Issuance a legislative anomaly

No difference from Certificate of Completion and Compliance in phased development, say experts

A Certificate of Completion and Compliance (CCC) or Form F is a written certificate stating that the construction work has been completed and complied with the conditions stipulated in the permit granted. It is issued by the principal submitting person (PSP) before vacant possession (VP) can be approved for a project, so as to ensure the building or development is fit for occupation.

A partial CCC or Form F1, on the other hand, is designed to allow the PSP to submit approval and notification of completion of building elements that is necessary to finish ahead of other elements. It has a clear application for the phased development as it facilitates the delivery of VP to the purchasers before the entire development is physically completed.

The conditions on issuance of partial CCC are clearly stipulated in the By-Law 27 of the Uniform Building By-Law (UBBL) 1984 (amendment 2007).

Realising that phased development has become a mainstay of the current property landscape in the country, the Malaysian statute under the Strata Titles Act (STA) 1985 defines a provisional block as a block in respect of a proposed building or land, for which a separate provisional strata title is applied.

The concept of provisional block, which allows for phase development, aims to facilitate purchasers to obtain strata titles in the earlier phases without having to wait for the whole strata scheme to be completed. In this sense, both the UBBL and STA are said to be synchronised in addressing the issue of phased development.

However, there is no provision under the Housing Development (Control and Licensing) Act (HDA) 1966 to accommodate the practice of partial CCC. HDA expressly states that only CCC is acceptable to satisfy the issuance of VP, and the definition of CCC is not including partial CCC.

Even in the Schedule H: Sales and Purchase Agreement (SPA) attached in the Housing Development (Control and Licensing) Regulations 1989 – which is a legally binding contract that outlines the details of a sale between a buyer and a seller – states that CCC does not include partial CCC.

As such, it forms a legislative contradictory with regards to the issuance of partial CCC in phased development. (LAM) for VP given using partial CCC for HDA projects.

Subsequently, the then Urban Wellbeing, Housing and Local Government Ministry (KPKT) released a circulation to clarify the definition of CCC as stated in HDA. As a corollary, partial CCC remains as a legislative grey area that tends to cause the issue on illegal VP in residential project if partial CCC is used as a basis to grant VP.

From the developers’ point of view, there should be no difference between CCC and partial CCC in the phased development. This is because the entire development must be demarcated clearly in the development order (DO); and each phase of development is then to be completed separately and to obtain VP accordingly.

Most importantly, partial CCC is not a temporary CFO as envisaged in the old repealed provisions, because a partial CCC can only be issued after all the essential services and amenities that serve the partially completed phase have been provided. In this case, a partial CCC should be treated as a full CF for the part(s) of the entire development that has been planned and designed for phased completion. As such, there is no room for CCC as distinct from partial CCC.

From the house buyers’ perspective, the concern is always on the protection of their interest – especially the first-phase buyers of the phased development – in case the developer does not continue with the other phases due to financial burden or market condition.

There is a possibility that those irresponsible developers may take the advantage of not further constructing the uncompleted phases after issuing partial CCC to the first phase buyers. However, this problem can be addressed if the house buyers are informed in the earlier stage of the fact that they are buying a house with existing facilities related to the phased development.

The rise of phased development not only highlights the shortcomings in the existing CCC practice, but also unveils the legislative contradictory that shadows the housing industry. Hence, the definition of CCC needs to be synchronised and to be able to cross refer between HDA and UBBL. It is, thus, suggested that the definition of CCC under the UBBL to be adopted as it considers the concept of provisional block that has a clear application for the phased development.

Most importantly, relevant regulations need to be amended accordingly so as to cater the need for the housing industry. To facilitate the delivery of VP to the purchasers in the early phase, it is suggested that HDA to be amended to allow partial CCC to be accepted for the delivery of VP.

However, the amendment of Act 118 will have to go through the process of legislation in Parliament, which means the effective changes may not be observed in a short period of time.

So, to cut short the process, one can consider giving power to the Controller of Housing to allow amendments to Schedule H on a case-bycase basis.

Or alternatively, as an interim measure, KPKT can issue a guideline to all industry players and local authorities, clarifying that residential phases of multi-phased development projects that are clearly delineated with local authority approval is deemed a complete development parcel qualifying for the issuance of its own CCC upon its completion.

This article was contributed by Property, Real Estate Lawyers Association president Datuk Pretam Singh Darshan Singh and MKH Bhd manager of product research & development Dr Foo Chee Hung.