that house-buyers make no payment until due vacant possession of the said houses.

It entices potential house-buyers that all they need is to pay the requisite downpayment of 10% upon signing the sales and purchase agreement (SPA) and the balance thereof will be financed by their panel banks/financial institutions.

Some even have the audacity to equate the same with the 10:90 concept of built-then-sell (BTS). One even goes as far as to advertise the mode of payment as 5:95 model. The connotations in all these advertisements are that buyers do not make any progressive payments until the houses are completed and ready for vacant possession.

All these advertised “schemes” of payments are nothing more than loan packages. Although the advertisement states “no payment until vacant possession”, in reality the buyers' loans are “locked-in” with panel banks/financial institutions and hence, buyers' housing loans are used to pay the developers as they construct the houses.

It is based exactly on the current sell-then-build (STB) or progressive payment formula. This formula has got so many house-buyers into trouble when the houses they buy are abandoned by the developers.
The only difference in the advertised system is that the interests towards the progressive payments are shouldered, absorbed and borne by the developers. Buyers still have to secure their end-financing housing loans as soon as they sign the SPA. Buyers are still responsible to the banks and financial institutions for the loans whether the houses are delivered or not.

BTS 10:90 model
This is far different from the real BTS 10:90 concept put in place and encouraged by the Government, whereby the buyers truly do not make any payment except for the deposit of 10% until vacant possession because the end-financing loans do not kick in until the houses are completed with all the certifications obtained and keys with vacant possession are available.

It is a far safer mode of buying houses and this is precisely why the Government is encouraging it and furthermore offering incentives to developers who opt to adopt this mode of selling their products. But it fell short of compelling the industry to adopt this BTS 10:90 concept currently. However, the Housing and Local Government Minister has reiterated that the BTS 10:90 will be made mandatory by 2015.


Vital differences
The vital difference between the advertised DIBS abbreviation and the government-encouraged BTS 10:90 is that, in the advertised DIBS or 10:90 or 5:95 model, should the developer abandon the project (for whatever reason), buyers are left with a partially disbursed housing loan to settle.

The amount varies in accordance with the amount of disbursements made.

The primary borrower is still the buyers and that it is the sole responsibility of the borrowers/buyers to continue with the proper conduct of his loan from the financiers.

Banks have not been known to be sympathetic to victims of abandoned projects.

The loans still have to be settled house or no house! This is the predicament presently faced by tens of thousands of nave and innocent buyers when the houses that they had bought were abandoned by their developers.

Don't think for a minute that the financier will write off the loan payable by the borrower/buyer.

Thus, the various advertisements for DIBS abbreviation or 10:90 or 5:95 or 0:100 connotations are merely marketing tools and are not the same as the BTS 10:90 concept that is put in place under the Housing Development (Control and Licensing) Act and Regulations.

These advertisements are open to misunderstanding and confusion. In this period of soft market in the housing industry, it is natural that more and more innovative sales strategy will come in.

We are not in opposition to that, but we are of the stand that advertisements should not have any element of misrepresentation or misconception and should not give rise to misunderstanding and confusion.


Housing Ministry to be vigilant
The Housing Ministry's Licensing Department should also take a close look at the contents of such advertisements before granting them sales and advertisement permits.

To allow such advertisements is injustice to nave and innocent first-time house-buyers.

Has the ministry erred in allowing those advertisements or did it not manage to spot the difference?

I would like to categorically state that I'm by no means implying that the advertised project is likely to be abandoned. This article is aimed only to inform potential buyers on the differences between the advertised DIBS or 10:90 or 5:95 or 0:100 mode of purchase vis-vis the government-encouraged BTS 10:90 concept.
Be an informed buyer and empower yourself with information to make a wise decision.


How to spot the difference
On the side of caution, the buyer needs to check if he has bought into a STB 10:90 loan package “scheme” or a BTS 10:90 concept. The differences between the two models are already explained in the article. An easy way to know what the buyer has bought is to refer to the SPA. If the contract is a Schedule H or Schedule G, the scheme is a sell-then-build. If the contract is a Schedule I or Schedule J, the scheme is a BTS 10:90 variant.


> Chang Kim Loong is the honorary secretary-general of The National House Buyers Association, a non-profit, non-governmental, non-political organisation manned by volunteers. For more information, click www.hba.org.my or e-mail info@hba.org.my

Tuesday, June 4, 2013

Free legal fees – fact or myth

Free legal fees – fact or myth



An erroneous understanding of the matter exists in the housing development industry, much to the dismay of purchasers having disputes with developers.

FREEBIES have been advertised and offered to woo purchasers to buy developers' property because choices are now in abundance though pricing is on the exorbitant side.

