The National House Buyers Association (HBA) raises concerns over the introduction of an electronic Sale and Purchase Agreement function (eSPA) by KPKT. The public might now think that since there is access to a DIY SPA aka the eSPA, there would be no need for checks and balances from a lawyer during a property purchase. Let’s take a look at the issues at hand.
The Ministry of Housing & Local Government (KPKT) has recently introduced an online platform called Housing Integrated Management System (HIMS), a single entry system to replace the existing BLESS, IDAMAN and e-Pemaju – all of which are now rendered redundant. Through HIMS< housing developers will have to submit their applications for the APDL (Advertising Permit and Developer’s License) online. HIMS also has a host of other features that regulate, manage, receive and gathering of data.
One baffling this which was introduced through HIMS is the eSPA (electronic sale and purchase agreement). This has sent shock waves through the legal circle, especially among law firms that have been engaged by housing developers for sale and purchase agreement legal work. These lawyers are now at risk of being sidelined, made redundant and put out of jobs once the eSPA is fully activated.
What are the issues with the eSPA?
The HIMS is meant to be an application and bipartisan reporting system between the government and housing developers. Bearing this in mind, the eSPA does nothing more than facilitating KPKT’s job by identifying the buyers’ particulars and details of purchases. It is merely a tool to allow the developers or their agents to key in the details of the purchasers’ names, identities, addresses and details of the purchased properties. It should stop there, except there is a section for digital signing.
Here is the million dollar question: If there is a digital signing by the purchaser, who is to bear witness to formalize the contract of Sale and Purchase Agreement (SPA) and the related Memorandum of Transfer (MOT)? Who is to safeguard the ‘digital signature’ of the purchasers without being misused and exploited?
The completion of the blanks in the statutory SPA does appear to be a clerical job and can be undertaken by the purchasers themselves. If that is so, why need lawyers? The signing of the SPA is merely the beginning of a journey to various sale and purchase transactions. I have in fact, explained the ‘end-to-end conveyancing process’ of real property transactions in an earlier published article titled: Why the conveyancing process in Malaysia should be left to lawyers?
With the eSPA, the developer will just fill in the blanks and generate the sale and purchase agreement from this system. This means that the onus is now on the housing developers and government to ensure the SPA for homebuyers in the whole of Malaysia is legally binding.
Will the eSPA actually benefit homebuyers?
Is it really that simple? What purpose does it serve for the government to be involved in the drafting of the SPAs? The extent of the government’s role should be to just regulate the terms and conditions in the statutory SPA in Schedules G (landed property), H (stratified property), I (landed property build-then-sell (BTS) 10:90 concept) and J (stratified property BTS 10:90 concept).
The eSPA does help housing developers to produce the SPAs without the need for lawyers, but how does it help the buyers? In any event, they will still need to engage lawyers to transfer the properties to them.
It is a pre-requisite requirement pursuant to Section 211 (Fifth Schedule) of the National Land Code, 1965 (revised 2020) that the transferors and transferees in an MOT (Form 14A) and all dealing instruments have to be attested and witnessed by those persons designated under the Land Code, of which lawyers are one of them. Bank officers, developers’ managers, Controller of Housing, Commissioner for Oaths and clerks cannot attest and witness the signatories to the MOT and the other related dealing instruments.
The government should leave the conveyancing of property to lawyers as the lawyers have always been the check and balance between the rights of the developer and the entitlement of the purchaser. The government should continue their role as regulator and custodian of the law, ensure that the developers have sufficient funds to complete a project, resolve disputes and effectively monitor, police and enforce obedience and compliance of the housing laws and policies, instead of getting involved in the business of housing developers.
If the eSPA is implemented, the Malaysian government could be biased against homebuyers in protecting the integrity of the eSPA function and HIMS as a whole.
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It seems that, after the eSPA is stamped, a copy must be uploaded to HIMS for data collection by KPKT and ‘subsequent management’ between the developers and KPKT? What does this “subsequent management” mean? Does KPKT wish to be the repository data collection centre where all homebuyers are tracked like the current MySejahtera? Will KPKT’s repository maintain a complete record of all movements of property sales and subsale transactions? Will the information be made available when a developer goes bankrupt and can the information be easily retrieved by the court-appointed private liquidators for a repository and custodian fee? Will all information be safely stored and conducted digitally online, thereby reducing the chances of various thefts and frauds?
It should be noted that the current Housing Development (Control & Licensing) Act (HDA) legislation does not provide for the need to register and process information of purchasers. The HDA also does not regulate and afford any protection to the processing of purchasers’ personal data.
The HDA and its Regulations only prescribe the standard form and contents of SPA but do not require any such SPA with purchasers’ information to be generated from any system operated by KPKT. Thus, the HIMS is not legally empowered to collect any personal data from homebuyers and to generate any SPA with said information.
KPKT contends that the eSPA is merely for administrative purposes only Does this argument ‘hold water’ in legal speak?
Why is KPKT being allowed to amend sections of the SPA?
Most worryingly, the HIMS makes it possible to issue letters of extension (EOT) and variation for delayed housing developments, whether by the Minister or his charge i.e. Controller of Housing.
The validity of the Controller of Housing and Minster’s approval of ‘Extension of Time (EOT) has been a contentious issue in the Courts of Law these past few years. It has been ruled by the Federal Court that the EOT is ultra vires (beyond the powers).
Hence, the validity of KPKT’s discretion to amend and vary the prescribed SPA especially the completion date from 36 months (in SPA Schedule H) to 48 or 54 months is an issue. Any exemption or variation from HDA must be by way of Regulations and gazetted required under Section 2(2)(ia)of the HDA and not merely by letter of extension (surat lanjutan) or letter of variation (surat pindaan) to the statutory SPA.
When exercising the Minister’s discretion, can he assume and exclude the voices of the purchasers of a housing development, who are directly affected by his action or inaction? On what premise can a Minister make the assumption that he is well aware of all the plights and voices of end purchasers? When a developer takes risks which then materialize, is it reasonable or logical for a Minister to modify the Scheduled SPA to exonerate the developer from all financial risk at the sole and exclusive burden of end purchasers with the stroke of a pen?
READ: Why is the Gov trying to amend the HDA and resurrect the Extension of Time (EOT)?
What about the issue of privity of contract, when the Minister or the Controller of Housing is not even a party to the SPA and allowed to intervene? Would it not be within reason and logic for the Minister to hear all voices of the end-purchasers to consider and devise all available remedies that would advance the protection of homebuyers? What if the discretionary power is abused and exercised with bias against the weaker party? Who adopts the check and balance here? Surely the affected end-purchasers must be accorded the right to be heard? The Minister and Controller of Housing cannot assume omniscience – that he knows all and sees all and can purportedly feel the pulse of each of the end-purchaser who falls victim to his decision.
These letters of extension should not be implemented as it would seem to be in defiance of the celebrated Federal Court ruling.
We hope KPKT will revisit these contentious issues and not launch something that is merely administrative in nature with no legal standing or in its term “punca kuasa” (source of legal jurisdiction). Nevertheless, the National House Buyers Association (HBA) will continue to monitor issues that relate to the eSPA and ensure the identity of the purchasers and digital signatures of the purchasers are not misused, abused and exploited.
This article is written by Datuk Chang Kim Loong, the Hon Sec-Gen of the National House Buyers Association (HBA) and edited by HBA volunteer lawyers. HBA could be contacted at [email protected]