Bought a House but Still Cannot Get Possession? Understanding LAD Compensation!

Malaysia Property Law | LAD (Liquidated Ascertained Damages) Claims for Late Delivery of Property

When a developer delays the delivery of a property, many purchasers are forced to bear both housing loan repayments and rental expenses at the same time, creating significant financial pressure.

To help purchasers better understand their rights, we have summarised the key points regarding LAD (Liquidated Ascertained Damages) claims below:

1. What is LAD?

LAD refers to Liquidated Ascertained Damages.

If a developer fails to deliver vacant possession within the period stipulated in the Sale and Purchase Agreement (S&P), the purchaser is generally entitled to claim compensation for the delay.

2. When Can a Claim Be Made?

Vacant Possession Has Been Delivered

This is generally the most suitable time to pursue a claim.

Once vacant possession has been delivered, the exact duration of the delay can be determined and the compensation amount can be calculated more accurately.

Vacant Possession Has Not Yet Been Delivered

If a purchaser commences legal proceedings to claim the full amount of LAD before delivery, the court may consider the claim premature. It is advisable to first review the relevant provisions in the S&P.

3. Can a LAD Claim Become Time-Barred?

Yes. Limitation periods apply, and the analysis generally falls into two categories:

Ordinary Late Delivery Claims

The limitation period usually begins from the date vacant possession is delivered, as that is when the purchaser can ascertain the total period of delay.

Challenges to Contractual Clauses

If the purchaser intends to challenge an extension clause already contained in the S&P (for example, where the contractual completion period was stated as 54 months instead of 36 months), the limitation issues may become significantly more complex.

Attempting to challenge such clauses many years after signing the agreement may result in the claim being considered time-barred.

4. Determining the Starting Point for LAD Calculation

The calculation of LAD primarily depends on the difference between the contractual delivery date stated in the S&P and the actual delivery date.

Important Note:

In certain cases, the starting point may not depend solely on the S&P signing date.

The date on which the Booking Fee was paid may also be relevant.

A developer should not collect a booking fee, delay the execution of the S&P, and then attempt to avoid liability for the period in between.

5. What If the Developer Relies on an EOT to Reject the Claim?

Developers frequently rely on an EOT (Extension of Time) to deny liability for LAD.

However, purchasers should note that:

📌 Not every EOT is legally valid or enforceable.

If a purchaser was already aware of the extended completion period when signing the agreement, or has signed a settlement agreement after delivery of the property, pursuing a claim later may involve additional legal challenges.

Expert Recommendations: Three Steps to Protect Your Rights

Step 1: Confirm Your Entitlement

Where there has been a delay in delivery, purchasers will generally have grounds to consider a claim.

Step 2: Conduct a Case-Specific Assessment

Whether a claim remains within the limitation period depends on the specific facts of each case.

Step 3: Documents Are Critical

Every legal position is ultimately supported by documentary evidence.

Please ensure that the following documents are available for review:

✅ Sale and Purchase Agreement (S&P)

✅ Booking Fee Receipt

✅ Notice of Vacant Possession

When facing a delayed property delivery, understanding the terms of your S&P is the first step towards protecting your legal rights.