Is The Statutory Standard Sale And Purchase of Housing Accommodation Agreement (Schedules G, H, I and J) In Peninsular Malaysia Compatible With Islamic Law? Part 2

It is reiterated that the said agreement (Schedules G, H, I and J) does not provide sufficient provision and term of protection against abandonment and the ensuing grievances, occasioned by the abandonment, for purchasers. Because of this absence, gharar al-fahish (exorbitant gharar-exorbitant fraud/risk/peril/uncertainty) may possibly (ihtimal) be committed by the vendor developer. Examples of lack of certain provisions, in the said agreement and the nature of house buying transaction in Peninsular Malaysia, which can lead to the possible (ihtimal) occurrence of gharar al-fahish are:

 

1)      No guarantee that the purported housing development project will not be abandoned and failed in the future. Even though there are legal provisions for the preservation and management for the releases of the purchasers’ monies in the housing development account, as provided in the Housing Development (Housing Development Account) Regulations 1991, yet this is proven, are not fully capable of avoiding abandonment of housing projects and leading to the ensuing grievances, sufferings and losses to the stakeholder, especially the purchasers. This happens because the architect and the engineer, who may act, in concert with the bank managers, approved fraudulent claims on the instruction of the developers for the release of the purchasers’ monies from the housing development account. In the alternative, the costs for construction of the housing project may not commensurate with the available moneys held under the housing development account and the vendor developer’s reserve;

2)      No provisions concerning the management of development of the housing project on the occurrence of abandonment, on the default of the vendor developer and how to legally and equitably face it with the intention of preserving the interests of purchasers (public interests) and the stakeholders;

3)      No specific provision for rehabilitation and regulating it in the event the inevitable abandonment occurs;

4)      No requirement to have Certificate of Fitness for Occupation (CF) or Certificate of Completion and Compliance (CCC) in the delivery of the vacant possession of the completed unit. This absence may lead also to gharar (risk/fraud/peril/uncertainty) – may be the completed house is not suitable for occupation;

5)      No provision providing damages and compensation to purchaser for their sufferings and grievances, in the event the project abandoned and in the course of waiting for the completion of the rehabilitation;

6)      No mandatory, legal requirement and legal rights for carrying out necessary supervision, verification, inspection, examination and monitoring by the purchasers, MOH, local authorities and technical agencies over the building and construction works as well as against the progressive claims made by the vendor developers (al-Amin, 2001, “Istisna’ and Its Application in Islamic Banking”, p. 47). Thus, in this situation, it is similar to sale of al-Munabadhah (an example of a gharar contract) – a sale effected by the vendor without leaving the buyer the opportunity to examine or check the goods or a sale of al-mulamasah (an example of a gharar contract) – a sale finalized without examination by the buyer, who is allowed merely to touch the product (Razali Nawawi, 1999, p. 90);

7)      No legal requirement for obtaining housing development insurance by the vendor developer, against any possible abandonment, non-completion and defective works in the completed building houses, which may result in the frustration of the contract – gharar al-fahish, in the event the vendor developer is later, proven not being able to meet financially, with the demand of the purchasers to undertake rehabilitation, completion, repairing and rectification works (al-Amin, 2001, “Istisna’ and Its Application in Islamic Banking”, p. 47);

8)      The completion date of the said agreement does not altogether require the full transfer of the title to purchasers. This may also lead to gharar i.e, purchaser may become the aggrieved party even though he has paid all the purchase prices but because of default, unwarranted and other unconscionable acts of the developer, the purchaser could not get the good title to the unit purchased;

9)      Specification of the building, in the Third Schedule to the said agreement are not fully disclosed and particularized warranting possible (ihtimal) commission of gharar by the vendor developer;

10)  Insufficient enforcement of the law by MOH, the local authorities and the technical agencies (such as TNB, Sewerage Service Department (JPP), Canal and Irrigation Department (JPS), Fire and Rescue Department (Bomba), Public Works Department (JKR) etc), resulting in possible (ihtimal) commission of various fraudulent conducts and gharar by the vendor developer at the expense of purchasers/stakeholders, yet the vendor developer finally got off scot free without any punishment;

11)  Insufficient capability and qualification, particularly in respect of the financial ability, on part of the vendor developer to implement the purported housing project due to unreasonable extravagant spending of money (safih), lack of skills/expertise (ghaflah), dishonesty, mismanagement and negligent financial and construction management (disqualified in the legal capacity – ahliyat al-Ada’). This is due to insufficient legal and practical requirements or failure on part of the authorities to select the suitable persons (the contracting parties/vendor developers) to carry out the project, supervisory failures and insufficiency, breach of duty of care and problems of enforcement. (Nuarrual Hilal Md. Dahlan, 2006, “Abandoned Housing Projects in Malaysia: A Legal Perspective”, Malayan Law Journal), (Nuarrual Hilal Md. Dahlan, 2007, “Rehabilitation of Abandoned Housing Project: Experience of an Abandoned Housing Developer Through the Help of A Government Agency”, Malayan Law Journal) and (Nuarrual Hilal Md. Dahlan, 2007a, “Rehabilitation of Abandoned Housing Project in Peninsular Malaysia By A Purchasers’ Voluntary Scheme: A Case Study”, Malayan Law Journal). These incapacities could cause the agreement void as it affects the root (rukun – pillars) of the contract, viz the capability and qualification of the parties (ahliyat al- Ada’) to carry out the contract (Abdul Halim Muhammad, n.d, p. 69–73), (Razali Nawawi, 1999, p. 68 & 82) and (Wahbah al-Zuhayli, 1989, vol. 4, p. 131—132);

12)  Total inability of the vendor developer to surrender the purported duly completed housing unit to purchasers on the promised date or there might be no delivery at all. This would cause the contract void due to gharar;

13)  Inability of the vendor developer to duly complete the purported housing project and to rehabilitate the same but received benefits and profits at the expense of purchasers (gharar); and,

14)  Even though equitable, statutory and legal remedies are available for the aggrieved parties, yet these would remains futile because when the time comes for instituting such actions, the intended actions and their outcomes might not be practical and feasible nor beneficial as the developer might have been wound up, disappeared, and having no asset/financial capabilities to meet the claims for damages. Thus, in abandoned housing projects, usually the purchasers are the fallen preys to the unscrupulous abandoned vendor developers.

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