What to do if your ‘new’ property has defects & 4 other must-knows about Defect Liability Period (DLP)

If you’ve purchased a primary residential property, you can claim for any defects from the developer during the Defect Liability Period (DLP). Here’s all you need to know about the DLP, including the recently amended law for latent (hidden) defects.

© Jordan Lye | Getty Images

In our previous article, we introduced an important term that all new house buyers must be aware of: the Defect Liability Period (DLP). To put it simply, it is the ‘warranty period’ from the Developer in case of any defects in the property. But wait, there’s good news for older purchasers, courtesy of a recently passed government ruling – if you’ve only recently noticed that there are defects in your property that was bought years ago, you might still be able to bring legal action against the developer for these latent defects (where the first occurrence of such defects cannot exceed 15 years). This will be elaborated below.

However, do take note that unlike the warranty that you might get from buying a smart device or even a brand new car, you can’t just exchange for a new unit if there are any defects in your property. You would need to carry out a detailed inspection of the housing unit, make a list of all the defects and thereafter, submit a defect claim to the Developer.

If you find yourself breaking into a cold sweat over ‘what, where and how’ to make a defect claim – don’t worry, this guide aims to help you understand this very technical term and what to do in the event you discover that your brand new property is just not up to scratch.

What exactly is the Defect Liability Period?

As briefly mentioned above, it’s the Developer’s warranty period against any defects in the property. The liability period starts from the moment that the vacant possession and keys to the property are delivered to you by the Developer. The duration of the liability period is 24 months from the date that you receive the keys.

However, not all brand new developments are covered by a Defect Liability Period, as under the Housing Developer’s Act, this warranty only covers properties and developments with residential titles.

Additionally, strata-titled residential properties would have added protection under the Strata Management Act which deals with the management and maintenance of the building and common property in the developments.

FIND OUT: Should I buy a house now or later?

What are the issues that might occur during the Defect Liability Period?

© Andriy Popov | 123rf

Under the Housing Development Act (HDA) 1966, you are allowed to claim for any defects in the property which were caused during the construction of the property and were not fixed before you received the keys to the property. These defects may include cracks in the walls, loose floorboards or tiles, unusable fixtures (such as electric connections, light switches, water taps, etc) and even misaligned doors and safety grills.

One common issue that might arise during the Defect Liability Period are renovations to the property. If during the renovation of your home, you contribute to the defects in the property, you might find that the developer would be unwilling to fix those defects. As such, it’s best to wait until the Defect Liability Period is over before making any renovations to your home, unless you do not wish to make a defect claim with the developer.

Another common issue would be the sale of the property within the Defect Liability Period. Generally, a secondary property is sold on an ‘as-is-basis’ – i.e. what you see is what you get. However, if the right to make defect claims within the liability period is transferred to the new buyer, the developer will usually honour the new buyer’s defect claim at no additional cost.

What to look out for during the Defect Inspection?

© bannosuke | 123rf

Your property inspection can get overwhelming – A top tip would be to bring along your Sale and Purchase Agreement (SPA), a sturdy measuring tape, a notepad together with some sticky notes and a non-bleeding marker pen to jot down your observations:

1) Start with making sure that the property details match what is written in your SPA. Count each and every connection point and inspect all the given appliances to ensure that the make and model is exactly as listed in the SPA. Keep a note of every variance so that you are able to bring it up with the developer.

2) Next, test all the fixtures in the property to confirm that they are working properly and that there are no cracked or chipped pieces installed. It is also wise to run the taps and showers to check that the water is connected and that there are no leaky pipes.

3) Finally, check that the workmanship is satisfactory. Inspect every wall, floor, ceiling, door and window for any visible defects and check if everything is properly aligned and straight. The last thing you would want is a crooked wall or a stuck door or window!

4) Make a note of all defects and take pictures of each of them so that you can include it together with your defect claim to the developer. Most developers will have a defect claim form that you would need to fill out and submit to either them or the management office (if it is a condo). 

MORE: What is property valuation & the 4 factors which influence a home’s value?

What happens after the defect claim is submitted?

When a claim has been submitted, the developer has 30 days from the received date to make the repairs on your property. Once they have completed the repairs, the developer will schedule an inspection of the repairs with you. If you still find any other major defects, the developer is obliged to carry out the additional repairs if it is still within the Defect Liability Period.

However, in the event that the developer does not respond to your defect claim, according to the House Buyer’s Association (HBA), you may hire your own contractor and recover the repair costs from the developer’s lawyer.

HBA also advises that house buyers who are having difficulties in getting the defects repaired to band together as this might help persuade the developer to take the defect claims seriously.

If the developer still refuses to carry out the repairs after the 30 days have passed or refuses to reimburse the repair costs, house buyers are allowed to submit a claim (for claims up to RM50,000 only) to the Tribunal for Homebuyer Claims (Housing Tribunal) for action to be taken against the developer.

What happens to (latent) defects discovered after the Defect Liability Period expires?

© Prudencio Alvarez | 123rf

Latent defects are defects in the material and/or workmanship that are not discoverable through general inspection and would lead to structural malfunction or damage if not repaired. Latent defects are also known as hidden defects as they are usually only detectable many years later.

Under the old Limitation Act 1953, buyers have a time limit of 6 years from when the defects first occurred to bring legal action against the developer. The problem with this time limit is that most of the time buyers aren’t even aware that the defects have occurred and by the time it is discovered, the 6 year period would have expired. And the 6-years applies regardless of when the owner discovers such damage.

With the recent Limitation (Amendment) Bill 2018 which was passed in April 2018, buyers will now have a time limit of 3 years from the date that the defects were DISCOVERED to bring an action against the developer.

For example, A bought his house in 2000 and in 2010, he found that his walls are badly damaged due to hidden cracks. Although the building report states that the cracks first started in 2004; A has until 2013 to bring an action against the developer, as he only discovered them in 2010.

However, buyers would not be able to bring an action against the developer if more than 15 years have passed since the defects first occurred. This means that if the defects first appeared in 2001 but were only discovered in 2018, no action can be brought against the developer as the 15 year limitation period would have expired in 2016.

In summary…

Although the Defect Liability Period may seem very lengthy, don’t delay your property inspection as you would definitely want all defects to be repaired before you move into the property. Be very thorough during the inspection, note down any defects in the property and any differences between what is detailed in the SPA and what is actually present in the property.

And if at any point you find that the developer is unwilling to honour the repairs claim, a tip to remember is that you can make a complaint to the Housing Tribunal or even bring legal action against the developer in the court of law.

Before you start hunting for your dream home, make sure to find out what is the maximum amount that you can borrow from up to 17 banks across Malaysia. You can do this easily via LoanCare, iProperty’s Home Loan Eligibility Tool in just three easy steps.

Edited by Reena Kaur Bhatt

Share