THE National House Buyers Association (HBA) lauds the government’s recent decision in limiting the fees of liquidators appointed as agents by the Malaysian Insolvency Department (MDI) to RM500.
The appointed agent is to carry out administrative functions deemed as “last mile” processes in completing the memorandum of transfer to the house buyer, in the event of a developer becoming defunct before completing this function.
HBA thanks the Special Task Force to Facilitate Business (Pemudah), co-chaired by the caretaker minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed, and representative of the business sector, Datuk Andy Seo, which made this decision at a meeting on September 26.
We also appreciate the Malaysian Bar Council’s support in this HBA initiative. As per the Bar Council’s clarion call, we would also reiterate the need to look into expanding this embargo onto private liquidators who are not appointed by MDI, namely those appointed directly by the creditors or companies via court orders.
Despite this much-awaited step forward in ensuring fairness to the hapless house buyers, HBA notes further improvements could and should be undertaken by the government – namely to the new pegged fee of RM500, which should not only take effect prospectively but retroactively (however, not to the extent of making the liquidators refund any “overcharged fees”).
For many years, private liquidators have been overcharging administrative fees of 1% to 2% of the property’s market value on house buyers who are caught in the quandary of defunct developers.
Even more horrifying, this questionable practice has been carried out without any valid legal mandate, or it might have been condoned by the authorities – if not directly, then by omission through their acquiescence.
We have put forth certain additions to government policy pertaining to the liquidator’s fee to ensure fairness for all affected house buyers and to prevent such extortion-like practices in the future.
HBA’s counter-proposals
When HBA realised we must accept the only proposal made by MDI or risk having the offer withdrawn, we promptly accepted it to avoid the risk of having to go back to the drawing board, which would take months.
We did, however, qualify that we “accept those terms” offered by MDI on the condition of slight modifications and expansion of its perimeters. Such modifications are to be discussed through another focus group which will be initiated by the Malaysia Productivity Corporation (MPC), Pemudah’s secretariat.
The following are HBA’s counter-proposals to MDI’s terms, and their rationales:
(i) The proposed RM500 capping on the fee should also apply to title deeds already being applied, submitted and/or being processed at the Land Office for issuance.
This is in line with the policy of “vacant possession simultaneously with strata title” (VPST) that has been stipulated since June 1, 2015, with the amendments to the Housing Development (Control & Licensing) Regulations.
There have been enough cases of distressful consequences experienced by property owners when their developers have deliberately failed, neglected or refused to apply for and transfer the strata titles to purchasers, even when the latter have paid in full.
VPST was a mechanism for closing the floodgate to prevent developers from shunning their obligations. It was serious enough for the government to enact new statutory provisions, amend existing ambiguous laws (to plug the loopholes), and repeal redundant sections of the act to achieve this much-needed transformation.
(ii) To insert the word “reasonable” into the phrase “additional charges/costs/other expenditures” that liquidators are allowed to impose for difficult cases. There are instances, where the master titles are misplaced and cannot be found, whereupon the agents have to lodge police reports and formal applications to the Land Office for replacements.
In such situations, HBA agrees MDI-appointed liquidators are allowed to charge additional fees, costs or miscellaneous expenses at a reasonable rate which will be certified by MDI as necessary work, and not at a percentage of the market value of the house, left to the absolute discretion of the liquidator. This loophole should also not be a backdoor for the said liquidator to continue extortion-like practices of imposing the liquidator’s legal fees on the house buyer.
(iii) The RM500 fee should also be applied retrospectively to existing cases and not just future appointments of liquidators – because liquidators have been illegally imposing percentage fees on the house buyers, and this illegal practice should not be condoned further by the government.
Although MDI reasoned that buyers have signed written contracts with the respective liquidators and cannot renege on the deals, HBA would like to point out that normally, contracts are drafted with an exit clause or material-change-of-event clause to cater for change of administrative practices and amendments to existing policies.
The contract needs to be relooked at for its full effects and entitlements. HBA is confident MDI would have adopted this prudent contractual practice when entering into contracts with the liquidators.
Hence HBA urges MDI to review its contracts with the appointed liquidators to ensure the government’s policy is applied across the board to all present and future liquidators.
HBA hopes the government will expeditiously honour its commitment to look into these additional proposals from HBA as there are still hundreds of affected house buyers who are held at ransom by unscrupulous and avaricious liquidators.
MDI must be true to its vision and mission statement
MDI has an excellent expressive website with a policy statement and commitment inter-alia:
Vision: To be the leader in insolvency management through efficient and dynamic administration, services and enforcement.
Mission: To manage insolvency affairs with integrity, fairness and professionally to secure and balance the interest of customers to minimise the impact of financial management failure.
Objectives:
(i) Strengthening the administration, services and enforcement of the insolvency management.
(ii) Strengthening the application and the implementation of the insolvency laws.
(iii) Strengthening the ability and capacity of MDI.
(iv) Strengthening cooperation and strategic partnerships.
HBA has dealt with MDI, where the latter acted as official liquidators of defunct real property developers in cases of “verification exercise”, “distribution”, “transfer”, and “sign off”.
MDI is quite proactive because the process is merely procedural and administrative in nature. It should continue to keep up its efficiency and productivity to achieve its long-term mission statement.
Do you know that MDI charges a fair and reasonable fee of RM500 for the same process? MDI terms it as ‘Gaji Pelikuidasi’ (Liquidator’s Wage). – The Vibes, November 2, 2022
Datuk Chang Kim Loong is honorary secretary-general of the National House Buyers Association
