Are the Statutory Standard Sale and Purchase of House Contracts In Peninsular Malaysia Compatible With Islamic Law?

Abstract

Pursuant to regulation 11(1) and (1A) of the Housing Development (Control and Licensing) Regulations 1989 and the principles decided in Rasiah Munusamy v Lim Tan & Sons Sdn Bhd, SEA Housing Corporation Sdn Bhd v Lee Poh Choo, Kimlin Housing Development Sdn Bhd (Appointed Receiver and Manager) (in liquidation) v Bank Bumiputra (M) Bhd & Ors and MK Retnam Holdings Sdn Bhd v Bhagat Singh, it is mandatory that the statutory standard formatted sale and purchase agreement (Schedules G, H, I and J), as provided in the Housing Development (Control and Licensing) Regulations 1989 will govern all agreements relating to the purchase of houses in Peninsular Malaysia. This paper seeks to examine the provisions in the statutory standard formatted sale and purchase agreement (Schedules G, H, I and J) of the Housing Development (Control and Licensing) Regulations 1989 (‘the said agreement’) and considers the issue as to whether the said agreement is compatible with the requirements of the Shariah (Islamic law), insofar as the latter relates to abandoned housing projects. The determination of this issue becomes of paramount importance when the parties to the said agreement later apply for loans to purchase the housing units from Islamic banks in Malaysia. As the main requirement for an Islamic bank is the upholding of the principles of Islamic law in its operation, it prompts the question as to whether the said agreement complies with the requirements set out by Islamic law. For otherwise, the subsequent loan agreement that the parties may enter into with an Islamic bank would also contagiously be null and void.

Keywords: Housing Agreement, Peninsular Malaysia, Islamic Law, Failed Residential Projects, Injustices