In our previous article, we have discussed on what is Housing Development Act 1966 (HDA 1966) and its Sale and Purchase Agreement (SPA). As we are all aware that the SPA under HDA 1966 is a scheduled agreement under the Act, we should also know the important clauses of such SPA.

Today, we will share with you the following five (5) important clauses of SPA clauses that you need to know before purchasing HDA property:-

1) Delivery of Vacant Possession (VP);

2) Liquidated Ascertained Damages (LAD);

3) Defects of Liability Period (DLP);

4) Late Payment Charges; and

5) Payment of Purchase Price.

1) Delivery of Vacant Possession (VP)

Vacant Possession or VP marks the ending of your property purchase journey, it is when you are handed the keys of the property before you move in. The period of delivery of VP for HDA property is fix in the agreement and cannot be tempered unnecessarily. The VP usually should be delivered within 24 months (for SPA Schedule G, I) or 36 months (for SPA Schedule H, J) from the date of the SPA.

For example, clause 24(1) of Schedule G SPA stated as follows:-

Hence, if you purchase HDA property, you should get your house keys from the Developer within this period.

2) Liquidated Ascertained Damages (LAD)

As we have mentioned above, the VP shall be delivered to you within certain period of time. In the event of Developer’s delay in delivering VP to the purchasers, you are entitled to be awarded with LAD.

The LAD rate is at 10% per annum of the purchase price, calculated from day-to-day basis from the expiry of the VP to actual date of the VP. The following is the formula on how to calculate the LAD rate:-

Purchase Price (RM) x interest (10%) x Days of delays
365 days

This is clearly stated in the SPA under HDA property. For instance, clause 24(2) of Schedule G SPA stated as follows:-

3) Defects of Liability Period (DLP)

Defects of Liability Period or DLP is one of the important clauses of SPA that you need to know. It ensures your right to claim for the property’s defect from the Developer within the period of DLP as the Developer is responsible to fix for the property’s defect within the DLP.

Under HDA 1966, the DLP is 24 months starting from the date you receive your house keys. This is as illustrated in clause 27 of Schedule G SPA:-

4) Late Payment Charges

Late payment charges is one of the clauses in the SPA. It is important to note that you may be imposed with late payment charges if you fail to pay the purchase price. The HDA 1966 stated that the developer has right to impose interest to the purchaser if the purchaser fails to pay the instalment within the stated timeframe. The interest rate is calculated from day to day at the rate of 10% per annum.

For instance, clause 10 of Schedule G SPA stated as follows:-

5) Payment of Purchase Price

For HDA property, the manner of payment of purchase price is clearly stated in the SPA. Payment of purchase price is by progressive release or stages according to the type of schedule SPA. The purchaser is only required to pay upon the completion of certain stages of the development. The manner of purchase price is stated at the Third Schedule of Schedule G/H/I/J SPA.

These are only the few important clauses of SPA that you need to know before entering into a sale and purchase transaction. This basic clauses are significant as different issues can rise from within these.

Article Disclaimer: The contents written above and/or in this website do not constitute a legal advice and should not be relied upon by any parties as such. Please reach out to us for further enquiries.

Interested to know more on your rights protected under the Sale and Purchase Agreement (SPA)? Feel free to connect with our team directly at

Leave a Reply

Your email address will not be published. Required fields are marked *