Baffled by the need for eSPA

Mar 13, 2024

By Chang Kim Loong

THE Housing and Local Government Ministry (KPKT) recently introduced an online platform called Housing Integrated Management System (HIMS), a single-entry platform for developers to submit applications for permits and which also serves to regulate, manage, receive and gather data. It replaces Bless, Idaman and e-Pemaju.

HIMS is meant to be an application and bipartisan reporting channel between the government and the developer. One HIMS function — the eSPA — shocked the legal circle, especially those law firms that monopolised sale and purchase work. These firms are worried about being out of a job once the eSPA is fully activated.

The eSPA is a tool to facilitate the ministry’s job by identifying a buyer’s particulars and details of purchase. Developers or their agents just need to key in the details of buyers and their purchased properties and pricing. It stops there, except for digital signing.

If there is digital signing by the purchaser, who is to bear witness to formalise the Sale & Purchase Agreement (SPA) and the related Memorandum of Transfer (MOT)? Who is to safeguard the digital signature of purchasers? Completing the statutory SPA appears to be a clerical job that can be done by purchasers themselves. If that is so, why need lawyers?

However, the signing of the SPA is merely the beginning of a journey to a sale and purchase transaction. I have explained the end-to-end conveyancing process of property transactions in an earlier article titled: Professional Services Trump Theoretical Know-How which was first published in Star Biz7.

The eSPA function makes the developer and government responsible for the drafting of the agreement. According to HIMS, the developer will just fill in the blanks and generate the SPA.

No value-added service

What purpose does it serve for the government to be involved in the drafting of the SPA, except to regulate the terms and conditions in Schedule G (Landed property), H (Stratified property), I (Landed property BTS 10:90 concept) & J (Stratified property BTS 10:90 concept)?

It does nothing for the purchaser but helps the developer to produce the SPA without the services of a lawyer. However, the purchaser will still need to engage a lawyer to transfer the property.

It is a requirement under Section 211 (Fifth Schedule) of the National Land Code 1965 (revised 2020) that the transferor(s) and transferee(s) in an MOT (Form 14A) and all dealing instruments must be witnessed by persons designated under the Land Code, among whom are lawyers.

Bank officers, developer’s managers, Controller of Housing, Commissioner of Oaths and clerks cannot witness the signatories.

The government should leave the conveyancing of property to lawyers because they have always been the check and balance between the rights of the developer and the entitlement of the purchaser.

The government should continue its role as regulator and custodian of the law, ensure that the developers have sufficient funds to complete a project, resolve disputes and effectively monitor, police and enforce compliance with housing laws and policies.

It should not get involved in the business of developers. If this is implemented, the government could be biased against the purchaser in protecting the integrity of the eSPA and HIMS as a whole.

KPKT acting as a repository?

It seems that after the eSPA is stamped, a copy must be uploaded to HIMS for data collection by KPKT and subsequent management between the developers and the ministry. I wonder what subsequent management means.

Does KPKT wish to be a data collection centre, keeping details of purchasers like MySejahtera where citizens are tracked?

Will KPKT’s repository maintain a complete record of all sale and sub-sale movements? Will the information be made available when a developer goes belly-up and the data can be easily retrieved by court-appointed private liquidators for a custodian fee? Will all information be online thereby reducing chances of theft and fraud?

The current Housing Development (Control & Licensing) Act (HDA) legislation does not provide for the need to register and process information of purchasers. Neither does it regulate the processing of purchasers’ data.

The HDA only prescribes the standard form and contents of the SPA but does not require a completed SPA to be generated from any system operated by KPKT. Therefore, the application of HIMS shall not be extended to the collection and generation of personal details of purchasers.

KPKT’s discretion to amend

Why does HIMS allow KPKT to amend and vary the standard terms and conditions of the SPA?

The validity of the Controller of Housing and Minster’s approval of Extension of Time (EOT) has been a contentious issue in court. The Federal Court ruled in Ang Ming Lee and Others v Menteri Perumahan (2020) that the EOT is ultra vires.

Hence, the validity of KPKT’s discretion to amend and vary the SPA, especially the completion date from 36 months (in SPA Schedule H) to 48 or 54 months, is an issue. Any exemption or variation from the HDA must be by way of HDA regulations and not merely by surat lanjutan (letter of extension) or surat pindaan (letter of variation).

When exercising discretion, who are directly affected by the minister’s action or inaction?

When a developer takes risks, is it reasonable or logical for the minister to modify the SPA to exonerate the developer from all financial risk with the stroke of a pen?

What about the issue of Privity of Contract when the minister or the Controller of Housing is not even a party to the SPA but is allowed to intervene (aka interfere)? It would be more logical for the minister to consider all available remedies that could advance the protection of purchasers.

Hence, the application of HIMS to issue letters of extension and variation should not be implemented as it would seem to be in defiance of the celebrated Federal Court ruling.

We hope KPKT will revisit the contentious issues and not launch something that is merely administrative in nature with no legal standing. Nevertheless, the HBA will continue to monitor contentious issues that relate to the eSPA and ensure that the identity of purchasers and their digital signatures are not misused, abused and exploited.