Shariah and legal issues in house buying in Malaysia: The legality of Bay’Bithaman-Al-Ajil(‘BBA’) with special reference to abandoned housing projects

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Md Dahlan, Nuarrual Hilal and Syed Abdul Kader, Sharifah Zubaidah (2011) Shariah and legal issues in house buying in Malaysia: The legality of Bay’ Bithaman al-Ajil(‘BBA’) with special reference to abandoned housing projects. Pertanika Journal of Social Sciences & Humanities , 19 (2). pp. 349-361. ISSN 0128-7702

Abstract

The primary duties of Islamic banks and financial institutions in Malaysia are to carry out Islamic banking and financial activities and to offer products that are in accordance with the Islamic teachings. These products are subject to the scrutiny and approval of Bank Negara’s Shariah Advisory Council (SAC) and the internal Shariah Advisory Bodies (SAB) or the Shariah Committees of the respective financial institutions.Despite having been in existence for more than 25 years, in the authors’ view, it is still questionable whether or not the Islamic banks and financial institutions in Malaysia have been satisfactorily carrying out these duties. One area worth examining is the transaction involving house buying, particularly the one that falls under the purview of the Housing Development (Control and Licensing) Act 1966 (Act 118) and transactions involving houses pending completion. This paper examines this area of transaction and the loan agreement, affected via Bay’ Bithaman al-Ajil (BBA), provided by Islamic banking and financial institutions in Malaysia.The purpose is to see to what extent the sale and purchase agreement and the loan agreement have complied with the requirements of the Islamic Law in protecting stakeholders and to provide practical suggestions to improve the existing practice.The paper concludes that the current practice of the BBA contradicts with the teachings of Islam and should therefore be modified and revamped until it is fully able to protect the interests of the purchasers/borrowers.

Keywords: Bay’ Bithaman al-Ajil, Gharar al-Fahish, Islamic Banking Law, abandoned housing projects, Malaysia

Comparative legal analysis between the rehabilitations of the failed residential projects of the liquidated housing developer companies in Malaysia and the Republic of Singapore

Md Dahlan, Nuarrual Hilal (2012) Comparative legal analysis between the rehabilitations of the failed residential projects of the liquidated housing developer companies in Malaysia and the Republic of Singapore. Journal for Global Business Advancement, 5 (2). pp. 126-149. ISSN 1746-966X

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Abstract

This paper discusses the liquidation law and practice in the rehabilitation of failed residential projects in Malaysia of the liquidated housing developer companies in comparison with the position in the Republic of Singapore.This paper is the fruit of a legal case studies research funded by the Ministry of High Education Malaysia (MOHE) through the FRGS Grant. The objective of this paper is to highlight the problems in the current liquidation laws applicable in Malaysia and Singapore in the face of the failed residential projects’ problems and the grievances of the purchasers. This paper suggests that there are lacunae in the current law of liquidation and insolvency in Malaysia and Singapore in dealing with the rehabilitation of failed residential projects for protecting the rights of the aggrieved purchasers. This paper also proposes solutions for the lacunae and the problems.

Keywords: liquidation law issues; failed residential projects; rehabilitation; liquidation of housing developer companies; Malaysia; Republic of Singapore.

Issues of Khiyar (option) in housing agreements in Peninsular Malaysia

lestari30Md Dahlan, Nuarrual Hilal (2014) Issues of Khiyar (option) in housing agreements in Peninsular Malaysia. Malayan Law Journal, 1. pp. 1-21. ISSN 0025-1283

Abstract

It is well entrenched in lslamic Law that khiyar is an inherent right of the contracting parties in a contract.This right provides the contracting parties with a right of option to void the contract they entered into if the subject matter of the contract does not comply with the specifications, terms and conditions of the contract.In Peninsular Malaysia, all house purchasers who wish to buy houses built by the licensed housing developers who are subject to the Housing Development (Control and Licensing) Act 1966 (Act 118) and subject to the control of the Ministry of Housing and Local Government (MHLG) are required to use the prescribed housing statutory standard sale and purchase agreements as contained in Schedules G, H, I and J (‘the said agreements’). However after close scrutiny over the said agreements, there is no term of khiyar provided.  Thus, due to the absence of term of khiyar in the said agreements, the said agreements, it is submitted, are null and void under lslamic Law. Likewise, it follows that due to this nullity, the subsequent housing transactions involving loan agreements, effected through Bai’ Bithaman al-Ajil (BBA), Musharakah Mutanaqisah, ljarah Thamma al-Bay’ and Istisna’ used by lslamic banks, may also be affected and are void.This academic paper is a fruit of a completed research undertaken by the author.Its objective is to discuss and explore the issues of khiyar in the said agreements, particularly when the housing projects are abandoned.The author used qualitative legal research methodology to unravel the issues of khiyar in the said agreements.This paper contends that due to the absence of khiyar in the said agreements, the said agreements have not complied with the requirements under lslamic law and could cause the housing transactions and the subsequent loan transactions entered into by the purchasers/borrower, developers and lslamic banks, void too.This paper also provides certain proposals to improve the current terms and conditions in the said agreements in order to render them harmonious with the spirit and intent of lslamic law.

