Having ownership towards something gives us sense of accomplishment and fulfillment. Whenever a limited edition product has been released and you are one of the few people to get your hands on them, you are special because you owned something that others don't. When it comes to purchasing a high-rise property, have you ever thought of when you actually own that property? Some of you might think that you own the property once you paid the downpayment for the property, or you might think that you fully own the property once u paid off your loan mortgage. But...
The answer is.....NO! You only officially own the property if strata title has been issued to you. Strata title is a type of land title issued for stratified properties to serve as proof of ownership. To keep it simple, think of it as a identity card for your property. In the past, there were plenty of news about homeowners have not received the strata title to their properties even though it has been years since they taken vacant possession from developers. You must be thinking: What's the big deal about that?
Why You Should Have Strata Title?
Imagine that you purchased a property from developer without having a strata title issued to you and you have been living there peacefully for years. One day, you receive a knock on your door from a government officer saying that the land which your condominium stands has been gazetted to be compulsorily acquired by the government.
You try to stay calm and seek for professional advice from a lawyer only to realize that you are not entitled for any sort of compensation as without a strata title, the developer is the lawful owner, even though you have purchased the property and have been staying there for years.
KEY TAKEAWAYS: The major consequence of any delay in issuance of the strata title is that according to the master title, the land legally belongs to the developer (or the registered proprietor) and the homeowner only has beneficial ownership of their respective parcels. If the above mentioned scenario happens, homeowners are unable to prove ownership of their parcel without the strata title being registered under their name.
Things Have Changed for the Better
Finally, the Government has heeded the recommendations of the National House Buyers Association (HBA) to resolve this issue. To ensure that strata titles can be obtained simultaneously with vacant possession, under Section 6(1) of the Strata Management Act 2013 (SMA), the Schedule of Parcels (SOP) must be filed with the Commissioner of Building (COB) before developers can sell any parcel or proposed parcel.
Benefits to Purchasers
The concept of “vacant possession simultaneously with strata title” was adopted under the new improved version of the statutory Sale and Purchase Agreement (SPA) (Schedule H) to protect homebuyers. Developers cannot deliver vacant possession and claim the 17.5% progress payment, unless the strata title has been issued.
Furthermore, the developer cannot claim the next 2.5% progress payment unless the duly executed instrument of transfer, together with the original issue document of strata title, is delivered to the purchaser or the purchaser’s solicitor.
Developers have to pay liquidated ascertained damages (LAD) calculated at the rate of 10% per annum for delays in VP beyond the stipulated period of 36 months, if the strata title has not been issued. A new clause now allows a purchaser to deduct such LAD from any instalment of the purchase price due to the developer as a set-off or contra.
Source: EdgeProp.my
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