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Booking fee dilemma Can the developer confiscate your booking fee?
BUSINESS NEWS
Saturday, 4 May 2013

I found my dream house. The developer’s office said the project was selling like hot cakes. Sales were on a ‘first come first serve basis’ and I must pay a deposit otherwise she would have to give it to someone else. Or was it a booking fee she called it?

I begged her to give me one week. Three days, she said. How very sweet and understanding of her. Bank loan? No problem... 85% loan margin? No problem, she assured me. If I could not get a housing loan I could always cancel and get my money back. I left the developer’s office feeling on top of the world. I had secured my dream house by paying the deposit. My dream turned into a nightmare when I could not get a bank loan. I had no choice but to forgo the house.

As if letting go of my dream was not bad enough, the developer now refuses to give me back my deposit. The lady said her hands were tight because it’s a management decision. It was not stated in the ‘option letter’ or ‘booking form’ that my purchase was subject to the loan approval. On reading the terms and conditions in the option letter/booking form, I now realised that all terms were inclined in favour of the developer.

What do I do? I just want my money back. I don’t mind if they keep a small sum for cost of paper work and for administrative purposes.



Many house buyers are unaware of lending guidelines requiring loans to be tagged to net income as opposed to gross income. Many find that they are unable to obtain the financing they want and have to withdraw from an intended purchase before the sale and purchase agreement is even signed. The developer then refuses to refund the deposit or booking fee or whatever other payment which may have already been paid.

The unfortunate part about this whole thing is that house buyers do not have the luxury of a learning curve in which they can acquire the necessary skills to avoid getting themselves into trouble. Very often by the time they realised that they have made a mistake, it is already too late and the result can be traumatic and financially crippling.

This very noble and seemingly simple undertaking of buying a house, in a lot of cases, have gone terribly wrong.

Can developers collect booking fee or deposit?

The sale and purchase agreement (Schedule G, H, I or J) as prescribed by the Housing Development (Control and Licensing) Regulations, 1989 (the Housing Regulations) provides very clearly how the purchase price is to be paid. The first 10% is payable immediately upon the signing of the sale and purchase agreement (SPA), not before.

No collection of any payment is allowed before the SPA is signed. Deposit, booking fee, advance payment, administration charges are just some of terms used by some devious developers in their vain attempts to circumvent or contract out of the Housing Regulations and to confuse, mislead and convince naïve house buyers especially the first-timers.

Collection of any payment by a housing developer before the signing of the SPA is an offence. This is very clear under the Housing Regulations and it does not matter what the developer calls it.

The Housing Regulation 11(2) stated: “No housing developer shall collect any payment by whatever name called except as prescribed by the contract of sale”. (In this context’ contract of sale means the SPA)

Commission of such an offence under the Housing Regulations means that the developer in question can be prosecuted, fined and/or even imprisoned under Regulations 13. Even those persons who knowingly and willfully aids, abets, counsel, procures or commands the commission of such an offence shall be liable to be punished.

Prosecution, however, is in the hands of the public prosecutor whose action or non-action the house buyers are not able to dictate. House buyers and indeed the general public are of course at liberty to lodge a complaint against any developer in breach of any housing laws. Such complaints can be lodged with the Enforcement Division of the Ministry of Housing and Local Government: www.kpkt.gov.my

The law as regards non-payment before the signing of the SPA is very clear and house buyers are strongly urged to understand the law and not be misled by some cunning, unscrupulous developers or their smooth talking sales representatives who either do not know the law or simply do not care about the law.

Profit orientated developers care about nothing but profit. The more they sell the more they gain. They engage marketing commission agents and sales representatives whose only mission is to sell. In their quest to sell their products, some unprincipled commission agents (secondary markets included), who are untruthful will not hesitate to mislead, conveniently telling “white lies” and make empty promises to make a quick buck. Some are so well trained in the art of selling they can probably sell sand to the man in the desert.

Ever wondered why the sales office told you there are only five units left but three months later there are more than 10 units still available? Did the developer’s office tell you the unit you want is already booked but called you two days later to congratulate you because the same unit has just become available? Ever gone to a developer’s office in the hope of getting the “Early Bird Discount” advertised the day before only to find that the project was launched more than a year ago?

Filing a claim for refund

Free gifts, rebates, and waivers of this or that are also fairly commonly seen and are often stated to be for a limited time only. House buyers hurry to meet the deadline. Three months later the same advertisement appears, again for a limited time only or perhaps extended due to popular demand. Gimmicks of “Free legal fees” offer but you must use the developer’s panel lawyers are commonly marketed.

The list of marketing ploys used by developers and their marketing alliance goes on and unscrupulous developers and real estate agents are not likely to stop trying to exploit vulnerable house buyers any time soon. House buyers must therefore be very wary and not be easily swayed by promises made by the developer’s office.

