Not enough to just cap MDI-appointed liquidators’ fees at RM500

• HBA notes that further improvements could and should be undertaken by the government, namely to the new pegged fee of RM500 should not only take effect prospectively but retroactively (but not to the extent of making the liquidators refund any “overcharged fees”).
• 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.

The National House Buyers Association (HBA) lauds the recent move and decision of the government in limiting the fees of liquidators appointed as agents by the Malaysian Department of Insolvency (MDI) to RM500, as stated in our earlier article titled Govt halts exorbitant fees by MDI-appointed agents.

The appointed agent is to carry out administrative functions deemed as the “last mile” in completing the memorandum of transfer to the house buyer in the event a developer becomes defunct before completing this function.

HBA would like to thank Pemudah (Special Task Force to Facilitate Business), chaired by the Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed and co-chaired by Datuk Dr Ir Andy Seo, which made this decision during its meeting on Sept 26.

Read also: Developers not allowed to charge above RM500 administrative fees)

We also appreciate the Malaysian Bar Council’s support in this initiative of the HBA. As per the clarion call of the Bar Council, we would also reiterate the need to look into expanding this embargo onto private liquidators who are not appointed by the MDI, namely those appointed directly by the creditors or the companies via court orders.

Despite this much awaited step forward in ensuring fairness to the hapless house buyers, HBA notes that further improvements could and should be undertaken by the government, namely to the new pegged fee of RM500 should not only take effect prospectively but retroactively (but not to the extent of making the liquidators refund any “overcharged fees”).

For many years, private liquidators have been overcharging administrative fees of 1%-2% of the market value of the property on house buyers who are caught in the quandary of defunct developers. What is even more horrifying is that this questionable practice has been carried out without any valid legal mandate, or has been condoned by the authorities, if not directly, then by omission through the latter’s acquiescence. 

Read also: Victims of runaway developers face double woes from exploitative liquidators
We have put forth certain additions to the government policy pertaining to the liquidator’s fee in order to ensure fairness to all affected house buyers to prevent such extortion-like practices in the future.

HBA’s counter-proposals

When HBA realised we must accept the one and 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 to be initiated by the Malaysia Productivity Corporation (MPC), the secretariat of Pemudah.

The following are HBA's counter-proposals to MDI's terms, and their rationales:

1. The proposed RM500 capping on the fee should also be applicable 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 implemented 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. The VPST was the mechanism to close the floodgate to avoid developers 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.

• New law: Strata titles should come with vacant possession

2. 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 the MDI- appointed liquidator is allowed to charge additional fees, costs or miscellaneous expenses at a reasonable rate to be certified by the 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 the extortion-like practice of imposing the liquidator’s legal fees on the house buyer.

3. The fee of RM500 should also be applied retrospectively to existing cases and not just future appointments of liquidators – on the grounds that the liquidators have been illegally imposing the percentage fees on the house buyers and this illegal practice should not be condoned further by the government.

Although MDI reasoned that the buyers have signed written contracts with the respective liquidators and they 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 that 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 on all present and future liquidators.

HBA sincerely hopes the government will expeditiously honour its commitment to look into these additional proposals of the HBA as there are still hundreds of affected house buyers who are held at ransom by unscrupulous and avaricious liquidators.

Read also: Liquidators making fortune from homebuyers’ misfortune

This article is jointly written by an author volunteer with the National House Buyers Association (HBA) from legal background and by Datuk Chang Kim Loong, Sec-Gen of the HBA, a non-government and not-for-profit organisation wholly manned by volunteers.

HBA can be contacted at:
Email: [email protected]
Tel: 012-334 5676