The Space You Get

24th September 2009
Your Sale and Purchase Agreement states that you're getting a house with 1,200sq ft of space. However, upon obtaining vacant possession, you discover that it's actually quite a lot smaller. Whoa, though. Before confronting your developer for explanations, there are some things you need to know.

First, you can't revoke your purchase based on this discrepancy � not even if a professional surveyor confirms that there is indeed a shortfall. However, you can recover some money from the developer if the difference between what you signed for and what you're actually getting exceeds a stipulated amount.

Second, the definitive size is what is stated in your property's final document of title or strata title. So, even if you engage an independent surveyor to measure your home, legally, courts will only rely on the title.

Third, your title must already be issued before you can make any challenge on the size. If you go to court before that, the developer's lawyers will argue that your case is premature.

But what if it's the other way around � what happens if your property is delivered with more space than was committed? Well, mum's not the word, and don't be too quick to pop the bubbly. You may just have to pay for the difference, which in some instances can be rather substantial.

Pay you say? Yes! Read your agreement. Depending on what you bought and when the original transaction was done (which is relevant if you didn't buy the property from the developer but from a previous owner), it can mean a world of difference.

If your purchase was done with the developer before 2002 � when agreements were governed by the Housing Development (Control and Licensing) Regulations 1989 � you would have to pay the difference.

One purchaser who declined to be named found this out the hard way.

In 1997, she bought a condominium that claimed to be 1,175sq ft from the secondary market. Years later, when her strata title was issued, she was informed by her developer that she needed to pay an additional RM5,000 because her unit was 40 sq ft larger. The amount equates to RM125psf, or the price at which the developer originally sold the unit to the first buyer.

After 2002, when the regulations were amended, stratified parcel owners were no longer liable to pay for any excess in built-up space, but purchasers of landed property had to pay up to a maximum of two per cent of the total land area as shown in their final titles.

In the same amendments, developers of stratified projects were required to pay for the difference in area only if the size shown in the strata title was smaller by more than three per cent.

Via the latest amendment made in 2007, this was subsequently adjusted to two per cent, which means that today, if you bought a 1,000sq ft unit but find your strata title states the size is at least 20sq ft smaller, the developer would have to pay you the difference based on a value as stated in the agreement.

National House Buyers Association honorary secretary general Chang Kim Loong said the amendments were made to favour purchasers.

"The two per cent difference is a reasonably accurate tolerance for construction, especially with respect to land sizes," he said.

"The amendment seeks to prevent excessive claims by the developer."

Chang added that in the legislation governing landed properties (Schedule H), only developers are contractually bound to pay because they did not use any "extra" land to construct the building structure.

The base land dimensions remain the same and the developers did not have to pay any "extra" cost that wasn't the consequence of their own doing.

In the event that a developer has been wound up by the time the final documents or strata titles have been issued, Chang advised purchasers to file a claim as an "unsecured creditor" against the defunct company.

Such claims, he said, have to be filed with the appointed liquidators.

Source: NST