Opinion: Baffled over eSPA

Datuk Chang Kim Loong is the Honourary Secretary- General of the National House Buyers Association (HBA). Image from PropertyGuru

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The man in the street thinks that we now have DIY SPA via eSPA and there is no need for the services of a lawyer in property purchases from licensed housing developers. But, is that so?

The Ministry of Housing & Local Government (KPKT) recently introduced an online platform called: Housing Integrated Management System (HIMS), a single entry system to replace the existing BLESS, IDAMAN and e-Pemaju (these acronyms are now rendered redundant – pun intended) where housing developers will have to submit their application for APDL (Advertising Permit and Developer’s License) online and a host of other features that regulate, manage, receive and gathering of data.

There is even a function under HIMS for an eSPA where shocked waves were sent through the legal circle, especially for law firms that have monopolized the sale & purchase legal work from housing developers – leaving these firms sidelined, redundant and ‘out-of-jobs’ once the eSPA is fully activated.

The HIMS system is meant to be an application and bipartisan reporting system between the government and developer; others are not included. Actually, the eSPA is nothing more than facilitating KPKT’s job by identifying the buyers’ particulars and details of purchase.

The acronym eSPA may sound fantastic, but it is merely a tool to allow the developers or their agents to key in the details of the purchasers, i.e names. identity, their address and details of the purchased property and its pricing. It stops there save for ‘digital signing’?

Now comes the million-dollar question: If there is a digital signing by the purchaser, who is to bear witness to formalize the contract of Sale & Purchase Agreement (SPA) and the related Memorandum of Transfer (MOT)? Who is to safeguard the ‘digital signature’ of the purchasers from being misused and exploited?

The completion of the blanks in the statutory SPA does appear to be a clerical job and can be undertaken by the purchasers themselves. If that is so, why need lawyers? Do you not know that the signing of the SPA is merely the beginning of a journey to a sale and purchase transaction?

I have in fact, explained the ‘end-to-end conveyancing process’ of real property transactions in an earlier published article titled: ‘Leave conveyancing to Lawyers (Part 2)’.

However, the government by adding the eSPA function makes the housing developer and government responsible for drafting the SPA across the country. According to HIMS, the developer will just fill in the blanks and generate the sale and purchase agreement from HIMS.

No Value Added Service to the Purchasers

Is it really that simple? What purpose does it serve for the government to be involved in the drafting of the sale and purchase agreement in the first place save and except regulating the terms and conditions in the statutory SPA in Scheduled ‘G’ (Landed property), ‘H’ (Stratified property), ‘I’ (Landed property BTS 10:90 concept) & ‘J’ (Stratified property BTS 10:90 concept)?

How does it help the buyers? It does nothing for the purchaser but helps the developer to produce the sale and purchase agreement without the need of a lawyer, but in any event, the purchaser will still need to engage a lawyer eventually to transfer the property to them.

It is a pre-requisite requirement pursuant to Section 211 (Fifth Schedule) of the National Land Code, 1965 (revised 2020) that the transferor(s) and transferee(s) in an MOT (Form 14A) and all dealing instruments have to be attested and witnessed by those persons designated under the land code; of which lawyers are one of them amongst others. Bank officers, developer’s managers, Controller of Housing, Commissioner for Oaths and clerks cannot attest and witness the signatories to the MOT and those related dealing instruments.

The government should leave the conveyancing of property to lawyers as the lawyers have always been the check and balance between the rights of the developer and the entitlement of the purchaser.

The government should continue their role as regulators and custodians of the law, ensure that the developers have sufficient funds to complete a project, resolve disputes and effectively monitor, police and enforce obedience and compliance of the housing laws and policies and not get involved in the business of developers.

If this is implemented, the government could be bias against the purchaser in protecting the integrity of the eSPA function and HIMS as a whole.

Is KPKT playing the role of ‘Repository’?

It seems that, after the eSPA is stamped, a copy must be uploaded to HIMS for data collection by KPKT and ‘subsequent management’ between the developers and KPKT?

