Malaysia: Renovation Contracts: Towards A Worry-Free Relationship With Your Contractor

Last Updated: 8 September 2016
Article by Raymond Mah and Gan Chong Chieh

Most people, at some point in their lives, will deal with renovation contractors. Whether the job is big or small, for the office or home, we can half expect delays, defects, cost overruns and stress from the renovation process. This is often based on our own prior experience with renovation contractors, or what we have heard from friends or family. However, many disputes with contractors can be avoided with an adequate written contract and by managing the process diligently. Here are useful answers to some commonly asked questions:

What are the indicators of a trustworthy contractor?

Most problems are avoided with the appointment of an honest and reliable contractor. A personal recommendation is a good start, but ask the recommender specific questions about working with the contractor; ask for examples of both the good and bad. Also ask the contractor for photographs of sample work and recent referees on similar jobs, and then call those referees for feedback on the contractor.

You can conduct a company search with the Companies Commission of Malaysia ( to confirm the registration and status of the contractor. The search may reveal financial information on the contractor, which you will want to consider especially if the contract value is high. A search will also allow you to confirm whether the person who represents himself as the owner is in fact a director or shareholder of the company.

Contractors can register with the Lembaga Pembangunan Industri Pembinaan Malaysia (CIDB) ( A registered contractor is far less likely to be a fly-by-night outfit.

Lastly, trust your gut feeling. If you are not able to communicate well with a contractor, or if you don't feel comfortable with them, keep looking for another. These days many contractors are technologically savvy and are able to communicate quickly over Whatsapp or email, and you may prefer this convenience. Yet, bear in mind that some old and experienced hands still produce the best quality work.

What are the issues to be discussed with the contractor prior to the commencement of work?

Three main issues which require clarity and agreement are:

(i) the scope of the works – exactly what you want the contractor to do;

(ii) the contract price – how much the contractor will be paid; and

(iii) the duration of work – when the work will start and finish.

The scope of work is best defined by drawings or sketches along with a description of the method of construction and materials to be used. These can be prepared by an architect, interior designer, the contractor, or by the owner – the objective here is to ensure that the contractor knows what needs to be done, and to be able to hold the contractor to it in the event the works are not carried out accordingly. Any changes made along the way should be confirmed and documented.

The contract price should be agreed upon upfront and confirmed in writing, whether by way of a signed letter of award, invoice, or purchase order. The contract price could be lump sum or be derived from an itemised bill. Any changes to the original scope of works are called variations – and could involve omissions (removing items from the original scope) or additions (adding items to the original scope). Variations will mean changes to your contract price, and it is best to discuss the cost of variations at the time the instructions are given to the contractor and to confirm the variations in writing. You will have far less bargaining power to negotiate the price of variations once the works are completed.

The schedule or manner of payment also needs to be agreed upon – whether to pay a portion upfront and the balance on completion, or whether to pay agreed amounts progressively.

It is always a good idea to retain an agreed portion of the contract price until all works have been completed and all defects have been rectified. This is usually referred to as the retention sum and is usually 10% of the contract price, although it can be more if the contract price is small.

For larger jobs, owners should consider engaging an architect or an interior designer to supervise the works. These consultants will be responsible for checking the progress of the works and certifying payment when the contractor issues his bills.

In order to avoid delays to the project, you need to specify a commencement and completion date for the works. Generally, contractors perform best when they have a firm deadline to meet. If there are any variations to the works, remember to also discuss any changes that the variations will have on the completion date. You can try to negotiate a liquidated ascertained damages (LAD) clause in your renovation contract, which will allow you to deduct an agreed sum for each day of delay caused by the contractor.

For more complex projects, it is a good idea to seek the advice of a construction lawyer on the terms and conditions of your contract with the contractor.

Are approvals either from the local authority or developer necessary for renovation works?

Generally, internal renovations do not require approvals from the local authorities. However, external renovations, additions or expansions to your home or building are likely to require the submission of plans and drawings to the local authorities under the provisions of the Street, Drainage and Building Act 1974 and the Uniform Building By-Laws 1984. Failing to obtain the necessary approvals will render you liable to fines and your extensions liable to demolition, especially if complaints are made by your neighbours. For any significant external renovations, it is best to engage the services of an architect or interior designer who is familiar with local council submissions.

In gated and guarded communities, house owners are often bound by a Deed of Mutual Covenants. Similarly in landed strata title properties, house owners are often bound by a set of house rules imposed by the Joint Management Body (JMB) or Management Corporation (MC). These rules generally impose restrictions on the type of external renovations that can be carried out with the objective of maintaining uniformity in the facade of the houses in the community.

In residential or office towers, notice may have to be given to the JMB or MC and a deposit may need to be paid to cover any dirtying of or damage to common property.


How can homeowners minimise disappointments which may result from the renovation works?

Close supervision of the works is likely to produce the best results. Even if you have engaged an architect or interior designer, it is best that you as the owner or your representative frequently visit the site to check on the progress and quality of the works. Regular inspections throughout the renovation period will encourage the contractor to keep to the timeline and will allow any works which are not satisfactory to be addressed and remedied immediately.

Owners are advised to take plenty of photographs of the works to document the progress. All meetings with the contractor should be noted down, and any correspondence with the contractor should be recorded and kept. This is especially important when issues such as price or variations are discussed and agreed upon.

Lastly, pay promptly when payments are rightfully due. Non-payment or delayed payment may result in the contractor slowing or stopping work until receipt of payment. This will also have the unavoidable effect of spoiling your relationship with the contractor. Treat your contractor with respect and kindness, and you may find him going the extra mile for you.

What action can be taken if the contractor is not performing its works according to the renovation/building contract?

If the contractor is not performing as agreed and expected, immediately communicate your dissatisfaction to the contractor. Be professional about the matter – state the shortcomings and agree on a course of action to remedy the problem. You may discuss your grievances verbally, but always follow up in writing, whether on paper, by email or even over Whatsapp.

If you cannot agree on the problem or the solution, or if the contractor demonstrates that he is unable or unwilling to rectify the problem, you should consider terminating the engagement. In such circumstances, terminating the contract is likely to save you more losses and delays in the long run. This would also be a good time to speak to a lawyer on your rights against the contractor and liabilities that may arise from the termination.

What can the homeowners do in a case of defects in the renovation works?

Once the contractor has completed his works, arrange for a joint inspection of the works and carefully identify all the defects that you require the contractor to rectify. This is most efficiently done by recording the defects on the construction drawings for the contractor.

Some contracts will have a defined Defect Liability Period (DLP), which refers to the period during which the contractor remains liable to rectify all defects found. In the event the contract does not have a specified DLP, the defects need to be identified within a reasonable period, but better as soon as possible. Practically, it is best to identify the defects and have them rectified before the final payments are made and before the retention sum is released.

In the event the contractor refuses to rectify the defects after reasonable opportunity is given, the owner can proceed to engage another contractor (usually called a 3rd party contractor) to finish off and rectify whatever is outstanding. The cost of engaging the 3rd party contractor for that purpose can be set-off against any balance outstanding due to the original contractor or the retention sum. In the event that the cost exceeds the unpaid balance, the difference can be demanded and claimed from the original contractor.

(This article was published in the December 2015 issue of Home & Decor magazine.)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions