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Shocking 304 EOTs issued by the Controller of Housing

This article is a continuation of our last month’s article - EOT ruled irregular by Court of Law.

By The iProperty.com News Team on Jul 04, 2017

The issue of Extension of Time (EOTs) was a controversial one and Parliamentarians were up in arms and demanded that the Government reveal the statistics on the number of EOTs issued; number of buyers affected and deprived of their rights and entitlement to liquidated ascertained damages (LAD) for late deliveries, naming of those housing developers who benefited from the EOTs fiasco and the projects involved as well as the so-called ‘special circumstances’ that warranted granting of EOTs to those developers.

A whopping 304 EOT

The current Minister of Urban Wellbeing, Housing & Local Government, YB Tan Sri Noh Hj Omar has just declared the statistics in the current Parliament sitting on 3.4.2017, attached is an excerpt of the statistics from #TanyaMenteriKPKT # Parlimen 2017.

It is indeed shocking that a total number of 304 EOTs have been issued by the Minister and those under his charge. The only word to describe this happening is “OMG”. It is a repulsive and divisive act against house buyers’ rights and their lawful entitlement. We are utterly shocked and disappointed with the atrocious numbers of EOTs and gross injustice inflicted on naïve and innocent buyers inclusive those first timers. 304 EOTs is by no means a small number. No matter how justified it may seem to be, in the eyes of the Minister, it is absurd and devoid of wisdom and a pure dereliction of duty of the Minister and his Ministry. They were supposed to ensure that the terms and conditions of the statutory SPA are observed and complied by the housing developers whom they licensed. If the Minister had swiftly acted and strictly enforced the letters of the housing development legislation there would have been no need for any EOTs. Why the lax and lack of monitoring, supervision and policing of each housing project?

With the 304 EOTs issued, let’s assume that there is each condo project has an average of 350 units, it equates to 106,400 affected victims of this unjustified act of granting EOTs. Say, each buyer has a family of four (4), it means that as many 106,400 buyers had been denied compensation in the form of LAD at the stroke of a pen, affecting a total of 425,600 people! What or who gives the Minister the right to give away money which rightfully belongs to the house buyers?

Stranger still is the interpretation of the so-called grounds for the granting of the extension, the: “Special circumstances or hardship or necessity” that the Minister mentioned in Parliament namely: “kejadian bencana alam, projek banjir berlaku, keruntuhan tanah dan juga ‘stop order’ daripada PBT” (natural disaster, flooding, landslides and ‘stop-order’ issued by Local Council).

The developer should not be allowed to take advantage of his own wrong doings, ineptness and bungling. Some reasons are self-inflicted and not Act of God. Local Council licenses construction at site (of development projects) between the permitted hours of 8.00am until 6.00pm on weekdays and Saturdays. In situations where developers defy the laws and continue with construction works beyond those permitted hours ie say until midnight, surely it will incur the wrath of the neighbors and Local Council must heed the complaints of those affected in the vicinity by issuing ‘stop-order (for defiance). Aren’t those circumstances ‘self-inflicted’? Or for that matter: ‘flooding’. Would a neighborhood suffer flooding if the developers had properly planned and built sufficient drainage, slit drains and discharge outlets? Similarly, would a place suffer a landslide, if the developers had planned and built retaining walls sufficient to avoid such happenings? Are these not ‘selfinflicted’?

The provision for granting of EOTs is not for run-of-the-mill excuses; the process is not transparent; and it reflects lack of integrity in the lawmaking process, and its observance by developers; it opens the door to possible corruption in the housingconstruction industry. Has our country now reached a state of economic crisis that the Minister must dish out EOTs to developers who are already in distress (due to bad management) and threatened to abandon their projects?

Don’t buy unless you get ‘no EOT’ assurance from your housing developers.

Prospective house buyers should hold off their purchases for now due to a lack of certainty on when the property they wish to buy will be completed: will it be within 24 months for landed property or 36 months for stratified property OR will the housing developers seek the Minister and his Controller of Housing’s intervention for an EOT ranging for extended period of 6 – 24 months (without LAD compensation). 

Prospective house buyers should continue to hold off their purchases until the Housing Minister unequivocally assures that he and his subordinates would not grant any further extensions of time. In addition, house buyers should demand for developers to issue an irrevocable written undertaking that they would not seek EOTs from the Minister or the Controller.

With the possibility of EOTs hanging over the buyers’ head, buyers can’t plan their time. Assuming a first-time house buyer wants to get married – they thought their apartment should be ready in 36 months but subsequently it got delayed by a year. Never mind, after one year thr buyer thought that they can get compensation of LAD in lieu thereof. But alas, the Minister gives an EOT and the buyer gets nothing.

Having paid for rental (for accommodation while the house is being built) and having paid to service interest, affected buyers/ victims will not be getting any LAD at all in lieu of being delayed.

To make matters worse, the house buyers were never consulted on the EOTs, even though the only parties of a sale and purchase agreement (SPA) is the home buyer and the developer – not the government.

In some cases, the house buyers are not even aware of the EOT until they had been handed the keys to their new house, together with a notice of the EOT and the realization that they would not be able to pursue damages. Under the standard terms of an SPA, the LAD for the late delivery of houses is 10 percent of purchase price per annum.

The practice of granting EOTs to housing developers started when the ministry was headed by the then Housing Minister, Dato Seri Abd Rahman Dahlan, and is now continued under the current Minister, Tan Sri Noh Omar.

The figures are so mind-boggling. How could they have issued the EOTs to developers to save developers at the detriment of the house buyers?

The fault lies with the lack of enforcement and supervision by the ministry, which is empowered by several provisions under the Housing Development (Control and Licensing) Act 1966 (HDAct) to take preventive actions against defaulting project development. Symptoms could be diagnosed through the quarterly lodgment of progress report (by housing developers) in Form 7F. One wonders whether the Ministry has enough qualified personnel to diagnose any sign of sickness in a housing project. Otherwise, how do you account for the prodigious numbers of problematic housing projects simply dissected into three (3) categories termed: abandoned, sick and late?

The minister can even take over a housing project under Section 11 of the HDAct, if a licensed housing developer acts and conduct business to the detriment of house buyers. Has Section 11 of the HDAct been invoked by these ministers to protect house buyers? If they had invoked Section 11 to protect house buyers, the issue of EOT will never arise.

Meantime, the case is expected to go to the Court of Appeal and parties are waiting for the court’s written judgment on the case.