HANDING OVER VACANT POSSESSION OF PROPERTIES UNDER CONSTRUCTION IN SARAWAK

INTRODUCTION

In Sarawak, during these recent years, there has been a rise in the number of sale and purchase transactions of housing accommodations or residential properties (“the properties”) under construction sold by various licensed housing developers (“the developers”).

The Housing Development (Control and Licensing) Regulations 2014 (“the Housing Development Regulations 2014”) provides for the standard format of the contract of sale to be adopted within the State of Sarawak for the sale and purchase of the properties under construction particularly for landed properties such as single storey houses and double storey houses (Form B in the Schedule of the Housing Development Regulations 2014) and for strata titled properties such as apartment units (Form C in the Schedule of the Housing Development Regulations 2014).

In other words, the rights and obligations of the developers and the purchasers in respect of the sale and purchase of the properties are stipulated in the said Form B or the said Form C as the case may be, which provides for, inter alia, the schedule of payment of purchase price, the time period required for the developers in handing over vacant possession to the purchasers and the defect liability period in respect of the properties concerned.

In the construction industry, occasionally various issues (including but not limited to the Covid-19 pandemic in 2020 to 2022) may be faced by a housing developer concerning the delay in the completion and the handing over of vacant possession of the properties to the respective purchasers .

TIME PERIOD FOR HOUSING DEVELOPERS TO DELIVER VACANT POSSESSION OF THE PROPERTIES TO PURCHASERS

One of the primary concerns and anticipation for all purchasers is the timing of when they are able to receive the keys to their properties and such concern is covered in the said Form B and Form C as below: -

Landed properties

• Clause 18(1) of Form B in the Schedule of the Housing Development Regulations 2014: -

24 months from the date of the Sale and Purchase Agreement.

Strata titled Properties

• Clause 23(1) of Form C in the Schedule of the Housing Development Regulations 2014: -

36 months from the date of the Sale and Purchase Agreement.

CALCULATION OF LIQUIDATED ASCERTAINED DAMAGES (“LAD”)

In the event that a developer fails to deliver the vacant possession of the properties to the purchasers within the time period as stipulated in Item 2.1 above, the developer concerned is liable to pay to the purchasers liquidated damages calculated from day to day at the rate of 3% per year (for landed properties)[1] OR 8% per year (for strata titled properties)[2] of the purchase price from the expiry date of delivery of vacant possession until the date of the delivery of vacant possession of the properties. A purchaser’s right to claim for liquidated damages for delay in the completion and handing over vacant possession of properties only arise upon the actual date of handing over vacant possession of the properties to the purchasers. Meaning to say, the liquidated damages shall be paid by the developers immediately upon the date the purchasers take vacant possession of the properties.

It is also important to emphasize that the timeframe for the developers’ completion and handing over vacant possession of the properties should be considered alongside the following matters: -

(a) Force Majeure Events

The developers are not liable for the delays in the completion and handing over of vacant possession of the properties if such delays are caused by circumstances beyond the developer’s control, inter alia, due to strike, lockout, riot, civil commotion, war, loss or damage by fire, flood, tempest, shortage of building material, accident to works, inclement weather, act of God, delay by the Appropriate Authorities or other public authorities in supplying water and/or electricity to the properties or the developer’s inability for reasons beyond their control to obtain any necessary sanction or approval from the appropriate authorities.

[1] Clause 18(2) of Form B in the Schedule of the Housing Development Regulations 2014

[2] Clause 23(2) of Form C in the Schedule of the Housing Development Regulations 2014

Should any of the aforesaid events occur, the time for the handing over of vacant possession of the properties will be extended accordingly, provided that the developers must inform the purchasers in writing within seven (7) days of the occurrence of any such events and the notification must include an estimated timeframe within which the developers are required to resolve the issues arising from any such events. [3]

(b) Gazettes issued by the Government in line with the Covid-19 pandemic

The Covid-19 pandemic has significantly impacted the construction industry in many ways including causing a massive shortage of labour, extended lockdown periods, delays in production and delivery of raw and building materials causing difficulties for the developers in adhering to the project schedule. In line with this matter, Sarawak Government Gazettes concerned were issued in which it was provided that that in respect of any agreement entered into between the purchasers and the developers before 18 March 2020 [4], the period from 18 March 2020 to 31 August 2020 (which was further extended to 17 March 2022 [5]) shall be excluded from the calculation of the time for handing over vacant possession of a housing accommodation and the calculation of LAD thereof.

CONCLUSION

While the developers have the duty under the contract of sale regulated by the Housing Development Regulations 2014 to complete and hand over vacant possession of the properties to the purchasers within the time stipulated therein, the purchasers must also bear in mind that the developers’ duty shall be considered along with the above factors (i.e. the force majeure events which are beyond the developers’ control) stipulated in the contract of sale and the gazettes issued by our State Government to deal with the issues of delay caused by the Covid-19 pandemic particularly during 2020 to 2022.

[3] Clause 19 of Form B and Clause 24 of Form C both in the Schedule of the Housing Development Regulations 2014

[4] Clauses 2 and 4 of the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) (Housing Development (Control And Licensing)) Regulations, 2021

[5] Clause 3 of the Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) (Housing Development (Control and Licensing)) Extension of Period Notification, 2021