So, the time has finally come for you to collect the keys to your new home, and it is certainly an exciting time, having waited for the past few years for its completion. Even so, the delivery of vacant possession also signifies a few important matters, one that requires your immediate concern.
What is a vacant possession?
Delivery of vacant possession means that the property has been given to the purchaser. This includes all the furnishings and fittings listed in the Sales and Purchase Agreement. Now that the notice of vacant possession has been handed, the defect liability period for the new property has officially begun.
3 Key Issues
1. Liquidated Agreed Damages (LAD)
Generally, the Sales and Purchase Agreement will specify a particular date or a period of time in which the property will be completed and will be handed over. But if there is an issue of delay in the delivery of Vacant Possession (VP), buyers are able to claim for liquidated agreed damages (LAD).
Even though the bank owns the rights to the purchaser’s unit due to the borrowing of loans, homebuyers have a locus standi to sue for the LAD without having to bring the bank as a party from a legal point of view.
Note that the calculation of LAD starts from the signing date of the Sales and Purchase Agreement (SPA), and not from the date of the booking form was signed.
2. Certificate of Completion and Compliance & Strata Title
On the same day the purchaser collects the property, the purchaser will also receive a copy of the certificate of completion and compliance (CCC), or formerly known as CFO. They will also be issued the strata title to their particular unit as well.
The CCC is a document released by the local authority council that ensures that the purchaser’s property is completed and is safe to move in. Under the new Strata Management Act 2013, the strata title for the purchaser’s unit must be issued upon vacant possession as well. Without the strata title, the purchaser’s unit is still technically owned by the developer in the eyes of the law.
If the purchaser have yet to receive any of these legal documents, it is important for the purchaser to safeguard a copy of the SPA and consult thier lawyer for further action. However, if things run smoothly, they will sign several documents to mark their acceptance of the keys to their unit, and that is when the defect liability period begins.
3. Defect Liability Period (DLP)
The defect liability period (DLP) is simply the “warranty period” for the purchaser’s unit. Homebuyers are given roughly two to three years to identify and report any defects, usually along with a representative from the developer.
Do note that it is possible for the purchaser to check and identify defects on their own accord, provided that the defects are not aligned with the specifications listed in your SPA. The purchaser has to be sure to mark and document any defects properly, and as clearly as possible.
If the developer refuses to fix the defects, or remain unresponsive, the purchaser also have the option to hire their own contractor to proceed with the repairs and recover the cost from the developer’s lawyer. It is also wise to mark and rectify the defects before proceeding with the renovation of the property.
Regardless of the context, in the situation where the purchaser feels that either party has wronged them, it is essential that they remain calm and take the steps necessary to remedy the situation with the tools and resources available to them as a buyer.
Taking the precautionary steps necessary (marking the defects properly, actively contacting the developer etc.) will help the purchaser gain substantial leverage in the worst-case scenario when the matter is being brought up to court or tribunal.
