Raveendra: It is the Selangor government’s responsibility to prevent such violations.
LIQUIDATORS are calling for the Selangor government to waive the penalties imposed on unwitting homeowners who were sold bumiputra units by unscrupulous developers.
These non-bumiputra buyers, who were sold units in two housing projects in Selangor, should not bear the repercussions of the developers’ wrongdoing, they said.
As both the concerned housing developers have gone defunct, the liquidators said the best thing for the Selangor government to do was to waive the penalties.
StarMetro article on Nov 6, 2023“It’s the kind and right thing to do,” said Datuk Ng Seing Liong, an approved company auditor and liquidator with 40 years of experience in the housing industry.
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Ng, who is Real Estate and Housing Developers’ Association Malaysia past president, added that such cases were widespread across the country.
He was responding to a StarMetro report on Nov 6 titled “Penalty dilemma”, which shed light on several hundred homeowners in Selangor who had been left in the lurch after buying residential units meant for bumiputra buyers.
These homeowners now find themselves burdened with penalty fees amounting to millions after the developers went into liquidation.
“Many developers have been going defunct, even before the (Covid-19) pandemic. The number of cases has increased since then.
“It just never gets exposed like this case,” said Ng referring to StarMetro’s report.
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However, he pointed out that the developers were also in a bind.
Ng says the state should pursue the companies in liquidation by filing proof of debt.Ng said under the law, developers are required to pay a penalty known as Liquidated Ascertained Damages (LAD) when they fail to meet their project completion deadlines.
This penalty, he said, amounted to 10% of the selling price per annum for each unit.
“This substantial penalty is one of the key factors contributing to project delays and abandonment.”
Ng highlighted the need for the state to pursue the companies in liquidation by filing proof of debt, which is a legal document used by creditors to establish a claim against a debtor.
“Giving the buyers discounts on the penalty and asking the liquidator to collect the fee from them is not fair to the buyers.”
Approved liquidator Datuk Raveendra Kumar Nathan of RKN & Co also said it was the Selangor government’s responsibility to implement the necessary mechanisms to prevent such violations.
“The company and its directors should be personally held accountable.
“Offering discounts to buyers is simply not good enough.”
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Raveendra said his firm had encountered numerous cases involving developers going out of business, leaving thousands of innocent homeowners in a precarious situation.
“We have presented these issues to various state agencies where 300 to 400 titles are stuck, and we need to get the agencies to release them.
“It is a tedious process, which is why it is crucial that proper mechanisms and safety nets are put in place to safeguard buyers.”
