Dear En. Hilal,
I read your articles on abandoned housing project. Being very convincing with your expertise in this field, here I would like to get your brilliant and tips.
My name is…. In 1998, I purchased a unit of apartment in…. This project was ran by …. (the developer) I get into a contract with … (the bank) to finance my purchase of the apartment unit. …had released the 1st 10% of my loan to …(the developer).
In Dec.2002 this project was declared abandoned by KPKT (Ministry of Housing and Local Government). Few years later … (the developer) was declared bankrupt. Few years after the declaration that this project was abandoned, I had requested …(the bank) to close my loan account as I would like to settle all the 1st 10% which was disbursed to…(the developer), envisaging that I want to avoid paying the interest for that 10% for good. The bank told me that was not possible.
In 2006, I went oversea to further study and till now still in oversea. I did not have any contact with the bank anymore. The interest from my housing loans kept on accumulating plus all legal fees, late payment fees and other related fees.
This month Jan 2014, by chance I had contacted the organizing committee of purchasers of…(the developer) project and he told me that the project was taken over by another developer but my unit fall under cancelled project, whereby the developer had received the approval from the court to cancelled the project of my unit and will reimburse all the money the purchasers had spent to buy the unit in that parcel, they will reimburse ONLY the amount that the bank had released to…(the developer) and the 10% down payment, other related cost like lawyers fees for the bank and the developer and related fees will not be included.
I have contacted the related persons from the new developer, and they had informed me that they had released the cheques under my names to…(the bank) and the cheque was cleared in Nov 2013. The bank did not contacted me, I understand because I was not contactable. Then I contacted the person in-charge from the Loan monitoring unit in…(the bank) and they admitted that they had received and cleared the cheque.
I have requested the Bank to reconsider and recalculate the settlement of my debt to…(the bank), and I have also requested them to minus the 5 years waiver exemption of paying the interest for that abandoned project as announced by the Government, and I requested the bank to minus all legal fees too during the 5 years waiver / exemption of paying the interest.
- Am I correct to request all those 3 issues to be reconsidered for the settlement of my loan with…(the bank) for this abandoned project? If not, could you please advise or suggest me what actually the correct thing to do or to request?
- Do I have to provide the Bank with the necessary docs related to this issue? If yes, what are the documents would be?
- I have also requested the bank to remit all the balances from that settlement amount to my personal account.
Below is the draft of my email to the person in-charge in …(the bank). I really appreciate if you could have a look on my drafted email below and please feel free to amend or add any wording if you think necessary/appropriate. I really appreciate if you could give me the feedback ASAP so that I could contacted those persons accordingly ASAP too.
As per our discussion on the phone this morning, could you please proceed with the necessary for my below requests pertaining to the settlement of my HL with …(the bank) for the abandoned project under…(the developer).
- I would like to request the waiver of interest exemption as announced by the government for any abandoned project. this waiver should be commenced from the date the project was declared abandoned by KPKT (Kementerian Perumahan dan Kerajaan Tempatan/ Pihak berkuasa yang berkenaan with maximum terms of 5 years.
- I would like to request the waiver of all legal fees imposed on this account during that waiver period too with the reasons explained in my previous email.
- I would like to request that all the balances from this settlement to be refunded to my …(my bank) account no…………………………………………..
Thanks and kind regards
I feel sorry for the disaster that strikes you.
This is an opinion regarding your case. Nonetheless, my advice/opinion below is subject to without prejudice basis.
Your housing developer went bankrupt and wound up, leaving the housing project abandoned. In Malaysia, the normal and general possibility that the abandoned housing project can be revived is remote. At the end of the day, you may not get the duly completed house and that you may have to settle the loan that had been advanced to the defaulting abandoned housing developer. Even if you sue the wound up housing developer, this may not help you either. As the remaining funds may not be adequate to compensate you for all the losses you suffer. In this situation, legally, you may apply to the court to lift the corporate veil, requesting the court to order the directors to pay compensation and be liable to you.
On the other hands, you could report to the police for the fraud that the company/director committed. Further, a report should be lodged to KPKT, so that KPKT can take action in accordance with the provisions under the Housing Development (Control and Licensing) Act 1966 (Act 118) against the defaulting directors of the abandoned housing developer company.
In short and by and large in Malaysia, there is no law that governs abandoned housing project, its rehabilitation and that can protect the aggrieved purchasers’ interests today (including obtaining damages and compensation).
As regards your problem (in 2002) on…(the bank) for releasing some percentage of the loan, it is a law that you as the customer has a right to order …(the bank) not to release the loan to the defaulting developer (see Hoo See Sen & Anor v. Public Bank Berhad & Anor  2 MLJ 170, (Supreme Court)). The act of the bank in releasing the first 10% to the developer, despite your request to them not to do so, was wrong in law and knowing that the project was declared abandoned by KPKT. On this, I think you should provide proof of their negligence and breach of duty as the bank. You should also report this to Bank Negara Malaysia to take action and can sue them for their breach of duty of care/negligence. You may also claim damages/compensation for the losses you suffered.
You are also entitled to get an endorsement and certification from KPKT on your right to have the calculation of the interests of your loan be stopped from the date the housing project has been declared abandoned by KPKT. As regards your right to get back all legal fees and related fees, I think, you have to personally sue the wound up housing developer and by lodging Proof of Debt (POD) to the liquidator and you will become an unsecured creditor who may entitle to the balance moneys that the wound up company left.
In 2013, you said …(the bank) released some loan to the new developer. I cannot imagine, how could the bank release the money to the new developer, if your house has been cancelled for further development? In this case, I think …(the bank) was negligent and breached their duty. You can ask them to cancel the payment made and make a statement that you shall not be liable (to repay/settle the loan) to the wrongful release of that loan to the new developer.
Finally, you are entitled to the requests (waivers) you made to…(the bank). If they still hesitant to entertain your request, you may report to Bank Negara Malaysia for further action. Provide all proof as well.
Before I end this email, I have a question:
Is there any court order regarding the rehabilitation of the project and on the handing over of the project from…(the developer) to the new rehabilitating developer? The court order should provide certain terms as regards the rights of the purchaser to proceed or not to proceed with the rehabilitation, terms that protect the purchasers’ interests etc and the duties of …(the bank).
Associate Professor Dr. Nuarrual Hilal Md. Dahlan ACIS, Institute for Governance and Innovation Studies, Universiti Utara Malaysia, Sintok, Kedah Darul Aman.