Property Hunter Magazine October Issue 2014 | Page 66

/// Contributor FIRST PAYMENT Both HDA and HDE provided that the first payment of 10% is payable immediately upon the signing of the SPA (5% for HDO). Nonetheless, the norm nowadays is to pay a minimal booking fee upon signing the booking form as part payment and the remainder of the first payment upon signing of the SPA which is on a later date. As for the remaining 90% (or 95% in HDO) is paid progressively throughout the construction period according to the stage of work done. LOAN Chris Tan The homebuyer has to obtain a loan within 14 days from the date of receipt of the stamped copy of the SPA and notify the developer with the name and branch of the financing bank. Do take into consideration that Developer Interest Bearing Scheme or any similar schemes are no longer allowed and tighter financing measure has been implemented such as the recent changes to the base lending rate. Lawyer Specialising in Real Estate Chris Tan is the founder and now Managing Partner of Chur Associates, a boutique legal practice that thrives in delivering business friendly solutions for its clients and having a niche positioning of ‘Everything Real Estate’ serving the entire value chain from the upstream to the downstream. Chur Associates is a boutique legal firm founded in 2004, specialising in designing legal solutions catered to our clients’ needs. Chur Associates’s brand promise is “We Deliver!” To that end, they offer clientsthe necessary means and methods to ensure their requirements are met. You can get in touch with him at Facebook: Chur Associates Email: [email protected] After securing a financing loan, you will only need to pay the remaining sum not covered under the loan sum (ie. not up to 90% of the purchase price) and thereafter service the loan on time. It is also prudent to check if the bank has released the sum during progressive billings intervals as any delay on payment may incur the late payment interest. In any event that late payment interest is applicable and the homebuyer wishes to claim for the interest charges against the bank, he will need to prove the bank’s delay. Nonetheless, the developer is entitled to terminate the SPA and forfeit 10% of the purchase price if the homebuyer fails to pay the instalment or interest for any period in excess of 28 days after the due date of instalment or interest. An advice for the homebuyer is to check the current stage of work done by the developer as not all homebuyer purchases their property at the early stage of construction. Taking HDA for example, the purchaser has to pay 45% of the purchase price upon buying the property where the construction has reached stage 4, ie. the purchaser has to have sufficient amount of funds to pay the 45% progressive payment or a penalty of 10% may be imposed by the developer after 21 working days. Nonetheless, the developer has the discretion to grant the homebuyer a grace period to settle the 45% progressive payment and you may want to confirm this with the developer prior to signing the booking form or SPA. The rationale behind the late payment interest is not to penalize the homebuyer but to ensure the homebuyer to make timely progressive payment for the developer to keep the ball rolling. While homebuyers are not anticipating for any late delivery of vacant possession, the developer is definitely hoping for punctual progressive payment to ensure sufficient liquidity to keep the construction progressing on schedule. SUBSEQUENT PROGRESSIVE PAYMENTS AND LATE PAYMENT INTEREST Trending Up Legally in view of the Property Boom in Malaysia (Part 5) Unless you have secured a loan to finance 90% of the purchase price, you may want to be alert on any notices from the developer for the progressive payment. For cash rich homebuyer, this is important to observe as ignoring notices from the developer may incur more cost to purchase the property. Below is a simple illustration on the time frame and the late payment interest applicable:HDA HDE HDO Time period 21 working days 14 days 14 days Penalty 10% per annum 8% per annum 10% per annum M alaysia day is right around the corner a nd it marks the establishment of the Malaysia federation for 51 years. Throughout all these years of this national occasion, the property market in Malaya, Sabah and Sarawak has never cease to prosper and is evidential with the launching of abundance new developments in each corner of the federation. Property market does not only provide a platform for buyer seeking residential, commercial or industrial assets, but also serve as a form of investment to most people who have the extra cash in their pockets as the return may be better than saving in a fixed deposit account. As mentioned in my previous articles, any purchase of new residential property in West Malaysia from the developer is subject to Housing Development (Control and Licensing) Act 1966 (HDA). For readers in Borneo island, the new residential development in the land below the wind is governed under the Housing Development (Control and Licensing) Enactment 1978 (HDE) while the Housing Developers (Control and Licensing) Ordinance 1993 (HDO) is applied in the land of the hornbills. While the author makes reasonable efforts to present information which he believes to be reliable, the author makes no representation that the information or opinions contained in this article is accurate and complete. Readers are advised to seek specific professional advice before acting on the views. 66 www.PropertyHunter.com.my HDA, HDE and HDO has stipulated a standardize Sale and Purchase Agreement (SPA) for all homebuyers purchasing the sell then build model from the developer for Malaya, Sabah and Sarawak respectively. Similar to those we have familiarized ourselves with in HDA, the SPA is provided in the regulations under Schedule G and H. TREND NO 4: PAYING YOUR PROGRESSIVE BILLING PROMPTLY Any prudent homebuyer will realize that the third schedule of the SPA (second schedule for HDE) details out a table for progressive billing payment. You are required to pay according to the specifications provided upon signing on those dotted lines in the SPA. This is a series of articles that examine the latest trends and issues in real estate investment. Stay tuned. NOTES www.PropertyHunter.com.my 67