Malaysia - Covid-19 Bill 2020 - Affecting Housing Developers And Homebuyers.

Legal News & Analysis - Asia Pacific - Malaysia - Dispute Resolution - Construction & Real Estate

27 August 2020
 

On 25 August 2020, “The Temporary Measures For Reducing The Impact of Coronavirus Disease 2019 (Covid-19) Bill 2020” (“Covid-19 Bill 2020”) was passed by the Dewan Rakyat.

 

When will the Covid-19 Bill 2020 come into operation?

The Covid-19 2020 Bill comes into operation on the date published in the Gazette.

 

However, it will have a retrospective effect and will be deemed to have come into operation on the first day of the Movement Control Order i.e. 18 March 2020.

 

What does the Covid-19 Bill 2020 mean for Housing Developers and Homebuyers?

 

A synopsis:

 

1.       SPA for Housing Accommodation (Clause 33 of the Covid-19 Bill 2020) – Applies to Schedules G, H, I and J contracts under the Housing Development (Control and Licensing) Regulations 1989 signed before 18 March 2020.

 

2.       Late Payment Charges (Clause 34 of the Covid-19 Bill 2020) – Late payment charges for failure of the purchaser/ homebuyer to pay any instalment are excluded for the period from 18 March 2020 to 31 August 2020.

 

Purchaser/ homebuyer may apply to the Minister for a further extension of time of the exclusion period until 31 December 2020.

 

3.       VP and LAD (Clause 35 of the Covid-19 Bill 2020) – The calculation of time for delivery of vacant possession (“VP”) of a housing development and computation of liquidated damages (“LAD”) for failure to deliver vacant possession shall exclude the period from 18 March 2020 to 31 August 2020.

 

Developer may apply to the Minister for further extension of time of the exclusion period until 31 December 2020.

 

Notably, if the purchaser/ homebuyer is unable to enter into possession of occupation from the date of service of a notice to take vacant possession during the period from 18 March 2020 to 31 August 2020 or any further extension period, the purchaser/ homebuyer shall not be deemed to have taken such vacant possession.

 

4.       Defect Liability Period (Clause 36 of the Covid-19 Bill 2020) – The calculation of the defect liability period and period for the developer to carry out works to repair and make good the defect, shrinkages and other faults in a housing development shall exclude the period from 18 March 2020 to 31 August 2020.

 

Developer may apply to the Minister for further extension of time of the exclusion period until 31 December 2020.

 

5.       Saving Section (Clause 37 of the Covid-19 Bill 2020) – Sections 34 to 36 above shall not affect any legal proceedings commenced, or any judgment or award obtained in relation to the recovery of late payment charges payable by the purchaser/homebuyer or liquidated damages payable by the developer or any other sum during the period from 18 March 2020 until the date of publication of the Covid-19 Bill 2020.

 

Any late payment charges paid by the purchaser/homebuyer or liquidated damages paid by the developer before the publication of the Covid-19 Bill 2020 shall be deemed to have been validly paid and shall not be refunded to the payer.

 

6.       Modification of Section 16N (Clause 38 of the Covid-19 Bill 2020) – If the limitation period for the homebuyer to file a claim under subsection 16N(2) of the Housing Development (Control and Licensing) Act 1966 expires during the period of 18 March 2020 to 9 June 2020, the homebuyer is entitled to file the claim from 4 May 2020 to 31 December 2020.

 

7.       Inability to perform contractual obligation (Clause 7 of the Covid-19 Bill 2020) – The inability of any party/ parties to perform any contractual obligation arising from any of the categories of the contracts specified in the Schedule* shall not give rise to the other party/ parties exercising his/ their rights under the contract for the period from 18 March 2020 to 31 December 2020.

 

* Includes but not limited to:
 

i. Construction work and related contracts/ construction consultancy contract;

ii. Performance bond that is granted pursuant to construction/ supply contract;

iii. Professional services contract; and

iv. Lease/ tenancy of non-residential immovable property;

v. Event contracts, Contract by a tourism enterprise and Religious pilgrimage-related contract.
 

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For further information, please contact:

 

Yee Mei Ken, Partner, Shearn Delamore & Co​

[email protected]