Property Friday: What is Delivery of Vacant Posession & What Happens if the Developer is Late?

You’ve signed the SPA. But when do you truly own your home — and what if it’s late?

 

Delivery of Vacant Possession (VP) is the formal moment when a developer hands over complete ownership and control of your property to you — the purchaser.

It’s not just getting the keys. It means you receive immediate and exclusive possession of the property (the right to occupy, use and enjoy the property without interference from the developer or any third party).

VP is a fundamental obligation under the Housing Development (Control and Licensing) Act 1966 (HDA 1966) and the Sale and Purchase Agreement (SPA) between the developer and purchaser.

 

The HDA 1966 read together with the HDR 1989 sets two strict deadlines — both legally binding:

• 24 months
  • Landed property (Individual Title) 🏡
• 36 months
  • High Rise property i.e. apartment, condo (Strata Title) 🏡

Both run from the date stated in the SPA. The Court of Appeal in GJH Avenue Sdn Bhd v Tribunal Tuntutan Pembeli Rumah [2019] 6 AMR 112, CA held that the SPA date is clear and unambiguous — the period commences from the date as stated in the agreement itself.

 

Before signing the handover document, the purchaser should inspect and the developer must provide:

1. Thorough inspection for defects, incomplete works or discrepancies with agreed specifications — before acceptance. 🛠️
2. All keys (main entrance, unit, doors, windows), CCC or CF, operation and maintenance manuals, warranties for fittings. 🔐
3. Formal handover document signed by both parties. For strata properties: individual title deed and share unit documents where applicable. 🔐
4. Water and electricity must be live and ready for use — not merely installed to the building perimeter. 🚿💡

 

A common misconception: VP and the Certificate of Completion and Compliance (CCC) are separate events under the SPA.

• Vacant Possession

Transfer of physical control — the right to possess the property

• CCC / Certificate of Fitness

Regulatory approval to occupy the property.

Possession ≠ Occupation.

 

Icon City Development Sdn Bhd v K-Shin Corporation Sdn Bhd [2022] 9 CLJ 827, CA — the High Court had erred by conflating VP with the CCC. The Court of Appeal confirmed they are totally separate events, catering for different situations. There is no statutory prohibition against separating them, and the sanctity of contract must be preserved.

 

If a developer fails to deliver VP within the statutory period, they are liable to pay Liquidated Ascertained Damages (LAD) — a daily compensation running from the day after the deadline until the day you receive VP.

Key features of LAD

• Rate: 10% per annum of the purchase price
• Accrues day by day — no need to prove actual loss
• Based on the full SPA price, not any rebated or discounted figure

LAD = (10% × Purchase Price) ÷ 365 × Number of Days of Delay

• Worked example

Purchase price: RM600,000 · Delay: 180 days

LAD = RM600,000 × 10% ÷ 365 × 180 = RM29,589

 

Rebate does not reduce LAD.

In Choot Ewe Hin v Saujana Triangle 2017] 1 LNS 355, HC, the court held that even where a developer gave a discount on the price, LAD must still be calculated on the full SPA purchase price. The developer cannot offset LAD using the purchaser’s own money.

The burden to show LAD is unreasonable falls on the developer — not the purchaser. (Icon City Development Sdn Bhd v K-Shin Corporation Sdn Bhd [2022] 9 CLJ 827, CA )

 

When does LAD start?

1. Normal case: LAD starts from the day after the 24 or 36-month deadline, calculated from the SPA date. (GJH Avenue Sdn Bhd v Tribunal Tuntutan Pembeli Rumah [2019] 6 AMR 112, CA]).
2. Booking fee paid before SPA: LAD runs from the date the booking fee was paid. Regulation 11(2) HDR 1989 absolutely prohibits collection of booking fees. Developers who do so are bound from that earlier date. (PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah & Ors [2021] 2 CLJ 441, FC)
3. Exception: If the sum paid was a genuine stakeholder sum — not a booking fee arrangement — LAD runs from the SPA date only. (Toh Ai Shi v Talent Team Sdn Bhd & Anor [2022] 8 CLJ 508, HC)

Can the Developer extend time?

• The Federal Court in Ang Ming Lee & 34 Ors v Menteri Kesejahteraan Bandar, Perumahan dan Kerajaan Tempatan & Anor (and 5 Other Appeals) [2020] 1 CLJ 162 held that the Controller of Housing has no power to extend VP deadlines — regulation 11(3) HDR 1989 is ultra vires the HDA 1966. Only the Minister of Housing personally may do so.
• Bluedream City Development Sdn Bhd v Kong Thye & 184 Ors (and 5 Other Appeals) [2022] 2 CLJ 829, CA — Where the Minister personally granted the extension (not the Controller), the extension was valid and purchasers’ LAD claims were denied.

• Obata- Ambak Holdings Sdn Bhd v Prema Bonanza Sdn Bhd (and Other Appeals) [2024] CLJU 1657, FC — Ang Ming Lee applies prospectively only. Developers who previously complied with existing law and obtained valid Controller extensions are not retroactively liable for LAD on those extended periods.

 

Some SPAs allow the project architect to grant an extension of time. But courts apply strict requirements for such letters to be valid.

An architect’s letter is NOT a valid extension unless it:

• Expressly references the SPA and the specific extension clause.
• States the architect’s opinion that the delay was caused by exceptional circumstances beyond the developer’s control.
• Is addressed to the correct parties and refers to the main contract.

Koperasi Permodalan Felda Malaysia Bhd v Icon City Development Sdn Bhd (dahulunya dikenali sebagai “Sierra Peninsular Development Sdn Bhd”) & Anor [2023] MLJU 14, CA — letters merely informing of delays, with no reference to the SPA or force majeure, were not valid certificates of extension of time.

 

For further information, please contact us at Miranda & Samuel:

• Dato’ George Miranda (george@mirandasamuel.com)
• Joy Sam Jia Qian (joy@mirandasamuel.com)
• Alisyah Maisarah (alisyah@mirandasamuel.com)

 

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