Residential vs commercial non landed properties 1
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Condominiums and apartments used to be the few categories of non-landed homes. But as land in prime areas become scarce and the function of homes as just a roof over our heads change, a wave of unconventional non-landed properties came into the market. These days, non-landed properties range from SoHos (Small-Office-Home-Office), SoVos (Small-Office-Versatile-Office), and serviced apartments, to even lavish butler-serviced apartments.

However, what many don’t know (or found out too late) that even if many of these property types have “home”, and “apartment” in their names, they DON’T in actuality, hold residential titles. So if you’ve been tempted by the prospects of living with concierge services or high speed internet in your very own SoHo, first learn the different legislations that are involved when buying residential and commercial titled high-rise properties and understand your rights before sealing the deal!



Protection under the Housing Act

The development of “housing accommodation is controlled by the Housing Development (Control & Licensing) Regulations 1989 (amended 2015). As such, the first thing you should know is whether the property you are buying is considered a “housing accommodation”.

Under the Housing Development (Control & Licensing) Regulations 1989, non-landed residences (condominiums, apartment, flats) fall under Schedule H, while other build then sell non-landed “housing accommodation” will come under Schedule I. They are also known as Schedule Sales and Purchase Agreement (SPA), and do not apply to commercial non-landed dwellings (SoHos, serviced apartment etc.).

Definition of housing accommodation: Any building, (tenement, or messuage) which is intended for human habitation or partly for that purpose.


For Schedule SPA high-rise homes, the developer has to gain permission from the local council, and have all compliances, layout plans, and building plans approved before being awarded a developer’s license and the APDL, a permit to advertise and sell the non-landed residential development. This however, does not apply to commercial non-landed properties (non-Schedule SPA).

Given that both “housing accommodation” (residential) and commercial non-landed homes differ in terms of whether they are Schedule Sales and Purchase Agreement (SPA), here are several important points to look at in how they differ and what are the rights entitled to buyers of each.

Read also: A shortcut guide to the Sales and Purchase Agreement



1. Commencement date and completion

Your property should be completed within a given time frame from the commencement date, which differs according to whether it is under the Housing Act or not.


For properties under the Schedule SPA, it is typically 36 months from the date when the developer and buyer sign the SPA. As for non-Schedule SPA, commencement may only begin on the date when the building plans are approved. The developer may also extend the completion period for reasons that they may claim to be “out of their control”.


2. Compensation for late delivery (LAD)

Late delivery is also known as Liquidated Ascertained Damage (LAD). For Schedule SPA non-landed properties, damages for late delivery is at 10% of the purchase price, per annum. Late delivery can be considered to be the time right after the completion date, until the date of actual vacant possession. Schedule H properties will also be entitled to additional claims for LAD if the common facilities are not completed on time as well.


3. Procedure of delivery of vacant possession

Buyers of commercial and residential high-rise properties also go through different processes, which differ in terms of the manner of delivery of vacant possession. Typically, residential titled homes will have to obtain the Certificate of completion and compliance (CCC) before it is ready for occupation. Those of commercial titles on the other hand, may have additional steps before the unit is ready for occupation.


4. Defect liability period

This is the time period in which the developer warrants against defects in the individual units, building, and even the common property which may arise within the first 24 months after buyer(s) take possession.


5. Stakeholders’ money

Typically, when it comes to residential non-landed properties under the Housing Act, 5% of the purchase price is retained against repairs and replacements by the lawyer stakeholder. The sum is then released to the developer in 2 stages. As for commercial high-rises which are not legislated under the act, no sum of the stakeholders’ money is retained.


6. Schedule of payment of purchase price

One of the most important things buyers of commercial titled high-rises should know is that the payment for these units are upon commencement of work or the developer’s written notice. This is an arrangement which is top heavy and could be biased against buyer(s). In contrast, payment of residential non-landed properties is done progressively, as according to the architect’s certification of stage work completed.


7. Tribunal for home buyers claim

As a means to provide legal aid to home buyers, the housing tribunal was created by Parliament, where everyday Malaysians like you and me won’t have to fork out a fortune to stand up to developers who violate the S&P.

For the unaware who buy a commercial non-landed home, they may easily be confused by the S&P, which are typically drafted by lawyers in the interest of the developer. These agreements are known to appear like a “legit”, government legislated S&P, albeit with terms and conditions that may not have the buyer’s best interests in mind.


Here’s a table to help you see the differences between residential and commercial non-landed properties:

Source: National House Buyers Association (HBA)

Read more: 7 Differences Between Residential and Commercial Properties



Conclusion

Despite their differences and the fact that residential high-rises are protected under the Housing Act and commercial ones are not, it is best to do your due diligence and appoint your own lawyer to vet through any documents you have to sign throughout your purchase, regardless of residential or commercial non-landed homes. Take note that not all developers of commercial high-rise properties will actively seek to draft one-sided Sales and Purchase Agreement(s), and not every S&P legislated under the Housing Act can guarantee your rights.


Referenceshttp://www.thestar.com.my/business/business-news/2016/07/23/not-all-apartments-are-the-same/http://www.malaysianbar.org.my/conveyancing_practice/law_realty_purchasing_a_new_property.html


(Written by: Looi Jing Er, 28th April 2017)

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Quoted from article:

"As for commercial high-rises which are not legislated under the act, no sum of the stakeholders’ money is retained."

No wonder some developer only provide 6 months defects warranty period.They got our money and don't want to held liable for too long.