SALE OF COMMERCIAL PROPERTIES BILL

Order for Second Reading read. 6.48 p.m.

The Minister for National Development (Mr Teh Cheang Wan): Mr Deputy Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

There have been complaints from the public about the inequitable manner in which some developers conduct the sales of their shop units. The main complaints are the exorbitant option fees and the absence of a completion date in the sales agreement. In some cases the option fee is as much as 10% of the purchase price. The whole sum is forfeited if the option is not taken up. By signing such an option, the purchaser binds himself to terms which are unfavourable to him.

The absence of a completion date in the sales agreement enables the developer to escape liability to pay liquidated damages for late completion. On the other hand, the developer charges interest for late payment of instalments. Buyers are compelled to take possession and pay property tax when the Architect's Certificate of Completion is issued. This is inequitable because premises cannot be occupied until Temporary Occupation Licences are issued. Some developers demand exorbitant fees for consenting to assign an agreement. There are also cases where a purchaser has to pay the full purchase price even before separate title is obtained. These abuses must be checked and purchasers protected.

This Bill will regulate the sale of commercial units. It will not, however, apply to buildings containing four or less separate units or to buildings having a Certificate of Fitness or to buildings as may be exempted by the Minister. "Commercial property" is defined as any property approved for non-residential use. Such premises shall not be offered for sale unless the plans have been approved by the building authorities. Rules to be enacted under this Bill will require agreements for sale and option forms to contain such terms and conditions as may be prescribed. Any terms or conditions of sale which are inconsistent with the prescribed terms shall be null and void.

Penalties are provided for offences. Where a company commits an offence, its officers will be held liable unless they can prove otherwise.

The Bill will put an end to prevailing abuses by developers. By laying down proper safeguards, it will inject confidence in commercial property transactions thereby encouraging the healthy development of this sector.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Teh Cheang Wan].

Bill considered in Committee.

[Mr Deputy Speaker in the Chair]

Clause 1 ordered to stand part of the Bill.

Clause 2 -

Mr Teh Cheang Wan: Sir, I beg to move,

In page 2, line 25, to leave out "subdivision" and insert "title".

The reason is that this corrects a mistake in the drafting.

Amendment agreed to.

Clause 2 as amended, ordered to stand part of the Bill.

Clauses 3 to 10 inclusive ordered to stand part of the Bill.

Bill reported with an amendment; read a Third time and passed.