What is Vacant Possession (VP) and Certificate of Completion and Compliance (CCC)?

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See also: What is SPA?

In essence, a VP which is also popularly known as Vacant Possession refers to the right of the buyer to exclusively utilize the property once its selling process has been completed. On the other hand, CCC or Certificate of Completion and Compliance is a type of certificate that approves completion of the house or building that was previously under construction. In this blog post, we will discuss why VP and CCC are important in the property acquisition process, and what role do they actually play.

 

Things You Need to Know About CCC

House in human hands

The issuance of Certificate of Completion and Compliance means that a property is now considered safe to use and live. The CCC was initially called CFO (Certificate of Fitness for Occupation), but to mitigate the bureaucracy of red tape and to improve the efficiency of building activities, its name was changed in 2007. With the introduction of CCC in local housing development, many major alterations were made. For example, it was made mandatory that CCC will be issued only by private parties such as building draftsmen, engineers and architects, rather than the local government. All these individuals are referred to as PSP or Principal Submitting Person. The sole purpose of giving the responsibility to PSPs was to decrease the number of incidents related to the collapse of buildings in Malaysia. PSPs usually acquire more knowledge about the completion of the construction work as compared to the local authorities.

Now, a CCC consists of different sections and each section describes various components of the project. The purpose of each section is to ensure that the construction process is comprehensively reviewed. Here are some common elements which are taken into consideration by the PSPs;

  • Building Condition
  • Lightning of Street
  • Plumbing
  • Earthworks
  • Fire safety
  • Landscaping
  • Drainage

Hence, the CCC will only be approved once it is signed by the PSP. On the other hand, every contractor which has been involved in the work will also have to sign this certificate.

Talking about the submission process, the CCC is usually submitted along with some other documents from relevant parties like public safety and utility organizations.

Considering so many formalities involved in signing and submitting CCC, a sense of safety can be developed in the local public, and their confidence in the construction authorities can be further enhanced.

 

The Importance of CCC in Construction

What is Vacant Possession (VP) and Certificate of Completion and Compliance (CCC)? 1

Since the replacement of CFO by CCC, the delays in approval has been significantly decreased.  If today you are able to buy a dream home for your family without any delay, then it is solely due to the CCC. Because previously, these certificates were first sent to the local authorities and the construction industries had to wait for a long period of time before they get approved. Hence, due to the introduction of CCC, people are able to turn their dreams into reality in a shorter period of time.

Apart from this, the Certificate of Completion and Compliance is a self-certified certificate which is authorized by the construction industry. This means that the industry professionals that occupy the particular knowledge regarding the construction project will be liable to sign the certificate, ensuring the safety and reliability of the building for the human habitat.

If we talk about Malaysia, the CCC occupies high importance in the local construction market. The Malaysian government has laid down strict requirements, which must be fulfilled before a Certificate of Completion and Compliance can be issued and the constructed building is considered safe to use and live. Here are the following six requirements;

  • The relevant authorities must confirm that the supply of electricity is up to the mark.
  • The relevant authorities associated with water supply must provide confirmation that the supply of water in the building is adequate.
  • The relevant authorities must ensure that the sewage connection is properly attached to the treatment plants.
  • The relevant authorities must provide the clearance of lifts and machinery incorporated within the building.
  • The relevant authorities must provide clearance regarding the working of the firefighting systems.
  • The relevant authorities must provide clearance on drainage and roads.

Usually, in the issuance of CCC, the role of local authorities is quite dim. But this fact is not entirely true. These local authorities can perform a random audit of the building anytime and can even prevent the private parties from issuing the CCC in case of any problems found that may need fixation.

So, being a Malaysian resident, you will be free from every kind of construction-related issues that people usually have to face in different parts of the world when buying a new home.

 

What is the Purpose of PSP in the Construction Industry?

Construction

If we dive further into the role and responsibilities of the PSPs it can be evaluated that these individuals are responsible for monitoring and checking the building throughout the whole process of construction. This basically means that;

  • A PSP will be responsible for submitting the construction plan for approval by the PBT (Pihak Berkuasa Tempatan).
  • A PSP must communicate with the PBT when commencing the construction work.
  • A PSP is also responsible to supervise the site work, in order to make sure that the workers are following the right policies and regulations during work.
  • In case of any sort of breach by any employee or worker, the PSP will be liable to report the breach to the PBT as soon as possible. So that any kind of breach can be effectively rectified during the building process.

