Affordable house construction fraud: Lodge police report, claim compensation for damages

Aisyah Basaruddin
Aisyah Basaruddin
15 Feb 2024 09:28am
Among the victims' houses that were built halfway.
Among the victims' houses that were built halfway.

SHAH ALAM - Victims of house construction fraud are urged to lodge police reports and seek compensation from the Tribunal For Consumer Claims (TTPM) immediately.

Real estate lawyer Mohd Norzaki Mohd Yusop said under Section 53 of the Consumer Protection Act 1999, services provided to consumers must be carried out diligently and with reasonable skills, giving consumers the right to claim compensation, similar to contractors.

However, he emphasised that when dealing with problematic construction companies, landowners must ensure they have a written agreement.

This agreement served as crucial evidence of the selection of the contractor and the payments made, thereby strengthening their claim.

"It applies only to cases not exceeding RM50,000. If it exceeds that amount, then another option is to appoint a lawyer.

"Landowners can appoint a lawyer to claim compensation from the contractor as stipulated in the agreement.

"The claims process is easier if there is a contractor agreement signed as a reference for the tribunal and the court if the amount involved exceeds RM50,000," he told Sinar.

Norzaki was commenting on Sinar's news report on the increasing prevalence of house construction scams to the extent that a group of victims suffered losses reaching millions of ringgits.

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When asked about most contractors escaping legal action even though victims have reported them to the authorities, he said such cases occurred because there was no 'black and white' agreement between landowners and contractors.

He said that the absence of crucial evidence such as WhatsApp conversations, online payment copies, or receipts from the contractor would complicate the process of claiming compensation and it might not be able to bring the offender to court.

Moreover, if the contractor was bankrupt, victims affected by fraud can submit proof of debt or evidence of debt to the Malaysian Department of Insolvency (MDI) as a way for the perpetrator to settle the compensation.

"However, the next steps are also determined by the type of contractor's business, whether it is a sole proprietorship or a private limited company (Sdn Bhd).

"If it's a sole proprietorship, the company's assets are considered the personal property of the contractor, and compensation can be obtained by seizing the company's assets and liquidating sellable assets.

"But if the type of business is a Sdn Bhd, the process is more complicated because the law considers the owner of the company's assets to be the company itself and not a specific individual unless proven otherwise," he added.

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