2. If the developer/vendor fails to complete the building and hand over the flats to the purchasers on time, can the purchasers terminate the agreement and sue for compensation?
Generally speaking, the vendor will be entitled to an extension of time for completion of the building in the event of certain reasonable and legitimate reasons such as strikes, riots, accidents beyond the vendor's control or bad weather (rainstorm black warning or typhoon signal no.8) which hindered the construction work.
If the vendor fails to complete the building/flats on or before the specified date without any reasonable and legitimate reasons, the purchasers can choose to:
- terminate the sale and purchase agreement, ask for the refund of all amounts paid to the vendor, and claim for interest (usually at 2% per annum over prime rate) on the amount paid; or
- wait for the completion of the building and claim for interest (usually at 2% per annum over prime rate) on the amount paid.
Purchasers must also note that there is a time restriction on informing the vendor of the above decision. Independent legal advice should be sought if necessary.