The role of PSPs does not end here. In case of any failure or delay in work, the PSPs will have to submit hefty penalties and fines as well. Apart from this, if the CCC is submitted by an unqualified individual, or if a professional PSP makes inaccurate or fraudulent claims in the certificate, then that individual will have to pay a penalty of RM 250,000 or may even serve 10 years behind the bars. Considering all these facts, it can be said that the PSPs have to bear a lot of pressure and responsibilities in order to provide a safe home for the Malaysian residents.

 

What VP Means for the Malaysian Residents?

Closeup of Malaysia Ringgit currency notes and coins

Due to the current housing crisis in Malaysia, acquiring a new home is not that easy. There are a lot of formalities that we are required to fulfill before living in our dream home.  One such formality is known as Vacant Possession or VP.

VP refers to delivering the property along with any furnishings and fitting mentioned in the Sales and Purchase Agreement (SPA) to the purchaser upon the culmination of the transaction for the home purchase.

However, before the VP is delivered by the developer, it must be ensured that;

  • The CCC has been appropriately signed and issued by the local government.
  • The water and electricity supplies are available for use.
  • The purchaser of the new house has paid the balance payments in accordance with the agreed schedule.

Once the above-mentioned criterion is met, the buyer will receive a notice either from the lawyer’s or developer’s office to acquire the property. Lastly, in order to finalize the authorization process, the developer will provide several property forms for signage to the purchaser. Once all these formalities are completed, the purchaser will be able to acquire the real estate property.

On the other hand, if you are giving a Vacant Possession to someone, then here are some tips for you;

  • Ensure that no one lives in your house once the date of VP has been issued.
  • Ensure that the property does not contain any kind of furniture.
  • Ensure that there are no licenses, lease, and sublease attached to your property once you leave it. This will not allow anyone else to demand the right of acquisition in the future.
  • Last but definitely not least, don’t forget to handover the property keys to the new buyer. 😉

 

What is a VP Schedule?

house

A VP schedule begins once the buyer signs the SPA. There can be various schedules for VP depending on the nature of the purchase. In primary housing purchases, you might have to wait for 2 to 3 years in order to obtain vacant possession. On the other hand, in secondary housing purchases, a buyer can receive a VP only in 3 months’ time period.

However, if the buyer gets the VP after the end of the agreed schedule, then the developer will have to face legal consequences. Every sales and purchase agreement contains a clause of schedule that must be exercised by both parties. In accordance with this clause also known as LAD (Liquidated and Ascertained Damages) clause, the developer will be liable to pay the damages to the buyer starting from the date of expiration of the VP agreement to that date on which the buyer eventually receives the VP from the developer.

In other scenarios, if the delay is unreasonable, and the compensation for the damage is not adequate, then both the parties can sign a settlement agreement. By signing this agreement, the developer agrees to pay for all the damages suffered by the buyer.

 

The Defect Liability Period

Hourglass on calendar

Obtaining a VP notice from your housing developer is no doubt an interesting part of the process of obtaining property of your own. The handover date for the property will be mentioned in your sales and purchase agreement. Once the date mentioned in the agreement is reached, the purchaser will be able to acquire the house. However, with the end of this date, the defect liability period begins.

A Defect Liability Period is a 12 to 24 months’ period, in which you are given an opportunity to find any issues associated with the property and report them to your housing developers so that they can fix or repair them accordingly. There are a number of things that you can inspect during the given defect liability period.  Here are some easy tips for you;

  • Inspect locks, keys, and doors. Ensure that all the keys given to you match with every lock in the house.
  • Check the fittings and finishing of the kitchen cabinets and the cupboard doors.
  • Look out for scratch and dents on the surface tops.
  • Inspect the toilets and taps for any sort of leakage.
  • Look out for wonky surfaces. You can use a spirit measure to check whether the floor surface is even or not.

Now that you have understood what is CCC and VP you can easily deal with your housing developer and find the right house that you always dreamt of.

 

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