Part One: Understand, Get Fit & Ready
Property Defect Management is an often undervalued “stop over” of the property buying journey. In my last blog, that can be read here, I have been talking about the property buying journey and what to get ready for, once you receive the keys of your new home!
Today I will do my best to clarify what a home buyer needs to do in order to make sure that what has been received is what was agreed upon or, rephrasing this, how to carry on Property Defect Management in a proper way!
In Malaysia we have a good Housing Development Act, you can find more information here, which, beside ruling the proceedings of a residential property development, helps the two main players, property developer and property buyer, to get along nicely during the whole property journey and at its end with the property Defect Management.
From progressive payments, which can only be claimed upon certified completion of works, to punctual delivery, by the developer, as far as punctual payments, by the buyers, everything is fairly regulated between the two parties. One very important clause, not often highlighted, refers to possible defects, either from workmanship or actual sizes, found in the property upon receiving its vacant possession.
What “Defect Liability Period” is and how it applies to a new property, should be clearly known by all purchasers to make sure they will be able, through an accurate Property Defect Management, to receive the property they have been paid for as it was agreed upon.
Defining Purchasers’ Expectations
Once a property from an under-construction development has been purchased, the only document should be looked at is, the Sales and Purchase Agreement (as per schedule G and H of the Housing Development Act 118) which legally binds seller (developer) and purchaser. Brochures, catalogues, 3D renderings and all the marketing material is designed to attract buyers to visit a project and is understandably “polishing” the proposed “dream-home”.
The above is a developers’ normal practice which KPKT, the Malaysian housing Ministry, regulates and controls to avoid false claims or untruthful information being given to the prospect buyers. I’ve rarely seen 3D images in property development brochures without the disclaimer sentence reciting: “This is an artist impression” which means this is not what you will receive.
Too often, it also happens that highly motivated sale agents are verbally promising a “small piece of the moon” to make sure the prospect decides to book the unit first and later signs the Sales and Purchase Agreement. As said above, please, refer only to what is written in the signed agreement (SPA) as that is what you have agreed to receive, and the developer has agreed to deliver!
Hopefully, the above clarifies and sizes purchasers’ expectations and now, let’s go through the actual detection of defects; how to find them and file a proper complain with the developer to have them fixed as soon as possible, in other words how to carry on a complete Property Defect Management!
What Defect Liability Period is and Where it Applies
Only residential properties under construction are, by law, having the “Defect Liability Period” clause clearly stated in the Sale and Purchase Agreement (schedule G & H of HDA 118). This includes landed and high-rise, condominiums, properties plus all those service apartments and residences which, even though developed on a commercial title, are regulated by the Housing Development Act 118 or, in other words, those development projects carrying an APDL (Advertising Permit and Developer License) number. This important information can be found in the marketing material of the property development and, of course, in the Sale and Purchase Agreement.
What the defect liability clause covers is clearly stated by the HDA as being: “Any defects, shrinkage or other faults in the said Parcel or in the said Building or in the common property …. due to defective workmanship or materials or the said Parcel or the said Building or the common property not having been constructed in accordance with the plans and description as specified in the First and Fourth Schedule as approved or amended by the Appropriate Authority….”
The whole clause can be read here but the short extract above makes clear what can or cannot be claimed as a Defect.
How to get ready for a Property Defect Management, what should be looked for and how, what to do when a defect is found and finally how to submit a report and get the defect being fixed? Or rephrasing it, how to have a Property Defect Management done in a satisfactory way?
The following are some ideas and tips for you to refer to, so that you can ensure your inspection and the following Property Defect Management is as more complete as possible!
How to get ready for the property Defect Inspection
When a buyer is getting ready for the defect inspection, three are the main areas to be looked at as follows:
- What the developer has agreed upon to be delivered in terms of sizes, finishing and fixtures (refer to the signed Sale and Purchase Agreement and best advise here is to get a photocopy of it and use it to highlight the findings). Is everything corresponding?
- Do all the fixtures and appliances, if any, work?
- Is the workmanship satisfactory?
What does the purchaser need to carry on during the full inspection day?
On the actual day of inspection, these are few tool and items the buyer should carry along to allow a smoother inspection and an even easier Property Defect Management:
- The new property keys, not only the main door one but all the keys that have been delivered.
- A photocopy of the Sales & Purchase Agreement (SPA) containing the original floor plan and all the technical specifications
- A measuring tape, best to have at least a 5 meter long one
- Masking tape, label stickers, post-it
- Marker pens of different colour, bring more than one please
- Note-book which can also be replaced by handphone notes app to note down all the important findings
- Camera, the phone can help on this too but, please, remember to carry along a power bank.
- A small ladder to inspect high-up places in the property, if needed.
- A small magnet, those nice ones used to decorate the fridge will do their job during the inspection
- An electric plug with a short cable and a light bulb at the end (please make sure the bulb is new and, just in case, have a spare one)
- A bucket to be used to carry water while testing all the floor holes
Well with all of the above, the purchaser is now ready to go and get the defect inspection done! In few days a new article will guide through a step-by-step check list to help you all, newly become or going to be soon home-owners, to get your Property Defect Management done and your property as more defect proof as possible!
Remain tuned for part 2 of this Property Defect Management story and stay safe and healthy!
About the author
The opinions expressed in this article are solely of the author, Dr Daniele Gambero.
Dr Gambero has been an expatriate to Malaysia from Italy, since 1998 and has more than 35 years of real estate experience. He is the co-founder and group CEO of REI Group of Companies, the Co-founder of Propenomy.com and the deputy president of the Malaysia Proptech Association.
In the past 10 years Daniele, as international and TEDX speaker, has engaged several hundreds thousand people talking about Property, Economy, Propenomy, Digital Marketing and Motivation. He is also a bestselling author and columnist on several magazines and main stream media.