Keywords: khiyar; housing statutory standard sale and purchase agreements; abandoned housing projects in Peninsular Malaysia; housing law in Peninsular Malaysia; lslamic law.

Issues in the statutory housing sale agreements in Peninsular Malaysia: A case study of abandoned housing projects

Md Dahlan, Nuarrual Hilal (2015) Issues in the statutory housing sale agreements in Peninsular Malaysia: A case study of abandoned housing projects. The Law Review. pp. 377-397. ISSN 1985-0891

Abstract

The use of statutory housing sale agreements (“the said agreements”) as enshrined in the Housing Development (Control and Licensing) Regulations 1989 is mandatory for all housing developers in Peninsular Malaysia.The use of the said agreements is to ensure protection to house purchasers against irresponsible housing developers.However, in practice, it is evident that the terms of the said agreements are inadequate to provide purchasers with the required protection particularly in abandoned housing projects. This paper aims to highlight this issue.This paper is also the fruit of a research exercise using legal research and qualitative case study methodologies. It finds that there are certain lacunae in the terms of the said agreements that have caused the said agreements’ inability to face the problems of abandoned housing projects to the detriment of the house purchasers’ rights.Further, there are certain housing transaction practices that have caused grievances to the house purchasers. The author provides, at the ending part of this paper, some proposals to overcome the highlighted problems.This is a part of the initiatives to strengthen the said agreements to become more protective to house purchasers.

Keywords: Statutory housing sale agreement, issues, abandoned housing projects, Peninsular Malaysia, grievances to purchasers.

Issues in the Malaysian statutory housing agreements (Schedules G, H, I and J): “Defect Liability Period”

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Md Dahlan, Nuarrual Hilal (2015) Issues in the Malaysian statutory housing agreements (Schedules G, H, I and J): “Defect Liability Period”. The Law Review (2). pp. 254-273. ISSN 1985-0891

Abstract

Defect liability period clause is provided in the statutory housing agreements-Schedules G, H, I and J (“the said agreements”). However, this liability may not be provided if the housing project is abandoned. Thus, in the event of housing abandonment, the purchasers may not be able to get protection under defect liability period clause. Due to this lacuna, the rights of purchasers can be undermined. This paper aims to highlight this issue-defect liability period in the said agreements, particularly involving abandoned housing projects in Malaysia. This research paper used a pure legal research methodology.This paper finds that due to the absence of specific clause of defect liability period in the said agreements in the event of housing abandonment, the rights of the purchasers will be denied and they will suffer irreparable damage. At the ending part of this paper, the author suggests some recommendations to settle the issues identified.

Keywords: Abandoned Housing Projects in Malaysia, Defect Liability Period, Statutory Housing Agreements, Legal Issues, Purchasers’ Grievances, Recommendations.

Comparative legal analysis on the viability of judicial management on insolvent residential developer companies in Malaysia, The Republic of Singapore and The United Kingdom

Md Dahlan, Nuarrual Hilal (2015) Comparative legal analysis on the the viability of judical management on insolvent residential developer companies in Malaysia, The Republic of Singapore and The United Kingdom. Malayan Law Journal, 2 (20). pp. 1-15. ISSN 0025-1283

Abstract

Recently, the corporate law reform committee (‘CLRC’) operating under the companies commission of Malaysia (‘CCM’) has recommended that judicial management (‘JM’) be introduced in Malaysia as one of the ways to deal with corporate insolvency matters. The application for appointment of judicial manager may be made by the company itself, the directors or the creditors. The judicial manager is armed with a moratorium power against any action taken which may be commenced by the creditors and others to ensure that he can effectively carry out his duty. The moratorium power will enable him to prepare and implement the approved restructuring plan for the benefits of the insolvent company and its creditors.This paper aims to elaborate the CLRC’s recommendations on JM and study its strengths and weaknesses particularly in dealing with the problems of failed residential projects of insolvent residential developer companies. This paper is also a result of research conducted through a comparative legal research methodology. Two jurisdictions, viz the Republic of Singapore and the United Kingdom have been selected for comparative analysis over their respective laws and practices on JM. Further, this comparative study is to investigate, identify and find the respective jurisdictions’ strengths and weaknesses on JM, which Malaysia can learn from particularly in the face of the failed residential projects’ problems. This paper finds that the recommendation by the CLRC for the appointment of judicial manager is commendable. Nonetheless, it is submitted that, in the insolvency management of insolvent residential developer companies with failed residential projects, the judicial manager who is armed with certain statutory and legal powers still cannot fully provide comprehensive solution in dealing with the rehabilitation of failed residential projects and cater to the rights of the aggrieved purchasers. Equally, this paper suggests certain proposals to improve the corporate rehabilitation mechanism carried out by the judicial manager in insolvency Administration involving insolvent residential developer companies whose residential projects failed.In the course of carrying the JM, this paper also suggests certain ideas on how to protect the rights and interests of the aggrieved purchasers in failed residential projects.

