What Are The Legal Steps A Homeowner Can Take If The Property Was Destroyed?

If your home has been destroyed or damaged, and it was due to negligence under the law of tort (which is the more common one), you can sue and win. However, if the property is still under construction, it's very unlikely to succeed.
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Some would still remember the Highland Towers incident, which occurred in 1993. A major landslide caused the collapse of one of the 3-block apartment.

Sadly, only a few people survived this tragic incident.  After that, the residents in the remaining 2 blocks were forced to evacuate by the authority and lost their homes overnight.

The residents who lost their homes then brought a civil action (read: sued!) against 10 defendants, namely:

  • The developer of Highland Towers
  • Architect
  • Engineer
  • Local authority
  • Owners of the adjacent lands
  • Contractors who were doing the land clearing works on the adjacent lands

The case started from the High Court, and went all the way to the Federal Court (which is the highest court in Malaysia). The judges examined the cause of the collapse under the laws of negligence and nuisance.

Eventually, most of the defendants were responsible for the damage and trauma suffered by the residents, and were asked to compensate the residents.

The local authority who was involved, however, was ruled to be protected with immunity and escaped liability.

The above is merely a case example where residents of destroyed homes decided to bring civil action to recover their losses.

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So, what can YOU do if your home was damaged?

Suffice to note that if your home is destroyed, you would be able to sue the persons who have caused the damage suffered by you, by filing a civil action in court.

In terms of legal principles, there could be several causes of action, where you can actually craft your claims based on facts that are unique to your situation.

1) ‘Negligence’ under the law of tort

Now, under negligence (which is the more common one), your “neighbourmust take reasonable care to avoid actions or carelessness on their part, which he/she reasonably foresees would likely injure you.

The word “neighbour” here refers to any person who will be so closely and directly affected by the actions or carelessness. 

Hence, it can refer to the developer, architect, engineer and other persons if you can show that it was due their actions or omissions which caused the loss suffered by you

In conclusion, if your property was purposely destroyed, you can sue the persons responsible in court, and claim for whatever losses that you've suffered.

2) Property is damaged while under construction

Now, what if your property is still under construction, and you found out that some part of the building has collapsed?

Collapsed building

And when you look at your Sale and Purchase Agreement (SPA) with the developer, there's still another year until completion, before the developer hands over your property to you.

Under the SPA, the developer is only required to handover the property to you by the completion date. There's still time for the developer to make repairs or re-construct the property

Hence, technically speaking, you do not possess the property yet, and no actual damage has actually been suffered by you.

Therefore, if you wish to sue the developer now for causing damage to your property, it's very unlikely to succeed.

3) Termination of Sales and Purchase Agreement (SPA)

There'll be some people who believe that the developer would not be able to complete the construction in time, and may wish to terminate their SPA. 

If your SPA is subject to the Housing Development (Control and Licensing) Act 1966 (HDA), under Section 8A, you can terminate the SPA at any time if you can satisfy the following conditions:

  • The developer refuses to carry out or delays or suspends or ceases work for a continuous period of 6 months or more after the execution of the SPA;
  • The purchaser has obtained the written consent from the end financier; and
  • The Controller has certified that the licensed property developer has refused to carry out or delayed or suspended or ceased work for a continuous period of 6 months or more after the execution of the SPA.

All these 3 conditions MUST be fulfilled. If you terminate the SPA without the written consent from the end-financier (i.e. the bank which you obtained the home loan to purchase the home) or the certificate from the Controller of Housing, your termination would be invalid.

PropertyGuru Tip
A Housing Controller is a person selected from amongst members of the public service, and is tasked to control and monitor the activities of property developers as well as protect the interest of house purchasers.

If your SPA is not one that's subject to HDA, you can also terminate the contract if you can prove that the developer has no intention to complete, or has abandoned, the project.

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Under Contract Law, this action is known as an ‘anticipatory breach’ where one party has indicated his refusal or inability to perform his part.

The innocent party may then anticipate the default, and terminate the contract before it is due. 

It has to be noted here that there are cases where showing delay alone is not sufficient.

You must show that the developer has indicated his intention not to complete or has abandoned the project, for example, letters from the developer or a local authority clearly stating that the project has been abandoned.

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Furthermore, you should also inform your end-financier and get their consent, if necessary.

Alternatively, you can wait until the completion date listed under the SPA to see if you're able to get your property on time.

If the developer is able to handover vacant possession of the property, then there should be no issue.

If however, there is a delay in handing over vacant possession of the property, you can claim for liquidated damages (LAD) in accordance with terms stated in the SPA.

PropertyGuru Tip
LAD is a genuine pre-estimate of the loss that will be caused to one party in a situation where the contract is broken by the other.

If the developer refuses to pay the LAD, you can file a civil action and sue the developer in Court, or lodge a claim at the Tribunal for Homebuyers if it's less than RM50,000.


Don't give up hope yet if there's damage to your home!

In conclusion, if your property is damaged during construction stage, you can terminate the SPA if you can satisfy the conditions or matters discussed above.

Alternatively, you can wait until delivery of the property and claim for LAD if there's been a delay.

Here would be a good time to remind you that whatever happens to the SPA (between you and the developer), it should NOT be used as an excuse in delaying the payments of your home loan interest or installments, unless there is a court order allowing you to do so!

Your home loan agreement is between you and your end-financier. If you default on your payments, your end-financier is entitled to exercise their rights under the loan agreement and security documents to bring legal action against YOU!


Allen Khor is an advocate & solicitor in Messrs Allen Khor & Partners. His areas of practice include conveyancing, civil litigation, divorce, probate and administration. The telephone number of the firm is 012-283 0656.

*This column is for your information only and does not constitute legal advice for your specific needs. It cannot disclose all of the risks and other factors necessary to evaluate a particular situation. You should seek and obtain independent legal or professional advice for your specific needs and situation. 

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