What Is Liquidated Ascertained Damages (LAD)?
If you’ve bought a property under construction and the developer hands over the keys late, you’re not just expected to shrug it off. There’s a specific compensation built into your Sale and Purchase Agreement for exactly this — it’s called LAD, and every buyer of a new development should understand how it works.
What LAD Actually Is
LAD stands for Liquidated Ascertained Damages — a pre-agreed compensation amount written into your SPA for when the developer breaches a promised timeline. The legal basis is Section 75 of the Contracts Act 1950, which allows you to claim this sum without having to prove you actually suffered a loss.
For property bought from a licensed developer, this is governed by the standard SPA formats under the Housing Development (Control and Licensing) Act 1966 — Schedule G for landed property with individual titles, Schedule H for strata-titled property like condos and apartments. Under both, the developer must deliver vacant possession within a set timeframe: 24 months from the SPA date for landed property, and 36 months for strata property. Miss that deadline, and LAD kicks in automatically.
How LAD Is Calculated
The rate is fixed by law at 10% per annum of the purchase price, pro-rated daily for the period of delay — from the day after the promised VP date to the day you actually receive your keys.
A simple example: say you bought a unit for RM350,000, and delivery was delayed by 100 days.
RM350,000 × 10% × 100 days ÷ 365 days = RM9,589
One more thing to know: vacant possession isn’t considered delivered until the developer actually holds the Certificate of Completion and Compliance (CCC). If a developer issues a VP notice before getting the CCC, that notice doesn’t stop the LAD clock — it keeps running until the CCC is genuinely in hand.
How to Claim It
You have two routes:
- Tribunal for Homebuyer Claims — for claims up to RM50,000. Filing fee is just RM10, and you must lodge within 12 months of the CCC issuance date, the expiry of the defects liability period, or SPA termination (whichever applies). You’ll need your SPA, VP notice, and CCC as supporting documents.
- Civil court — for claims above RM50,000, or if you want broader remedies. No cap, but you’ll need a lawyer, and the claim must be filed within 6 years of the breach.
If a developer ignores a Tribunal award, that’s a criminal offence under the HDA — punishable by a fine or imprisonment. So Tribunal awards do carry real teeth.
Practical Takeaway
LAD only applies to purchases directly from a licensed housing developer under a standard SPA — not sub-sale or auction purchases, where there’s no such statutory clause. Before signing any SPA, check the VP delivery date and LAD clause carefully, keep every payment receipt and correspondence with the developer, and if VP is delayed, don’t wait — track the days from your SPA date and start gathering your documents (SPA, booking receipt, VP notice, CCC when issued) early. For claims under RM50,000, the Tribunal route is fast, cheap, and doesn’t need a lawyer.
Hafiz Noor
