Rhythm Avenue buyer threatened with bankruptcy suit

Rhythm Avenue #4: Buyer faces bank harassment as developer allegedly dishonours supplemental agreement to service end-financing interests. CASSA urges Bank Negara and Lembaga Arkitek Malaysia to investigate foul play...
Posted on 03.01pm Apr 30, 2002

The 'Rhythm Avenue'
Series #4:

By usjXpress Team
Email: edteam@usj.com.my


SUBANG JAYA, April 30: Bank Negara and the Malaysian Board of Architects were today urged to investigate allegations of foul play involving the developer and architects for the Rhythm Avenue project in Subang Jaya.

Dr Jacob George, president and legal adviser of the Consumers Association of Subang & Shah Alam (CASSA), who made the appeal also called on individual purchasers to make police reports on the matter to facilitate investigations by the authorities.

He said buyers who need assistance in the filing of police reports can contact CASSA hotline at 012-3664444.

George said he wanted Bank Negara and the Malaysian Board of Architects to make a thorough investigation on two key issues.

"Why did the banks pay up to 95% of the loans to the developer after the construction was stopped?" he asked.

"Secondly, was there professional misconduct involving the architects who continued to make certifications for progress payment after the construction was stopped?"

According to the sales and purchase agreement, the developer Sanjung Utama Sdn Bhd (ROC No. 342573-U) was supposed to hand over vacant possesion of the apartments by end January.

However, construction of the apartments was said to have stopped in September last year.

UsjXpress Team was informed over 850 purchasers were affected by the delayed project.


BANKRUPTCY

At a press conference today, George revealed a case involving a Rhythm Avenue Axis buyer who was being threatened with bankruptcy suit by the bank which provided him end-financing facility.

"This buyer signed the sales and purchase agreement to buy a retail kiosk in August last year," George said.

"He also signed a supplemental agreement where the developer undertook to service his bank interest until the property is handed over," he said.

"The buyer had a rude shock when his bank called up and threatened him with a bankruptcy suit unless he regularises his account," he added.

"Neither Sanjung Utama nor the bank had informed him that the developer has not been servicing his bank interest as stated in the supplemental agreement," George said.

"What is more shocking is that, on one hand, the developer made a sale to him in August, and on the other, construction was stopped immediately the following month," he added.

According to documents shown to the usjXpress Team, the said buyer has, to date, paid up to 80% of the cost of the property.

George said, in view of the serious complaints made by the buyers, the Board of Architects should immediately conduct an inquiry into the architects involved to determine whether there was professional misconduct.

"The Commercial Crime Division at Bukit Aman should also conduct its own investigations on the respective banks that are alleged to have released huge funds to the developer prior to the certification submitted by the architects," George added.

George said CASSA is prepared to assist both Bank Negara and the Commercial Crime Division to get to the bottom of these allegations to protect consumers rights and interests.


COMPANY SEARCH

Latest extracts obtained from the Registrar of Companies Malaysia indicated Sanjung Utama Sdn Bhd, the developer of Rhythm Avenue, has a paid up capital of RM2 million.

To date, the company has also made three charges to Arab-Malaysian Finance Berhad for a total of RM127.89 million.

It was learnt that most of the apartment buyers have paid up to 95% of the cost of their properties, amounting to over RM100 million.

Though the construction has stopped, the purchasers were still facilitating payments through loans and direct debits.

Meanwhile, George also called on all end-financing banks for the buyers to suspend the buyers' monthly loan instalments pending a full investigation by the authorities.

"CASSA feels it is morally unjust for banks to harass innocent purchaser for monies until investigations by the authorities are completed," George said.

Earlier, George said he has received numerous complaints from the purchasers of the Rhythm Avenue project.

He said a group of the apartment buyers have appointed CASSA to help them get a full refund plus interests from the developers.

A senior civil engineer, who was also an affected buyer, told the buyers' meeting held by CASSA April 27 that he has written to the architect voicing his concerns over the conduct of the professional bodies involved in the project.

He also questioned the structure integrity of the 33-storey project, a strong view point that was acknowledged by the other buyers present at the meeting.

All except two of the buyers have overwhelmingly agreed to seek full refund plus interests from the developer.

The usjXpress team was told that the engineer has offered himself as a consultant to CASSA and the grieved buyers.


POLITICIAN

Meanwhile, Subang Jaya state assemblyman Datuk Lee Hwa Beng announced in his website April 27 that he had cancelled a press conference on the issue which he has scheduled for April 30.

Lee also carried an unsigned press statement purported released by the developer, which said "the two projects (Rhythm Avenue USJ19 and Newgate Avenue USJ21) are scheduled to resume work within the month of May 2002".

The developer also said "we expect Rhythm Avenue to be completed by the month of December 2002 and the Newgate Avenue to be completed by the month of June 2003".

The developer further said that it wished "to assure the purchasers wholeheartedly that we are also closely looking at a form and quantum of compensation payable when we deliver vacant possession of their units to them".

However, the developer did not commit to any firm date to revert to the purchasers.

By cancelling the press conference, Lee was also silent about his plan to help the buyers set up an action committee for which he volunteered to be its advisor.


Related Reports:
Papers identify causes for cracks in USJ19 houses
Malaysiakini: Consumers group wants errant developer to return money
China Press: Rhythm Avenue buyers demand full refund Rhythm Avenue Series:
#1: RM 100m (95% progress payment) collected, but...
#2: Hwa Beng's moves now being watched
#3: Attempts fail to disrupt buyers' meeting

Watch out for the expose!
#5: Web of mysteries surrounding Sanjung Utama

Related thread at Web Forum
Rhythm Avenue: Developer given 7 days to refund purchasers

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