2008 Mar Re News1

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N E W S L E T T E R

VOL 7 NO 1.0 MARCH 2008

KDN NO. PP 12544/10/2007

R E A L E S T A T E

The Housing Development (Control And Licensing)

(Amendment) Act 2007

IN THIS ARTICLE, ANITA BALAKRISHNAN REVIEWS THE PROVISIONS OF THE NEW SECTION 22D OF

THE HOUSING DEVELOPMENT (CONTROL AND LICENSING) ACT 1966, WHICH WAS INTRODUCED

BY VIRTUE OF SECTION 27 OF THE HOUSING DEVELOPMENT (CONTROL AND LICENSING)

(AMENDMENT) ACT 2007.

The Housing Development (Control And Licensing) (Amendment) Act 2007 (HDA Amendment

Act) was gazetted on 15 February 2007 and came into operation on 12 April 2007. The HDA

Amendment Act was passed to amend various provisions of the Housing Development (Control

And Licensing) Act 1966 (HDA 1966), which regulates the control and licensing of the business

of housing development in West Malaysia and other matters connected therewith.

One of the key changes brought about by the HDA Amendment Act is the introduction of a newSection 22D as follows:-

22D(1) For the avoidance of any doubt, an absolute assignment in writing, under the hand of the

assignor of the housing accommodation, not purporting to be by way of charge only, of the

proprietary right or interest in the housing accommodation and the legal chose in action in the sale

and purchase agreement in respect of the housing accommodation, of which express notice in

writing has been given to the housing developer by the assignor in the manner set out in subsection

(2) shall be deemed to have been effectual in law to pass and transfer the proprietary right, interest,

chose in action and all legal and other remedies for the same to the assignee, from the date of the

receipt of such notice by the housing developer, and the concurrence of the housing developer shall

not be required.

With the coming into force of Section 22D of the HDA 1966, with effect from 12 April 2007:-

The vendor of a housing accommodation for which the separate document of title has

not been issued is not required to obtain the consent of a developer to the sale and

transfer of the housing accommodation to a new purchaser.

The definition of housing accommodation has been amended by the HDA Amendment

Act 2007 to mean any building tenement or messuage which is wholly or principally

constructed, adapted or intended for human habitation or partly for human habitation and

partly for business premises and such other type of accommodation as may be prescribed by

the Minister (of Housing and Local Government) from time to time to be a housing

accommodation pursuant to Section 3A of the HDA.

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For the purposes of Section 22D, references to new purchaser shall include a

purchasers financier or any beneficiary under the estate of a deceased purchaser or an

assignee under an absolute assignment whether with or without consideration1.

The vendor is however required to deliver to the housing developer, notice of the sale

and assignment of the housing accommodation to the new purchaser, at or after the

completion of the sale and purchase between the assignor and the new purchaser, such

notice to be accompanied by the following:-

(a) a duly stamped sale and purchase agreement between the assignor and the

new purchaser of the housing accommodation;

(b) a duly executed deed of absolute assignment between the assignor and the

new purchaser of the housing accommodation together, if applicable, with a

letter of undertaking from the new purchaser or the new purchasers financier,

as the case may be, to deliver the duly stamped deed of absolute assignment

within fourteen days after the same has been stamped; and

(c) full payment of all sums and outgoings due to the housing developer under the

sale and purchase agreement2.

It is provided in the HDA 1966 that the expression completion of the sale and purchase

in Section 22D(2) in relation to a deed of absolute assignment executed in favour of a

purchasers financier or any beneficiary under the estate of a deceased purchaser or an

assignee under an absolute assignment whether with or without consideration not in

pursuance of a sale and purchase agreement shall mean the date of that deed of

absolute assignment, in which case the requirement for the assignor to furnish the

housing developer with a stamped sale and purchase agreement shall not be

applicable3.

Any person who requires any consent from a housing developer to any absolute

assignment or assignment by way of a charge in contravention of the provisions of

Section 22D shall be guilty of an offence and shall, on conviction, be liable to a fine

which shall not be less than RM50,000 but which shall not exceed RM100,000 or to

imprisonment for a term not exceeding 3 years or both4.