Keywords: Failed Residential Projects; Judicial Management (‘JM’); Rights of Aggrieved Purchasers; Rehabilitation; Malaysia.

Legal issues and prospects in the protection and assistance of internally displaced persons (IDPs) in Nigeria

Ekpa, Shedrack and Md Dahlan, Nuarrual Hilal (2016) Legal issues and prospects in the protection and assistance of internally displaced persons (IDPs) in Nigeria. Journal of Law, Policy and Globalization, 49. pp. 108-116. ISSN 2224-3240

Abstract

Internally displaced persons (IDPs) lived within the borders of their own country thus the responsibility for their protection and assistance rests on their national government. IDPs are not so privileged like refugees whose protection is guaranteed in international law. The protection and assistance of IDPs is encumbered by series of legal and institutional constraints in Nigeria. These concerns are interminable and preponderates all phases of internal displacement such as pre-displacement, displacement and post displacement. This paper aims at exploring into these bulging challenges with a view to bringing to the fore their intractable influence on the protection needs of IDPs.The paper also delves in examination of laudable efforts of Nigerian Government in a bid to ameliorate these challenges either by way of statutory interventions or policy initiatives. The paper as a conceptual analysis relies on primary sources such as international legal instruments, Nigerian domestic legislations, case law, and secondary sources such as textbooks, journal articles and other library based sources. This study is significant as it brings to the fore the imperative needs to address the prevailing difficulties faced by internally displaced persons as a result of unending surge in internal crises in Nigeria At the end of this discourse, the paper founds inter-alia that good laws and policies without the appropriate political will to implement them for the betterment of IDPs as part of the entire citizenry would remain dead letters. The paper recommends the adoption and implementation of relevant instruments and policies on IDPs’ protection in Nigeria and review of extant laws and policies as a way of bridging the gaps in the protection cycle of IDPs in Nigeria.

Keywords: Displacement, Persons, Protection, Responsibility, Challenges, Nigeria

Alienation of land for housing development projects in Malaysia and New South Wales, Australia: A comparative legal analysis

Md Dahlan, Nuarrual Hilal (2016) Alienation of land for housing development projects in Malaysia and New South Wales, Australia: A comparative legal analysis. Malayan Law Journal, 1 (xliii). pp. 1-19. ISSN 0025-1283

Abstract

The state authority in Malaysia has an absolute power in the alienation of lands as prescribed in List II to the Federal Constitution and the National Land Code 1965 (‘the NLC’). The state authority is not obliged to refer to the technical agencies and professional parties for views before making any decisions to alienate land or otherwise. Due to the absoluteness of their power to alienate land, there have been cases where the state authority has failed to carefully carry out this power to the detriment of the housing projects’ developers.This failure to the extreme may contribute to the occurrences of many abandoned housing projects in Malaysia. This paper analyses this issue through a combination of qualitative case study, conventional legal research and comparative legal research methodologies. In respect of comparative laws, the author compares the laws and practices that are applicable in Malaysia and New South Wales, Australia concerning the alienation of lands, to determine the advantages of that of the New South Wales’, that can be learned and adopted in Malaysia to avoid the occurrences of abandoned housing projects.

Keywords: Alienation of Lands; Abandoned Housing Projects; Legal Issues; Malaysia; New South Wales, Australia

Kewajipan menanggung nafkah anak tak sah taraf: Satu kajian kes di Negeri Kedah

Ahmad, Abd Ghani and Md Dahlan, Nuarrual Hilal (2016) Kewajipan menanggung nafkah anak tak sah taraf: Satu kajian kes di Negeri Kedah. Kanun: Jurnal Undang-Undang Malaysia, 28 (2). pp. 214-244. ISSN 0128-2670

Abstract

These days, the births of illegitimate child are on the rise and have raised a great concern among the society.The issue at hand is who will be responsible to provide maintenance to these children? This maintenance issue, if not addressed properly, may cause injustices to illegitimate children.The objective of this writing is to discuss the actual parties responsible for providing maintenance to illegitimate children based on Islamic Law and the current legal provisions.This writing is a socio-legal and qualitative nature based on primary and secondary data sources. Library research also constitutes a principal data source used in this writing by way of inductive and deductive analysis through references from the Holy Quran, al-Sunnah and laws.The outcome if this research is that the mother is the person responsible in providing maintenance to her illegitimate child.If the mother is incapable to do so, the responsibility is then shifted to the mother’s heirs and if none, it will then be the responsibility of the government.There is no corresponding responsibility on part of the father.This situation may cause injustices towards the mother’s part and the children.Thus, a refined mechanism should be adopted in dealing with the issues of welfare and maintenance of illegitimate children to ensure dispensation of justice to all parties.

