Readers’ Response - Victims Malaysia says e-SPA reduces cost and benefits homebuyers

We refer to the article by Datuk Chang Kim Loong from the National House Buyers Association (HBA), under the heading “Baffled over eSPA” published on June 10. 

The article indirectly raises questions about HBA's direction and objective. It raises questions and doubts about a system that benefits purchasers and the housing industry and appears to speak in defence of the legal fraternity. Victims Malaysia (VM) had hoped that HBA would support the KPKT (Housing and Local Government Ministry) initiative as it benefits the purchasers and stimulates the current gloomy housing industry.

In a nutshell, the e-SPA (electronic sale and purchase agreement) has been created by KPKT where the SPAs between developers and purchasers are done on an electronic platform. The contract content essentially remains unchanged as per the existing schedule in HDA118 (Housing Development (Control and Licensing) Act 1966 Act 118).

It is not extended beyond the limits of HDA118 to cover sub-sales. Previously we used pen and paper to write, and then the typewriter came along followed by Microsoft Office, so the e-SPA is just another evolutionary step in writing and documentation. It benefits the purchaser as it reduces the total cost of owning a house.

For clarity, the existing contract and the e-SPA are the same. It is statutory as it is part and parcel of the HDA118, which means it cannot be amended by both purchasers or developers or their legal representatives. Both buyers and developers cannot develop any supplementary agreement to the SPA as it can be nullified easily in court.

Lawyers not needed

As the agreement is statutory, lawyers no longer need to draft, evaluate and structure the terms of contracts for the best benefit of their clients.  Therefore, the point on lawyers providing the necessary check and balance as claimed in the article is not qualified.

This essentially raises questions on the value that lawyers provide to purchasers in formalising the contractual relationship between the parties. In all fairness, the exorbitant cost imposed does not justify the standard administrative work with very little legal value. The work can be done by anyone with some degree of knowledge.  In the real world, purchasers' legal services are almost unheard of after the SPA has been formalised.

Malaysian laws do not prevent two or more parties from signing any agreement without legal representation. Self-representation is a norm in any contract and is even practised in courts. Any agreement must be stamped by the Stamp Office to make it legally enforceable. This can be done by runners or self-service and it only costs the buyer RM10 for stamping fee.

A boon to housing industry

Irrespective of the form of the agreement (paper or electronic), the government is never a party to the SPA. The government position is and has been that SPAs are private matters between developers and purchasers. It created a standard SPA for the good of the industry. The government's role is to ensure that all parties comply with the HDA118. This does not change with the introduction of the e-SPA.

The positive aspect of e-SPA must not be ignored. It will stimulate the housing industry as it reduces the total cost of property ownership. Essentially it formalises the existing marketing practices by developers who provide “free legal fees” in their offerings.

The concerns of MOT (Memorandum of Transfer) attestation raised in the write-up do not arise. In Section 211 (Fifth Schedule) of the National Land Code, 1965 (revised 2020) a list of several other persons that can do the attestation is provided. One must not be confused with MOT (Form 14A) attestation and the SPAs as these are two separate documentations. In the housing industry, developer lawyers can easily provide these services.

Data protection not compromised

The role of KPKT has been towards ensuring a sustainable, housing industry and this includes ensuring that developers have enough funds to complete their projects. With the proposed revision of the HDA118, VM has given lots of input to further enhance purchasers' interest with minimal impact on the developers to ensure that Malaysia has a sustainable and vibrant housing industry that would be attractive to local and foreign buyers. The objective is to ensure consumers can buy houses with confidence with minimal downside risk.

With or without e-SPA, the developer is duty-bound to provide purchasers' information to the regulator either voluntarily or via a court order. Under e-SPA, this process is now being streamlined where the Housing Controller would have ready access to the information when required and to use the information for the benefit of the industry.

In the write-up, HBA has compared the information collated under e-SPA with MySejahtera in an attempt to link the issues surrounding MySejahtera with e-SPA. This is nothing short of being irresponsible. The question of tracking purchasers does not arise as the data has little value once the project is completed and the developer has discharged its liability. The data has no long-term value to anyone other than to the government as they can use it for analysis to develop new policies.

Collating and tracking sub-sales information naturally does not arise as it is outside the scope of the HDA118. The government including KPKT collects so much data on Malaysians on a daily basis and they have to ensure that data breaches do not arise. This is not something new. Data management and data securities are part and parcel of the responsibility of holding data and all data holders are subjected to the PDPA (Personal Data Protection Act 2010) law.

Government cannot amend SPA terms

Nevertheless, HBA has raised a valid point with regards to the government changing the terms of the SPA and this matter has been decided by the Federal Court as illegal. On this issue, VM will stand in solidarity with HBA. In fact, VM has raised its objection against amending the relevant section to empower the Controller to change the terms of the SPA. This should not be allowed to happen. However, we must be clear that this is a separate issue towards the evolution of the e-SPA.

The legal fraternity's concerns about the impact of e-SPA on their business are understandable as they are about to lose the goose that lays the golden egg. However, one must understand that the fees imposed by lawyers are exorbitant compared to the value and services provided.

In conclusion, the e-SPA will help to spur the sluggish housing industry. It creates value for the entire ecosystem. Purchasers will benefit from the legal cost reduction and it will also help the regulator in policy development. The legal fraternity equally needs to evolve and find a value-added business for its clientele.

Dr Mohamed Rafick Khan bin Abdul Rahman

Chairman

Victims Malaysia

The views expressed here are those of the author/contributor and do not necessarily represent the views of EdgeProp.my.