Whenever one buys a piece of property where there are common facilities, such as security, social amenities and other areas that require the involvement of all unit owners, one will be requested to enter into a Deed of Mutual Covenant (DMC). This is done simultaneously upon the signing of the Sale and Purchase Agreement (SPA).
In layman's language, the DMC is an agreement of mutual undertaking between the developer and the purchaser. The contents vary from developer to developer, and they are distinctly separate from those in the SPA.
Unlike the SPA, the contents of DMC are not dictated by the Housing Development Act. The contents are purely clauses that spell out the mutual agreements/undertakings of both buyer and the developer. Many house buyers do not really pay attention or understand the details of what they are signing for. This is particularly so in cases where the buyers, to save cost, have not engaged their own lawyers but rely on the developers' lawyers who have prepared both the SPA and the DMC.
Some of these clauses one has to be wary of are as follows:
- Maintenance charges
This is where the clauses is invariably left open ended. Usually the agreed amount is valid for a set period (say two years). After that, it is likely to be increased by what is merely stated as 'a reasonable amount'. A lot of dispute have arisen from this 'reasonable amount', and buyers are holding the short end of the stick. Remember, you must understand what you are signing, and if you are not comfortable, ask questions to clarify.
