Here's how 2 people in KL sued their developer for not building their condo as promised

Imagine this: you’ve finally saved enough for a downpayment on a new house, and you’re ready to invest. It’s pretty big step, and you wanna make sure things go well. After months of extensive research online and going around to showrooms, you found the right “dream home” and made a purchase – at an affordable price. But dreams don’t always turn into reality, because after moving in, your unit wasn’t what it looked in the brochures, showroom and your SPA (sales and purchase agreement).

While you may think that this scenario only happens to a very select few, we found that that 152 people in a particular condominium in Klang Valley went through a similar situation; and we managed to interview two of them, Michael and Angela* 

(*name changed to avoid interfering with on going lawsuits)

Michael and Angela were promised their dream home by a Malaysian condo developer, which led to a series of disastrous events leading to an ongoing lawsuit. 

Here’s their story...

It all started with a flashy brochure

As any person with plans to buy a new home, Michael and Angela had to some research first. And in that that process they came across a brochure of a posh and luxurious condo somewhere in the Klang Valley. They were instantly attracted to the amenities that were illustrated in the brochure. It looked somewhat like a mini Marina Bay Sands rooftop, complete with hanging gardens and an infinity pool. They were instantly drawn.

With the brochure planting the seed of curiosity in their minds, they decided to visit the developer’s showroom to see how their future home could look like. What they saw was condo units averaging at about 1400 square feet with 4 windows and homogenous tiles. However, as it was still under construction, they had to wait a few years before the condo was built.

Nevertheless, they were sold by what they saw and bought the condo unit.

After a couple of years, their condo was finally completed and they were handed their keys, proud new homeowners. However, their excitement turned to disappointment when they turned their keys into their new home: It looked nothing like promised.

The condo units had 3 windows instead of 4, porcelain tiles instead of homogenous tiles, and the Marina Bay-esque hanging garden looked more like a “random smoking area” (Michael’s own words).

Dissatisfied, Michael and Angela went straight to the developer, hoping they would fix the problem.

They tried to set up a town hall meeting between the residents and developer

Given that we’re Asklegal, you’d expect this story to go right into suing the developer and we’d explain the law for you. But usually when there’s a dispute between two parties, people would try to settle it out among themselves first. And that’s what Michael tried to do first.

He tried to set up a town hall meeting along with the other residents to voice out their grievances to the developer. All the residents wanted was a solution from the developer, but according to Michael the developer kept dodging questions and delayed further town hall meetings.

And it is this alleged inaction that actually led Michael and Angela to sue their developer.

But here’s the thing, the process of suing itself is a pretty daunting and expensive experience. You’d have to pay a lawyer’s legal fees, and you wouldn’t know what’s going on in court most of the time. Now imagine how extra scary that experience can be for an individual suing a cash rich big developer company.

So what Michael and Angela did was they decided to sue the developers along with their neighbours in what is known as a representative action (commonly known as a class action suit). According to Order 15 Rule 12 of the Rules Of Court 2012, a class action suit is where a group of people sue an individual(s)/corporation(s) together for the same matter.

Now the issue was, actually trying to convince the neighbours to sue. Michael and Angela actually told us it wasn’t an easy task. Michael had to go knocking door to door and handing out flyers in his condo which had about 700ish residents. 

Fortunately, their efforts paid off.  They managed to convince 150 of their neighbours to join in their class action suit and raised nearly RM 7,000 from each condo owner to cover the legal fees. 

Now that they have crowdfunded their lawsuit...

The residents had two reasons to sue

According to their lawyer Rodney, the 152 residents can sue for:

• breach of contract
• misrepresentation

this arose from a document called the sale and purchase agreement (SPA). This SPA is the document signed between a developer and a house buyer, basically stating that the developer agrees to sell a particular house to the buyer, and the buyer agrees to buy it for a particular price. And this SPA is also considered a contract under the law, which means that agreement is enforceable under the law.

Now remember when we said that the showroom showed a condo unit with 4 windows and homogenous tiles, the same thing was promised by the developer in their SPA. Which means when the residents got condo units with 3 windows and porcelain tiles instead, the developer breached their contract giving a right to sue.

As for the misrepresentation, this arose because of the misleading brochures. Under Section 18 of the Contracts Act, a misrepresentation is basically when someone tells you an untrue statement, and that statement actually makes you enter into a contract.

Now to take Michael as an example, In the developer’s brochure, showing the hanging gardens amounted to a representation. And that representation actually made Michael buy the condo unit. In fact, he told us he asked for a unit on the same floor as the hanging gardens because he thought it would be a nice place to entertain his friends over the weekend. So when the hanging gardens turned out like an alleged “random smoking area”, it amounted to a misrepresentation – giving the residents another right to sue their developer. 

But here’s the thing, while these two reasons seem like two big arsenals to against the developer in court and win, the tables turned when….

The developer sued Michael and Angela back

While convincing 150 neighbours to join them in a lawsuit can seem like a big win, they’re apparently facing more obstacles by their developer. 

Right after they initiated their lawsuit against the developer in court, the developer sued Michael and Angela for defamation. But the messages in the group were leaked. This reached the developers, who sued Michael and Angela for defamation – claiming they made false statements that could cause a loss in their reputation. And this on-going defamation lawsuit, is another reason why we can’t use the real names of our interviewees. But you can read more on this over at Cilisos. 

The developer also tried to settle out of court, offering them and the 150 neighbours RM 6,000 each to withdraw their suit. But this is considered a lowball offer, as we’re told that amount  won’t cover the shortcomings of their unit. They hired a building surveyor to determine what their units are currently worth, and what it’s supposed to cost based on the SPA and the brochures. They haven’t gotten the exact valuations yet, but Michael said he bought his condo unit for more than RM 500,000, but less than 1 year later its market value is less than RM 400,000. 

And in addition to that, their trial will only start somewhere in January 2020, but they filed their case in June 2018. According to their lawyer, this is a delaying tactic by the developer, to postpone litigation documents from being shared.

But despite all that, Michael, Angela and the 150 neighbours are not giving up; they are going on with their law suit. Michael and Angela told us, they aren’t just doing this for themselves. They want to show other home owners facing the same problems that action can be taken with proper effort. And perhaps what we can learn from their experience too, is that when buying a house – be aware of what’s written in your SPA and what has been advertised to you.