Some of the freebies include air-conditioners, kitchen cabinet, automatic gate, club membership and legal fees. The list is not exhaustive as property development is a competitive game.

However, among the freebies offered to purchasers, legal fees require objective analysis. The freebie on legal fees normally appears in sale brochures and advertisements as “free legal fees” or “legal fees borne by developer” or words to that effect.

Now, what is “free legal fees”? Is it a freebie in the truest sense of the word?

Meaning of free legal fees
Generally, “free legal fees” would mean that the developer will pay for the legal fees on the S&P (sale and purchase) agreement. However, the offer of free legal fees may not cover disbursements such as stamp duties, searches fees, registration fees, printing charges, purchase of documents costs, etc. The purchaser will have to pay for them.

In other words, the offer of “free legal fees” would in its plain and obvious meaning suggests that the legal fees the purchaser would have to pay to the solicitor would instead be paid by the developer. It would, therefore, be understood that if the purchaser had appointed a solicitor, the developer would pay for the solicitor's fees.

However, is this what happens actually when a purchaser buys property from a developer who offers “free legal fees”?

What happens actually is quite different. An erroneous understanding of “free legal fees” exists in the housing development industry, much to the dismay of purchasers having disputes with developers.

Developer's solicitor
In offering “free legal fees”, the developer would recommend to the purchaser a law firm on the developer's panel to attend to the S&P agreement and its related transaction. Correspondingly, the same law firm will be tasked with the loan documentation as a packaged deal. If the purchaser chooses that law firm, the developer will supposedly absorb the legal fees. Quite obviously, the developer takes the view that such arrangements represent a cost-saving to the purchaser as well as facilitate and expedite dealings.

Now the irony is the solicitor of the law firm attending to the sale and purchase agreement would not normally scrutinise the agreement for the purchaser to understand in layman language, but would say that it is a standard agreement'. Instead, the solicitor would ensure that the developer's rights and interests in the agreement are intact and the purchaser duly signs the agreement and thus, is bound by it.

From a legal point, the solicitor acting in such a manner would actually be acting for the developer. The solicitor is therefore the developer's solicitor, and this being the case, the developer would have to pay the solicitor's fees. Therefore, there is nothing free about it as far as the purchaser is concerned. It can only be considered free if the buyer receives independent legal representation and does not have to pay for it.

Hence, there is no solicitor acting for the purchaser to scrutinise and protect the purchaser's rights and interests in the agreement. The purchaser is without legal representation. Since the purchaser has no solicitor acting for the purchaser in the agreement, there is no legal fees for the purchaser to pay.

Unfortunately, many purchasers realise this rather late in the day.

The purchaser normally realises this fact when a dispute arises and the purchaser asks the solicitor for help and is informed that the solicitor who attended to the sale and purchase agreement is actually the developer's solicitor.

Purchaser's solicitor
What would happen if the purchaser appoints another solicitor who is not on the developer's panel of solicitors to attend to the sale and purchase agreement? How would the offer of “free legal fees” be affected?
In principle, the solicitor so appointed will scrutinise the sale and purchase agreement for the purchaser. The solicitor will act for the purchaser and consequently there are legal fees for the purchaser to pay the solicitor.
In this situation, the developer and purchaser will each have their respective solicitors. Each party will have solicitor's fees to pay.

If the developer's offer of “free legal fees” were taken seriously, the developer would have to pay for the purchaser's solicitor's fees. It is arguable that the developer's offer of “free legal fees” is broad enough to cover such a situation. The purchaser would therefore be entitled to claim on the offer and have the developer pay for the purchaser's solicitor's fees.

However, most developers would refuse to pay for the purchaser's solicitor's fees. The reason given normally for the refusal is that the offer of “free legal fees” is subject to the condition that the purchaser chooses the solicitor on the developer's panel of law firm to attend to the S&P agreement.

When this happens, the developer's offer of free legal fees would seem hollow and the developer may possibly be exposed to being sued for misrepresentation and damages.

Legal Profession Act
Section 84 of the Legal Profession Act 1976, stated that a solicitor who acts for the developer in the sale of property under a housing development must not act for the purchaser in the same transaction.
Furthermore, under the sale and purchase agreement, namely Schedule G and Schedule H, the developer and purchaser must pay its own solicitor's costs.

The above laws clearly suggest that the developer's solicitor must not act, or purport to act, for the purchaser. The purchaser has a right to appoint his/her solicitor. Each party bears its own solicitor's costs.
Thus, is the developer's offer of “free legal fees” legal? Readers should ponder on the arguments.

The reality
Meantime, two situations would possibly arise from the developer's offer of “free legal fees”.

First, where the purchaser is unrepresented by a solicitor in the S&P agreement, the offer of “free legal fees” is not really “free” because the purchaser has no solicitor acting on his behalf. There is thus no legal fees to pay.

