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:::
Beware of Traps in Pre-Sales Housing Contracts, Think Carefully Before Contract Signing

Date:2020-10-20
Source:Department of Consumer Protection

The Department of Consumer Protection of the Executive Yuan (hereinafter referred to as the DCP), the Department of Land Administration of the Ministry of the Interior, and the Land Administration Bureau (Department) under each local government carried out a special inspection on the "Standard Contracts for Pre-Sales Housing" of 50 construction projects conducted throughout the nation in order to understand the compliance situation of "Mandatory and Prohibitory Provisions to be Included in Standard Contracts for Pre-Sales Housing" among the construction companies. The inspection results show that only 4 construction projects met all the requirements, while the remaining 46 construction projects failed to meet certain requirements. After being given a time limit to rectify the defects, 45 companies have completed their rectifications, with 1 company refusing to do so.

A total of 15 items were included in this inspection, including the right of contract review, land location and parking space specifications, salable area and standards, and so on. Only 4 construction projects met all the inspection items, while the rest of the construction projects failed to comply with certain requirements.

Among the inspection items, the number and types of the most severe violations are as follows:

  1. A total of 35 construction projects failed to meet the requirements of "the notification deadline for housing transfer".
  1. Cut the amount of interest for defaults without prior approval.
  2. Changed the obligation of repairs "before housing transfer" to the obligation of guarantee "after housing transfer".
  1. A total of 34 construction projects failed to meet the requirements of "land location and parking space specifications".
  1. Failed to specify "parking garage height".
  2. Failed to specify "the calculation method of the parking space area", "the area of driveways and other essential spaces", and "the proportion of parking area to the total area of jointly owned spaces".
  1. A total of 34 construction projects failed to meet the requirements of "acceptance".
  1. Failed to specify the regulations concerning the retainage of housing transfers or cut the amount of the retainage of housing transfers through individually negotiated terms.
  2. Passed on water/electricity/gas bills improperly.
  1. A total of 34 construction projects failed to meet the requirements of "warranty period and scope".
  1. Removed some "items" of structural warranty and shortened the "period" of warranty.
  2. Altered attributable causes and alleviated the "obligation of warranty".

As soon as the inspection results were confirmed, the DCP immediately asked the Land Administration Bureau (Department) under each local government to order construction companies to rectify the defects within 30 days in accordance with Article 56-1 of the Consumer Protection Act. Among the construction companies, 1 company refused to correct the defects. As a result, the Miaoli County Government imposed a fine of NT$30,000 in accordance with law and asked the company again to rectify the defects within a given time limit.

The DCP reminds consumers that purchasing a property is a significant decision because it involves a huge amount of money. Since there are a number of contract traps in pre-sales housing transactions, before signing a contract consumers must obtain the contracts, read them carefully, and check each contract term one by one with the "Mandatory and Prohibitory Provisions to be Included in Standard Contracts for Pre-Sales Housing". If the contract terms of a construction project fail to meet the requirements, consumers may either ask the construction company to revise them or refuse to sign the contract. Consumers may also report this issue to the competent authority to not only safeguard their rights of purchasing properties but also maintain the overall trading order.