WITIHIN a week, I was asked two questions on housing issues:
ONE , what action can a purchaser take when he has signed a sales and purchase agreement (SPA) for a particular unit, but is given a different one; and
TWO , can a purchaser demand from the developer the right to take the measurement of a completed unit (to be done by his architect at his own cost) before he signs the SPA?
For the first question, there must be a good reason why the developer substituted another unit for the original one. In the case of Phang Shyue Ming v Couture Homes Sdn Bhd (2017, Malayan Law Journal), the plaintiff had bought a commercial unit, which we shall call LG-30, from the defendant (developer). But when the unit was delivered, the unit number was LG-29. The plaintiff claimed that this was a breach of the original contract. The defendant claimed that it had delivered a unit in similar size and had, therefore, fulfilled its obligation under the SPA.
What happened was that there was a change in the building plan, which had been amended subsequent to the signing of the SPA. As a result of the amendment, the original location of LG-30, which had been booked by the plaintiff, had been replaced by a “switch and meter room” and a staircase. LG-30 had ceased to exist. The court held that the amendment and substitution of LG-30 was necessary since the building plan (as amended) had been approved by the local authority. Furthermore, Clause 10.1 of the building plan permitted the defendant to substitute the plaintiff’s unit with another unit.
The amendment and switch of the unit was expedient and necessary and did not amount to an unjust enrichment by the defendant. By giving a unit of almost similar size to the plaintiff, the defendant had discharged his obligation under the SPA.
Going by the decision of the High Court in this case, only where it was expedient or necessary could a developer substitute an original unit that was given to a purchaser. There should be clear evidence to show that the original unit was no longer in existence as a unit, but had been taken over by utilities or used as common property. With this decision, it appears that a developer may not change a unit without a solid reason, as given in the above judgment.
On the second question, it is more a question of a willing buyer-willing purchaser scenario.
There does not appear to be a legal obligation on the part of the developer to allow such an action (of unit measurement), even if the purchaser were to bring his own architect, at his own costs, to do the measuring. A developer would have the right to deny such a request, but if the unit is not up to the measurements — as stated in the SPA — then the purchaser has a right to an action in breach of the contract. And, in any case, there will always be buyers for the units without this condition attached. It is, of course, arguable that some developers may be more accommodating, and it would depend on the developer, who might allow such an action. But, he has no legal obligation to do so.
There is of course, reason for concern on the part of the purchaser.
Clause 13 of Schedule H (Regulation 11 (1)) of the Housing Development (Control and Licensing) Act 1966 and Housing Development (Control and Licensing) Regulations 1989, which is the SPA for Building intended for Subdivision (Strata Title property), provides that “no error or misstatement as to the description of the area of the said Parcel shall annul the sale of the said Parcel or entitle the Purchaser to be discharged from the purchase” (Clause 13(1)).
Clause 13(2) continues that “any error or misstatement as to the description of the area of the said Parcel shall give the Purchaser an entitlement to an adjustment of the purchase price in accordance with the provisions of this clause”.
Clause 13(3) provides for an adjustment of the purchase price should there be a diminution in the area originally shown in the building plan. The reduction in area, however, should be in excess of three per cent of the parcel area. However, if the area of the parcel exceeds the area shown in the building plan, the vendor (developer) shall not be entitled to any adjustment of the purchase price (Clause 13(4)).
It might work out well for the purchaser not to have any measurement done!
The conclusion is that it is very much a willing buyer-willing seller situation. Sometimes, a developer may allow such a request. But, if he does not do so, he is not contravening any legal provision either.
DATIN GRACE XAVIER
Research fellow, Faculty of Law, Universiti Malaya