I wonder what ‘subsequent management’ means in its’ implied term? Does KPKT wish to be the ‘Repository data collection centre’ where they will keep all data of purchasers for safekeeping like the current ‘MySejahtera’ where the citizens are tracked?

Will KPKT’s Repository maintain a complete record of all movement of sale and sub-sales of the purchasers? Will the information be made available when a developer goes belly up and information easily retrieved by the ‘court appointed’ private liquidators for a repository and custodian fee?

And will all information be stored and conducted digitally online thereby reducing changes of different kind of theft and frauds?

However, the current Housing Development (Control & Licensing) Act (HDA) legislation does not provide for the need to register and process information of purchasers and further does not regulate and afford any protection to the processing of purchasers’ personal data.

The HDA and its Regulations only prescribed the standard form and contents of SPA but does not require any such SPA with purchasers’ information to be generated from any system operated by KPKT.

Therefore, the application of HIMS shall not be extended to collection and generation of personal data/ information of purchasers and potential purchasers as well as generation of SPA and termination for generation of new SPA with purchasers’ information.

KPKT’s contentions are that eSPA is merely ‘secara pentadbiran’ (administrative initiatives) only. Is that argument tenable and ‘hold water’ in legal speak?

Why does eSPA module of HIMS allow KPKT to amend and vary the standard terms and conditions of the SPA?

The validity of Controller of Housing and Minster’s approval of ‘Extension of Time (EOT) has been a contentious issue in the Courts of Law. It has been ruled by the Federal Court in: Ang Ming Lee and others v Menteri Perumahan (2020) 1 MLJ 281 that the EOT is ultra vires (ad initio).

Hence, the validity of KPKT’s discretion to amend and vary the prescribed SPA especially the completion date from 36 months (in SPA Schedule H) to 48/ 54 months is an issue.

Any exemption or variation from HDA must be by way of Regulations and gazetted required under Section 2(2) read with Section 24(2)(ia) of the HDA and not merely by ‘surat lanjutan’ (letter of extension) or ‘surat pindaan’ (letter of variation) to the statutory SPA.

When exercising the Minister’s discretion, whether the Minister can assume and exclude the voices of the purchasers of a housing development, who are directly affected by his action or inaction? On what premise can a Minister make the assumption that he is well aware of all the plights and voices of end purchasers?

When a developer takes risks when materializes, is it reasonable or logical for a Minister to modify the Scheduled SPA to exonerate the developer from all financial risk at the sole and exclusive burden of end purchasers with the stroke of a pen ?

What about the issue of ‘Privity of Contract’ when the Minister or the Controller of Housing is not even a party to the SPA and allowed to intervene ‘aka interfere’? Would it be within reason and logic for the Minister to hear all voices of the end purchasers to consider and devise all available or different remedies that would advance the protection of end purchasers?

What if the discretionary power is abused and exercised in biasness against the weaker party? Who adopts the ‘check and balance’ here?

Surely the affected end purchasers must be accorded the ‘Rights to be Heard’? The Minister and Controller of Housing cannot be an omniscient literally and assume that ‘he knows all and see all’ and can purportedly feel the pulse of each of the end-purchasers who fall victims to his decision.

Hence, the application of HIMS to issue letters of extension and variation whether by Minister or his charge ie Controller of Housing should not be implemented as it would seem to be in defiance of the celebrated Federal Court ruling.

We hope KPKT will revisit the contentious issues and not launch something that is merely administrative’ in nature with no legal standing or in their term ‘mana punca kuasa’ (source of legal jurisdiction).

Nevertheless, the National House Buyers Association (HBA) will continue to monitor the contentious issues that relates to eSPA and that the identity of the purchasers and digital signatures of the purchasers are not misused, abused and exploited for whatever reasons.

This article is written by Datuk Chang Kim Loong, the Hon Sec-Gen of the National House Buyers Association (HBA) and edited by HBA volunteer lawyers. HBA could be contacted at: Email: info@hba.org.my Tel: 012 3345676

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