Second, where the purchaser is represented by a solicitor in the S&P agreement, he has a solicitor acting on his behalf and thus has legal fees to pay. The developer would be bound to honour the offer of “free legal fees” and pay the solicitor's fees or possibly risk being sued for mispresentation and damages.

In reality, most developers fail to honour the offer of “free legal fees” in the second situation. Instead, the purchaser is asked to pay the solicitor's fees and is informed that the offer only applies if the purchaser chooses the solicitor on the developer's panel to attend to the S&P agreement.

In summary, is “free legal fees” fact or myth? I leave that for your pondering and own conclusion.
Hopefully, the next time you buy a property from a developer and read about “free legal fees” or words to that effect, you would remember reading this article and exercise your rights accordingly.

What are the prevalent legal fees in property transaction when you buy from a housing developer? Are legal fees discounted for standardised S&P or housing loans)

In a case where the purchase transaction is governed by the Housing Development (Control and Licensing) Act, 1966 (HDA transaction), or where a loan is obtained to finance a HDA transaction, the following lower scale of fees will apply:
● RM250 if purchase price or the loan sum (as the case may be) is RM45,000 or below;
● 75% of the applicable scale fee specified above, if the purchase price or the loan sum (as the case may be) is above RM45,000 but not more than RM100,000;
● 70% of the applicable scale fee specified above, if the purchase price or the loan sum (as the case may be) is above RM100,000 but not more than RM500,000; and
● 65% of the applicable scale fee specified above, if the purchase price or the loan sum (as the case may be) is in excess of RM500,000.

(See table for a simplified version of formula for the fees scale.)

Why must you use your own lawyer?
The first rule of conveyancing is “buyer and seller must engage own lawyer”. Consult a lawyer right from the start and not after you have paid the deposit. The reason being, under the law you are deemed to have read and understood every document you have signed.

Furthermore, promises made by the seller or someone else about the deal may not be enforceable if the promises are not in writing unless you are able to provide proof of the same.

A lawyer cannot represent both the vendor and purchaser. If you are using the vendor's panel lawyer, often, when disputes happen, the lawyer is unlikely to represent you against their bigger client.

A lawyer in a general practice will be able to complete your purchase; however, lawyers with a focused real estate/conveyancing practice may prove a better choice if you are unsure of what to do, or have complications in your purchase agreement or mortgage. While you may think that you cannot afford the services of your own lawyer, consider whether you can afford not to.

● Chang Kim Loong is the honorary secretary-general of the National House Buyers Association (HBA) www.hba.org.my, a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also a NGO councillor at the Subang Jaya Municipal Council.

Sunday, May 19, 2013

RAs and councillor honour Puchong police force


RAs and councillor honour Puchong police force


Saying thank you: Chang (third from left) presenting a certificate of appreciation to
representatives from the Bandar Puteri Puchong and Puchong Jaya police stations, and
Serdang district police station.Saying thank you: Chang (third from left) presenting a certificate of appreciation to representatives from the Bandar Puteri Puchong and Puchong Jaya police stations, and Serdang district police station.

A DINNER was recently held to honour the local police force in apprehending five dangerous criminals in Puchong.

The event was hosted by Subang Jaya Municipal councillor Chang Kim Loong and the Residents’ Associations (RAs) of Bandar Puteri 8 and 9, Puchong.
Present at the event were the Serdang OCPD and OCS (police station chief) of Puchong Jaya and Bandar Puteri Puchong, as well as the 15 policemen involved in the arrest.
In his speech, Chang said: “Both the commercial and residential areas of Bandar Puteri Puchong had suffered a spate of serious crime over the past few months.
“This has caused great fear and financial loss for residents and business people alike.
“Installing security systems and getting security manpower have become an increasing burden, with yearly increases in payment to cope with rising costs.
“We are glad to note that two months ago, the Bandar Puteri Puchong policemen had taken a conscientious step that led to the apprehending of five suspected criminals.
“This is a big achievement, considering that in the past, many robbery cases in the neighbourhoods went unsolved,” said Chang, who is also Zone 16 Residents’ Committee (JKP) chairman.
“We hope such exemplary effort will be continued so that the residents and business people in Puchong will regain confidence that the police are serious in combating crime and providing a safer place to live in and conduct business,” he said.
He added that the get-together with the men in uniform and community leaders is to commemorate the policemen’s success, with a certificate of appreciation for the exemplary effort undertaken by the local police force.
“As for MPSJ’s part in crime prevention, we have started installing CCTV cameras at strategic locations and this effort will be continued,” said Chang.

