"The developer is late handing over my house. Can I claim compensation?"

A purchaser signs a Sale and Purchase Agreement for a new condominium.

The developer is supposed to deliver vacant possession within the period stated in the agreement. As the deadline approaches, the purchaser receives an email explaining that construction has been delayed.

Six months later, the unit is still not ready.

The purchaser has continued paying rent while servicing progressive interest on the housing loan. When vacant possession is finally offered, the developer asks the purchaser to sign several documents before collecting the keys.

One of them states that the purchaser accepts the unit without any further claim arising from the delay.

The purchaser asks:

“If I sign this, will I lose my right to compensation?”

The answer depends on the agreement, the statutory framework applicable to the development and the wording of the document presented for signature.

1. Start with the Sale and Purchase Agreement

The first question is not simply whether the developer completed the property later than expected.

The relevant questions include:-

• What type of property was purchased?

• Is the SPA a prescribed statutory agreement?

• What period was allowed for delivery of vacant possession?

• From which date should that period be calculated?

• Was vacant possession delivered in the manner required by the SPA?

• Did the developer receive any legally effective extension?

• Has the purchaser agreed to any settlement, waiver or variation?

For many residential developments governed by the Housing Development (Control and Licensing) Act 1966, the prescribed SPA commonly provides a completion period of 24 months for a landed property or 36 months for a stratified property.

However, purchasers should not apply these periods mechanically to every transaction.

Different considerations may arise for commercial buildings, land sold without a building, developments governed by a different statutory form, and properties in Sabah or Sarawak. The actual SPA and applicable legislation must be examined.

2. A letter offering the keys does not always answer the question

A developer may say that vacant possession was delivered on the date stated in its notice.

The purchaser should check whether the requirements for valid delivery under the SPA were actually satisfied.

Depending on the applicable agreement, relevant matters may include:-

• whether the Certificate of Completion and Compliance was issued;

• whether water and electricity were ready for connection;

• whether the architect or other relevant professional issued the required certification;

• whether the keys were ready to be handed over;

• whether the purchaser had paid the sums properly due under the SPA; and

• whether any other contractual requirement for delivery was fulfilled.

The date on a letter should therefore not automatically be treated as the effective date of vacant possession.

Some agreements also contain a deemed-possession provision. If a purchaser fails to collect the keys within the period stated in a valid notice, the purchaser may be deemed to have taken possession even though the unit has not been physically occupied.

Ignoring the notice may therefore affect the calculation of a claim.

3. How is LAD generally calculated?

Compensation for late delivery is commonly described as liquidated ascertained damages, or LAD.

For claims governed by the prescribed housing agreement, the calculation commonly applies an annual rate of 10% of the purchase price, calculated according to the number of days of delay:

Number of days of delay × purchase price × 10% ÷ 365 days.

For example, a delay of 100 days involving a purchase price of RM500,000 would produce an indicative calculation of:

100 × RM500,000 × 10% ÷ 365 = RM13,698.63.

This remains an illustration only. The correct starting date, ending date, purchase price and applicable contractual provision must be verified for the particular transaction.

KPKT publishes the same general formula in its guidance for the Tribunal for Homebuyer Claims.

4. Rent and progressive interest are not automatically added to LAD

A purchaser may have suffered several financial consequences during the delay:

• rent for temporary accommodation;

• progressive interest charged by the bank;

• storage expenses;

• additional moving costs;

• loss of rental income; or

• increased renovation costs.

These expenses are not automatically added to a contractual LAD calculation.

Whether any separate loss can be recovered depends on the legal basis of the claim, the terms of the SPA, evidence of the loss and applicable principles concerning remoteness and double recovery.

Receipts, tenancy agreements, bank statements and correspondence should nevertheless be retained. They may be relevant when the available remedies are assessed.

5. Does accepting the keys cancel the LAD claim?

Not necessarily.