House buyers who are already caught in tussles with housing developers over refund of booking fee or deposit are at liberty to file their claims at the Tribunal for Homebuyer Claims (the Housing Tribunal). The Housing Tribunal was set up as an alternative forum for house buyers to save them the costs and hassle of fighting with housing developers in the civil courts.

The filing fee is only RM10; no lawyers are required and hearings are normally fixed within a month. The Housing Tribunal is empowered to hear disputes between house buyers and licensed housing developers even though the SPA is yet to be signed but the claims must be filed within the time frames provided under section 16N of the Housing Development (Control & Licensing) Act 1966 (the HDA). Check out the link: www.kpkt.gov.my – TTPR

Can the developer forfeit such payment?

Where booking fee or deposit or any other payment is collected by the developer before the SPA is signed, the house buyer would normally have been asked to sign a document indicating the house/apartment/condominium he/she is interested and agreeing to sign the SPA within a certain time frame, say 7 or 10 days or upon notice from the developer. This document may be in the form of an option letter, letter of offer, sales proforma, booking form or another document by whatever name the developer chooses to call it, all in an attempt to disguise a collection prohibited by law.

The amount varies and in some cases it is as much as 2% of the purchase price – RM10,000 for a RM500,000 house. When the house buyer decides to withdraw from the intended purchase, the developer refuses to refund the deposit, or was it booking fee, or was it ...?

l Chang Kim Loong is the honorary secretary-general of the National House Buyers Association: www.hba.org.my, a non-profit, non-governmental organisation manned by volunteers. He is also a NGO councillor at the Subang Jaya Municipality Council.

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Good morning guys, can enlighten me few things? What is ADPL? Also, I booked a house and loan didn't get to approve, so I want to get back fee back. Any concrete and solid statement/excuse I can use to get the full refund booking fee?

two official letters from any two banks citing your loan applications have been rejected.

APDL is an advertising permit allowed developer to formally start selling the house with marketing and promotion.

pls note that you may not get full 100% refund even though the law does say you should.

Hi all. Recently I had place a booking on a property but decided to pull back after knowing more unfavourable information about the property. Those information wasn't shared upon signing the booking form. In the form it said that refund takes 21 days. However its been more than 21 days, and the agent said normally it takes 30 days to refund. Any ideas on how to resolve this? I believe the company must uphold on whats written in the form which is 21 days.
tq in advance.

developer isn't supposed to collect deposit.
who do you made the cheque out to???? which company?
have the cheque been cleared?

if your cheque is made to independent agent and not the developer, good luck.

write to the developer and c.c. copy to Housing Tribunal.

Yeap, however almost all developer is practising this booking scheme, even big listed developers. Wondering why govt tutup one eye.

Paid to developer. Just called them in the mrg, cheque will be ready by this few days.
Tq for the tips.

big developers usually required you to sign spa within days bcos lawyers need to prepare spa n you need to get loan approval letters,

Curious to know about this too...

Parking to learn roti canai technically.

Hi, I am new here.

Recently just turn down a project after sign Letter of Offer from bank.
I request refund my booking fees RM 5000 from developer, they said already get loan approval not entitle to refund. My RM 5000 will be fully forfeited.

Can i try made aduan at KPKT or tribunal court to request them do refund? Even just partially is good enough.

Which project

It's gone, also don't forget the penalty to bank since you signed LO.
If you even signed SPA then there's no turning back.

Burn la. Middle man cannot eat pasir.

Aduan? yes you can. Win or not different story.

always put condition on booking form for cancellation 100% refund and u are good

i tot with rejection letter usually is fully refund? no?

Hi

i have similar situation as TS. I have recently placed a booking fee of 3% for this property (subject to loan approved 90% or else fully refund), and went to apply loan from a few banks.

what happened was that 3 out of 4 banks approved basis 90%.

the question here is that, If i decided NOT to proceed with the purchase, can i use that 1 rejection letter from the bank as a supporting doc to claim back my booking fees?

what if the agent somehow knows that the other banks approved my loan basis 90% thru her/his contacts?

Hi, same situation as TS.

I placed booking for a new apartment with RM3000 before MCO. Then mco hit and other issues arise. Now my loan is approved but i wish to cancel the booking as im not confident with the company stability as well as my own personal financial stability at the moment.

When i place booking (before MCO) the agent advise that if i myself cancel the booking (not due to loan reject etc), the RM3000 booking will be forfeited, or if loan reject, only RM500 butn (admin fee). Can advise if there’s any way to cancel but with refund?

If you buy from developer, it is illegal for developer to collect booking even it is common practise to do so. You may talk nicely to agent /developer but if didn't work, u can always write to kpkt and tribunal for the solution and copy to developer.

Good luck.

Im facing the same thing too 😭😭