Keywords: Illegitimate Children, Maintenance, Welfare, Islamic Law, Law

Some drawbacks in the Australian Buying Off the Plan

Buying off the plan means buying property with the advance of some deposit (usually at 10% of the purchase price), while the remaining 90% will be paid after the developer completes constructing the property together with the necessary certificate of completion/fitness which warrants delivery of vacant possession and occupation. This can protect purchasers against losses due to incomplete project or abandoned property project.

Nonetheless, there are some drawbacks of this plan. This is revealed in an article entitled “in Asking the right questions pays off when buying off the plan” appeared in Herald Sun written by Neelima Choahan in Herald Sun Real Estate – http://www.heraldsun.com.au/realestate/news/asking-the-right-questions-pays-off-when-buying-off-the-plan/story-fni0ckoj-1226910382891.

“New data from property consultants Charter Keck Cramer reveals the number of off the plan apartment releases soared 103 per cent from just over 7000 to more than 14,000 between 2009 and 2013. But the biggest gains have been in the outer suburbs of Melbourne where off the plan releases increased a whopping 2350 per cent from 42 to 1029 apartments, a whopping 2350 per cent jump.”

Charter Keck Cramer director Sam Nathan said Melbourne’s apartment sector had matured significantly in the past five years.

“Melbourne’s favourable planning strategy, dynamic private development sector and supply opportunities have driven the new releases,” Mr Nathan said.

However, he said the apartment market in the city fringe, inner and middle regions was still in its infancy.

Property group 360° director John Meagher said buying off the plan held a lot of financial advantages for well-informed buyers.

But for the uninformed there were many hazards that could turn the expectation of a great investment into a financial and emotional headache.

“Buying off the plan is a literal term for purchasing property that has not yet been built,” Mr Meagher said.

“In other words, it is making a decision to buy an apartment or house based on the documentation available prior to construction.”

Mr Meagher, who has just released a guide to buying off the plan, said buyers must consider the financial, technical and legal requirements before signing on the dotted line.
“Buyers should ask how much deposit needs to be paid, when the balance of purchase price is due to be paid under the contract of sale,” he said.

Mr Meagher said buyers in Victoria should investigate how much stamp duty they would have to pay on settlement.They should also find out the due date for payment and the sunset clause, Mr Meagher said.

“The sunset clause is the date by which the developer has to deliver the property to the purchasers,” he said.

“If the developer doesn’t deliver the property within the timeline, the purchaser is entitled to a reimbursement of the deposit and can walk away from the contract of sale. Alarm bells should ring if the sunset clause is too long.”

Being aware of important technical information when buying off the plan made all the difference between a good and bad investment, he said.

“Some agents will quote room sizes using measurements taken to the exterior of the building,” Mr Meagher said.

Other things to look out for were high rental guarantees used to set prices above market value and if car parking and air conditioning were included in the price.

Remember to ask the question, ‘What is included in this price?’, he said. “Don’t always assume you are buying what you see in the developers’ sales centre or brochure,” Mr Meagher warned. “Additional priced upgrades may be shown in the display.”

Buyers should check the developer’s background, obtain proof of progress and keep the contract handy during final inspection to double-check before settlement.

He urged buyers to go with experience. “You don’t want to be guinea pig, buying in a development where the developer is going through the processes for the first time and learning at your expense,” he said.

“The bottom line is you can never ask too many questions or have too much information about a property you are interested in buying.”

Practical planning pays off

BEFORE buying her new off-the-plan apartment, Euphie Rong made sure she asked all the right questions.

Despite that, the end product wasn’t quite what the financial markets client specialist imagined.

In fact, the one-bedroom abode in the CBD surpassed all her expectations.

“Thankfully, it was even better than my expectations,” Ms Rong said. “It has very good views of the city and lots of sunlight.”

Ms Rong, who has entered into the off-the-plan market for the first time, said doing her homework was the key to success.

“I looked at the plan carefully and I got as much information as I could,” she said.

“I also researched the developer and the builder to see what their track record was in terms of delivering on time and the quality of their project.”

Ms Rong also compared the established one-bedroom apartments in the CBD on offer before making her choice.

She said buyers should consider the “hard” and “soft” elements of the development before making a decision. “The hard (elements) are the construction, the quality, the material, the location — so the property itself,” Ms Rong said.

“The soft (elements) are the pricing and your own requirements.”

“No one knows the project 100 per cent — either the sales person or the project manager. But if you ask the questions, you’ll get the answers.”