A purchaser will usually need to take possession of the property even if there has been a delay. Collecting the keys does not, by itself, necessarily mean that the purchaser has agreed to abandon every claim.

The position becomes more complicated if the purchaser signs a settlement agreement, discharge, waiver or acknowledgment containing wider language.

Before signing, the purchaser should identify:-

• which claims are being released;

• whether the document covers LAD, defects or both;

• whether compensation is being offered in return;

• whether the release applies to known and unknown claims;

• whether the purchaser may record a reservation of rights; and

• whether refusing to sign will improperly prevent collection of the keys.

A document titled “key collection form” may contain more than an acknowledgment that keys were received.

Its substance matters more than its title.

6. The LAD claim and the defects claim are different

Late delivery concerns when vacant possession should have been delivered.

Defects concern the physical condition of the property and whether it was constructed according to the SPA, approved plans and required standards.

A purchaser who receives LAD may still have rights concerning defective workmanship or materials. Similarly, the existence of defects does not automatically extend the LAD period indefinitely.

Upon receiving the keys, the purchaser should inspect the property promptly and record defects through:-

• dated photographs and videos;

• a written defect list;

• marked floor plans;

• professional inspection reports, where appropriate; and

• notices delivered in the manner required by the SPA.

Do not delay a defect notification merely because an LAD claim is still being discussed.

7. What if the developer says it received an extension of time?

The existence and effect of any extension require careful review.

The purchaser should request sufficient information to understand:-

• who granted the extension;

• when it was granted;

• the legal provision relied upon;

• the period covered;

• whether the extension applies to the particular development and SPA; and

• whether its validity has been affected by any court decision.

A statement in an email that “the authorities approved the delay” is not enough to determine the purchaser’s legal position.

Equally, a purchaser should not assume that every extension is automatically ineffective without examining the relevant documents and legal history.

8. Can the claim be filed at the Tribunal for Homebuyer Claims?

The Tribunal for Homebuyer Claims provides a forum for certain claims arising from an SPA between a homebuyer and a housing developer.

According to KPKT, its jurisdiction is limited to qualifying residential claims in Peninsular Malaysia and the Federal Territory of Labuan. It does not extend generally to commercial buildings or ordinary disputes between a subsale purchaser and an individual seller.

KPKT presently states that:-

• the maximum claim is generally RM50,000;

• a higher claim requires written agreement between the purchaser and developer for the Tribunal to hear it;

• LAD and other non-technical SPA claims must generally be filed within 12 months from the issuance of the CCC; and

• technical claims must generally be filed within 12 months from the expiry of the defect liability period.

The appropriate forum and deadline must be checked before filing. A purchaser should not wait until negotiations have completely broken down before obtaining advice.

9. What documents should the purchaser collect?

The purchaser should retain:-

• the booking documents and proof of the first payment;

• the complete SPA and all supplemental documents;

• the loan agreement and progressive billing records;

• the developer’s notices and correspondence;

• documents concerning any extension of time;

• the vacant-possession notice;

• the CCC and supporting documents supplied by the developer;

• the key collection forms;

• any proposed waiver or settlement;

• evidence showing the actual date the keys were available; and

• calculations and correspondence concerning LAD.

The timeline should then be arranged chronologically.

A difference of several weeks in the legally relevant starting or ending date can materially change the amount claimed.

10. Do not exchange a legal right for a vague promise

A developer may offer renovation vouchers, maintenance-charge rebates or other benefits as a “goodwill settlement”.

Such an offer may be commercially acceptable, but the purchaser should compare its actual value against the potential claim and examine the release being requested.

The purchaser should also confirm when and how the benefit can be used. A voucher with restrictive conditions is not necessarily equivalent to a cash payment of the same stated amount.

Late delivery is not resolved merely because the keys eventually arrive.

Before signing any settlement or waiver, the purchaser should understand the amount potentially due, the rights being released and the deadline for taking further action.