What Can Be Done if a Developer Abandons the Project?
Be the first to review
Among the most common complaints of strata property residents in Sabah is the developer or property manager's failure in managing the housing development to account for proper details for management fee collection, big pay amount to property managers, company directors, perceived not doing a proper job or any related work at all, and unjustifiable expenditure.
If the property developer suddenly decides to up and disappear, there are 3 things that may happen: you can terminate your Sale and Purchase Agreement, obtain a full refund, or have the developer prosecuted.
The concept of Sell-then-Buy is attractive not only to buyers who get to enjoy exclusive early bird rates, but also to the developers themselves as they will have a cash flow to enable them to complete the project.
But, what if the developer never goes through with the project, and you become yet ANOTHER unfortunate victim of abandoned property?
It is not all gloomy days ahead. The Ministry of Urban Wellbeing, Housing and Local Government regards abandoned housing projects as a serious problem.
If a developer is blacklisted, the company and its board of directors will not be able to apply for licences and advertising permits. It will also not be able to renew its advertising and sales permits, and the company name will be added to the ministry’s website.
A project is considered abandoned if:
- There is no significant construction activity at the site for six consecutive months.
- The developer is under the control of the Official Receiver.
- The developer admits in writing to the Housing Controller that it is unable to complete the project.
Tips to Prevent Becoming A Victim of An Abandoned Project
- Avoid Sell-then-Build (STB) schemes. Instead, opt for Build-then-Sell (BTS) concepts. One popular one is the Build-then-Sell 90:10, where buyers pay the deposit of 10% upfront, and the remaining 90% only when the house is ready.
- Do some research and make sure you find out these things about a developer before buying from them.
- Know which developers are blacklisted by the Malaysian Ministry of Housing and Local Government.
Falling into uncompleted property traps can be a painful experience. A little research before taking the plunge will go a long way. The lesson we can gather is that prevention is always better than cure, and as homebuyers, we ought to be smart in our purchasing decisions to avoid developing our own victim story!
The views and opinions expressed in this article are those of the authors and not intended to malign any company, individual or necessarily reflect the official policy or position of any agency or organization. Focal Times is a subsidiary of Maxworld Consulting Sdn Bhd, a regional organization founded by a mixture of agile and experienced corporate finance, venture capital and industrial experts. This establishment focuses on sharing current banking affairs, latest property developments and updates and more.