Property
The bane of partial CCCs
Aliff Yusri 
Phased developments have become popular in the property segment, maximising convenience for residents and tenants
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PHASED projects have become a mainstay of the property landscape. They combine components such as residential, retail and office spaces into a single development to maximise convenience for residents and users.

The regulatory and legislative frameworks required to implement such projects are less obvious to the observer, despite their implications for purchasers and management bodies.

Chief among them is the partial certificate of completion and compliance (CCC), which arose as an ad hoc measure to govern the assessment of buildings and developments that are built in stages.

Ironically, partial CCCs remain a legislative grey area, with the potential to cause more issues than they actually solve. As such, there have already been calls from within the industry to abolish the practice.

A CCC is required before vacant possession can be approved for a project, ensuring that the building or development is fit for occupation.

“Partial CCCs are certified by architects and engineers via Form F1, instead of Form F which applies to full CCCs,” says National Housing Department assistant director (licensing division) Ong Hui Ling.

The onus is on the developer to prove that there is a third-party delay with regard to issuing the strata title, says Ong

Forms F and F1 are issued by the Board of Architects Malaysia and the Board of Engineers Malaysia.

However, there are no provisions under the Housing Development (Control and Licensing) Act (HDA) 1966 to regulate the practice, though several clauses in the Uniform Building By-Laws 1984 address the issue.

 

Muddying the waters

This had the consequence of muddying the waters when it comes to properties with strata titles, which are allocated share units depending on their parcel type.

“There have been cases where CCCs were issued, and vacant possession delivered to purchasers without corresponding strata titles. Many of these cases are still pending,” says Ong.

Residential properties within integrated developments hold strata titles as a rule, with facilities such as common lifts and recreational spaces shared between owners and tenants.

The allocation of strata parcels and share units within a project is outlined in a schedule filed with the Commissioner of Buildings prior to the sale of any parcel.

As share unit allocations affect the amount of service charges (such as maintenance fees and sinking funds) that an owner is subject to, as well as voting rights during annual and extraordinary general meetings, this becomes a common point of contention.

“Today, developers can still apply for vacant possession without a strata title at the discretion of the Housing Controller.

“However, the onus is on the developer to prove that there is a third-party delay with regard to issuing the title,” says Ong.

Partial CCCs, while similar to certificates of practical completion (CPCs), differ from the latter in several key aspects.

A CPC is issued by a project architect to all contractors and subcontractors as notice that all physical works onsite have been completed to his satisfaction.

While what exactly constitutes practical completion is left open to interpretation, the process is generally held to include supporting documentation from local authorities relating to the readiness of a project’s water, fire prevention, sewage, road, telecommunications and electrical systems.

 

Clear applications

Partial CCCs, in contrast, are issued before the CPC stage, when the employer (typically a developer) wishes to possess or occupy part of the works before a project is physically completed.

This has clear applications for integrated developments, where residential, retail or office components within a single building are often completed independently.

In such cases, partial CCCs are preferable to ensure that developers can deliver completed units to purchasers in a timely manner, and avoid the wait required for a “full” CCC.

As a corollary, partial CCCs do not cater for developments involving discrete, individual buildings built in phases, such as landed bungalow or terraced projects.

However, concerned quarters have pointed out that partial CCCs are not recognised in the HDA as the certification exists to safeguard the interests of purchasers, with partial certification as a “half measure”.

“The debate regarding the use of partial CCCs has yet to be resolved, being still in the discussion phase between industry bodies and government agencies.

“However, we anticipate a resolution in the near future, due to the popularity of phased developments and the criticality of the issue,” says Ong.

 

Legislation

The issuance of CCCs came into effect in April 2007, replacing the former certificate of fitness for occupation (CFO) standard issued by local authorities.

The practice is governed by a raft of legislation ranging from the Housing Development (Control and Licensing) Act 1966, Strata Titles Act 1985, Street, Drainage and Building Act 1974 and Architects Act 1967 to the Registration of Engineers Act 1967.

As CCCs are issued by professional architects, engineers or registered building draughtsman, the transition was designed to encourage self-regulation within the industry by transferring power and the burden of responsibility to these professionals.

The shift from CFOs to CCCs also had the benefit of addressing cases where purchasers received the keys to their properties but could not move in, as the CFOs were not yet issued.

Under the current regime, vacant possession can be delivered at the same time as the CCC. However, the rise of integrated developments highlighted shortcomings in the CCC practice.

Ezumi says partial CCCs are necessary when mixed development plans are altered during construction

Malaysian Institute of Architects president Ezumi Harzani Ismail says: “We came across issues in a mixed development comprising a shopping mall with three residential towers.

“In that case, the developer decided to convert one residential tower to an office block, citing slow residential uptake.

“We realised that we could not issue a CCC for the development as a whole, but only partial CCCs for the two residential blocks, with a full CCC once the office block was completed.”

Other issues include the application of different legislation to various components of a mixed development.

For instance, commercial components such as retail space are not subject to the Housing Development (Control and Licensing) Act 1966, while residential units are.

This has the consequence of advertising permit and developers license (APDL) requirements kicking in once the sale of residential units starts, which can significantly delay the development as a whole.



This article first appeared in Focus Malaysia Issue 250.