Similarly, any housing developer who:-

(a) requires any consent to any absolute assignment in contravention of the

provisions of Section 22D;

(b) imposes any condition to any absolute assignment or assignment by way ofcharge including requiring the new purchaser to execute any additional

agreement or make any other payment in contravention of Section 22D;

(c) fails to keep and maintain an up-to-date, proper and accurate register of all

purchasers of the housing accommodation until the separate or strata titles for

all the housing accommodation in a housing development have been issued by

the appropriate authority and registered in the names of all the purchasers of

the housing accommodation in that housing developer;

(d) fails or refuses to provide any confirmation in contravention of Section 22D(4) or

imposes any condition or any other fee in respect of any matter arising from

Section 22D(4)

The Housing Development (Control And Licensing) (Amendment) Act 2007 2

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shall also be guilty of an offence and shall, on conviction, also be liable to a fine which

shall not be less than RM50,000 but which shall not exceed RM100,000 or to

imprisonment for a term not exceeding 3 years or both5.

Section 22D(4) of the HDA 1966 imposes an obligation on a housing developer to

provide all necessary and accurate confirmation of the records in the register whenever

requested by a purchaser of the housing accommodation or the purchasers solicitors or

the purchasers financier or the financiers solicitors subject to a payment of a fee not

exceeding RM50 or such amount as may be prescribed from time to time for meeting

every request for confirmation in respect of all of the following:-

(a) full particulars of the housing accommodation;

(b) the postal address of the housing accommodation;

(c) the current purchaser of the housing accommodation;

(d) the current chargee or assignee of the housing accommodation;

(e) the total amount due to the developer under the sale and purchase agreement

as at the date of the confirmation;

(f) such other matter as may be prescribed from time to time.

The Bar Council is of the following view6 with regard to matters not specifically addressed by

Section 22D of the HDA 1966 :

If a developers consent, conditional or otherwise, was granted before 12 April 2007, and

the conditions or payment imposed or required have not been fulfilled or paid and the

developer has not endorsed its consent on an assignment, then the pursuit of thedevelopers consent should be abandoned as it is no longer required.

The endorsement of the consent of a developer is also not required to be obtained in

relation to a deed of Receipt and Reassignment.

In the case of sales and purchases of housing accommodation for which the separate

document of title has not been issued and for which also there is a right under the sale

and purchase agreements between the developer and the original purchaser (Principal

SPA) for the developer to charge an administrative fee of RM500 or 0.5% of the

purchase price whichever shall be lower in return for the developer endorsing its

consent to the purchaser's assignment to any third party, the provisions of Section 22D

of the HDA 1966 shall prevail, and accordingly, there is no obligation on a vendor to payto the developer the administrative fee stated in the Principal SPA.

The Housing Development (Control and Licensing) (Amendment) Regulations 2007 which came

into operation on 1 December 2007 has substituted the sale and purchase agreements

prescribed under Schedule G and Schedule H of the Housing Development (Control And

Licensing) Regulations 1989 with new agreements. The amended agreements provide expressly

that a purchaser may assign all his rights, interest and title in and to a property to third parties

without the consent of the proprietor or developer and the purchaser shall give notice of the

assignment to the proprietor or developer provided:

(a) the purchaser has fully paid the purchase price and duly complied with all the terms

and conditions and stipulations on the purchasers part contained in the sale and

purchase agreements; or


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(b) before the full payment of the purchase price, the purchasers financier has provided

the developer with the purchasers financiers unconditional undertaking to pay the

loan sum in the manner set out in the sale and purchase agreement and the

developer has provided the purchasers financier with the developers undertaking

to refund the loan sum in the event the memorandum of transfer in favour of the

purchaser cannot be registered for any reason not attributable to the purchaser.

ANITA BALAKRISHNAN

REAL ESTATE PRACTICE GROUP

For further information concerning amendments to the JDA 1966, please contact

Sar Sau Yee

[email protected]

See Guat [email protected]

1 Section 22D(7), HDA 19662 Section 22D(2), HDA 19663 Section 22D(8), HDA 19664 Section 22D(5), HDA 19665 Section 22D(6), HDA 19666 Circular No. 104/2007 dated 17 May 2007

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2008 Mar Re News1