Thursday, April 4, 2013

Be clear about what you are buying or investing


25th January: Real Reserve in Malaysia Reserve.(RR)

How to get started in property investment


Taken from the Malay Mail. Get Real in Malay Mail (GR) 18th January

Puteri 11 sweeper Pak Yoh had a Thyroidectomy operation on 4th March 2013

From Alice Choo:

Pak Yoh is the Puteri 11 sweeper who has been diligent in his duty. He was admitted to Serdang Hospital and had a full major Thyroidectomy operation on 4th March 2013.

Let us all pray for Pak Yoh's speedy recovery so that he can come back taking care of P11 cleanliness.




Sunday, March 17, 2013

PETITION by Torchasia *Children Soccerworn* : WE WANT FOOTBALL FIELD AT TAMAN TASIK WAWASAN


PETITION by Torchasia *Children Soccerworn* : WE WANT FOOTBALL FIELD AT
TAMAN TASIK WAWASAN

Cr. Chang Kim Loong has been invited by a group of children and their trainer, Ms. Joon from
Wawasan 4 for their “Harry Potter Play” and was accompanied by Alice (Secretary) and Pn
Sharifah (PA) on the Friday, 21st December, 2012 at 5.00pm.

Literally the intention of these children’s’ invite was not the play but is to voice out their
discontentment on the excessive plants planted in and within the Wawasan Lake Park, which
leave them no space for their football.

In order to redeem the space and having some plants removed, they have worked hard in
getting 200 signatures supporting their petition.

However, Cr. Chang with great empathy agreed to intervene to assist them in the best possible
way and Alice who is also the Chairperson of RA Puteri 11 agreed to have the removed plants
for their Taman.

Let’s pray that Cr. Chang can obtain the utmost best deal for these little gentlemen and ladies
of Wawasan 4.

God Bless

Voice of Alice Choo
Secretary JKP 16




PROGRAM BACK TO SCHOOL MPSJ 2012 BERSAMA JAWATANKUA​SA PENDUDUK (JKP) 16


PROGRAM BACK TO SCHOOL MPSJ 2012 BERSAMA JAWATANKUA​SA PENDUDUK (JKP) 16 - held on 29th Dec 2012

Astoundingly this event has been carried out gayly and smoothly with 55 children and their parents from
Zone 16 gathered at Wawasan Lake Park early at 9 am, even though the giveaways of the school bags
were at 10am.

Children ranging from age of 8 to 15 were so joyful and proud to have a new school bag for their coming
school days.

Having to say this, our Cr. Chang and his JKP Team Members shared the joy and pride wishing them an
excellent academic year with flying colors.

Voice of Alice Choo
Secretary JKP 16




Sunday, March 3, 2013

Saluran Aduan MPSJ

Whilst many residents sit down and expect the local council or JKP to solve residential problems, we need your co-operation too by submitting your complaint.

For a start, residents are strongly encouraged to lodge a complaint with local council stating your problem, the location of problem and what assistance you require. For example, you can request your local council to clear the illegal dumpsite and erect a signboad "Dilarang membuang sampah. Denda....".

To lodge a complaint with MPSJ, please follow the steps below:
http://ocps.mpsj.gov.my/cms/content.jsp?id=com.tms.cms.section.Section_56132bed-a020f414-15da7d00-b9ac0c69

Saluran Aduan MPSJ
Majlis Perbandaran Subang Jaya telah menyediakan pelbagai saluran bagi memudahkan penduduk sekitar kawasan Majlis Perbandaran Subang Jaya membuat aduan. Diantara saluran-saluran yang disediakan MPSJ bagi melaksanakan aduan adalah :-

Saluran 1:-Kaunter Aduan - Aras 1, Kaunter bersepadu , Majlis Perbandaran Subang Jaya.

Saluran 2:-Hotline :- 03-8024 7700 (primary) or 03-56376545 (secondary)

Saluran 3:-Melalui laman web MPSJ. http://www.mpsj.gov.my/ -> berdaftar bersama My@MPSJ at http://ocps.mpsj.gov.my/cms/signup.jsp

Saluran 4:-Sila hantarkan sebarang aduan melalui email kepada mpsj@mpsj.gov.my

Saluran 5:-Alamat surat menyurat Majlis Perbandaran Subang JayaPersiaran Perpaduan USJ 5,47610 Subang Jaya,Selangor Darul Ehsan

Sebarang tindakan dan maklumbalas aduan adalah selama 14 hari waktu berkerja.

Alternatively, you can write a complaint letter and submit to RA or JKP who will then relay to MPSJ seeking their assistance.

Potholes Patched in front of SJK (C) Keng Chee Wawasan Puchong

The potholes in front SJK (C) Keng Chee Wawasan Puchong were patched up on Thu, Feb 28, 2013. Thank you MPSJ and JKP16 for diligently following up on this matter and getting matter resolved promptly.