SALE AND PURCHASE OF HOUSES

Source: Malaysia Bar Council
National House Buyers Associatio

Information which a buyer should obtain when buying a house

1. Does it have a separate title?

2. Take a photocopy of the title.

3. Get a photocopy of

current quit rent receipt;

current assessment receipt.

4. Make sure you deal with owner of house or his duly authorised agent. (such authority

should be in writing). Any other person will not be able to make any binding commitment to you.

5.1. If the house/apartment does not have any title, then get evidence of the seller's ownership

i.e. a copy of the Sale & Purchase Agreement (SPA) made by the seller with the developer when he purchased the house/apartment.

5.2. If the seller is a Second/ Third hand owner, then he would have to give you

1st SPA made by 1st owner with developer;

2nd SPA made between 1st owner and seller, (if 2nd hand); and

3rd SPA between 2nd owner and 3rd owner seller, (if 3rd hand).

as proof that the seller is the owner of the house/apartment.

6. Did the seller take a loan to buy the property?

For most cases, the answer is "yes". In such a case, you should get the seller to provide you with the bank's statement of how much he still owes the bank (redemption statement). With the redemption statement, you would know how much money you can release to the seller and how much is to be paid to his bank to obtain a discharge of the property from the bank.

Information relevant to apartment

1. Maintenance and other charges that need to be paid to developer/management committee.

You should check that seller is up to date with his payments and there are no arrears due to developer/management committee.

2. If the apartment has no strata title, the seller must get the consent of the Developer to

assign the unit to you. Developers may charge "administrative charges" to give such consent. Such Charges are now regulated by the latest amendment to the Housing Development (Control And Licensing) Regulations 1989 by the inclusion of regulation 11A which reads as follows:-

11 A. Consent to assignment.

Subject to sub regulation (2), where in the sale of a housing accommodation to

which no separate or strata title has been issued, no housing developer shall impose any administrative fee or any fee by whatever name called upon any purchaser or subsequent purchaser for giving his consent, if required, for such purchaser to resell the housing accommodation if such fee shall exceed zero point five per centum (0.5%) of the purchase price or five hundred ringgit, whichever is the lower.

No housing developer shall collect any fee by whatever name called for giving his

consent to any purchaser or subsequent purchaser of a housing accommodation to assign his rights and benefits to and in the contract of sale to any financial institution providing a loan for such purchaser to finance or part finance the purchase of the housing accommodation.

Where in the sale of a housing accommodation to which no separate title has

been issued, a housing developer shall execute the instrument of title within twenty one (21) days from the date the separate title is subsequently issued and received by the housing developer from the Appropriate Authority and thereafter forward the same to the purchaser who shall execute the instrument of transfer within twenty one (21) days from the receipt of the same from the housing developer.

This regulation shall have effect notwithstanding anything to the contrary in any

agreement.

Housing Schemes that are developed by Statutory bodies e.g. Penang Development Corporation (PDC), Perda, PKNS, etc

1. T he SPA of such schemes may have restriction on the buyer selling the property i.e. it

could not be sold within a stipulated period or without the consent of the government.

2. The title to the property may have restrictions. (the restrictions could be read from the title or

search of the title) e.g. property cannot be transferred or charged without State consent.

3. The consent application may take a few months to be approved.

Documents you need to sign

1. Sale & Purchase Agreement;

2. CKHT form (form required to be submitted by Vendor and Purchaser to Inland

3. Stamp Duty form;

4. Transfer form 14A. (If title is issued);

5. Deed of Assignment (if title is not issued).

The process involved in getting you registered as the owner of the property (in cases where title is issued)

1. Both seller and buyer sign transfer form 14A.

2. Lawyer sends transfer form to Stamp Office for adjudication to ascertain how much stamp

duty is to be paid.

3. Stamp Office then stamps 'transfer form' for a nominal value of RM10.00 and returns

transfer form to lawyer.

4. Stamp Office then informs Valuation Department of transaction. Valuation Department then

values property and informs Stamp Office of valuation.

5. Stamp Office then issues PDS form to the lawyer. Buyer is normally given three (3) to four

(4) weeks to pay stamp duty failing which, a penalty would be imposed.

6. Lawyer collects stamp duty from purchaser and proceeds to stamp transfer form. It may

take about a week for the Stamp Office to return the lawyer the duly endorsed form. After stamping transfer form, lawyer presents the transfer form to the Land Registry/Office for registration. On presentation, you would be the registered owner of the property. However it may take several months (depending on which Land Office) before the physical title is returned by the Land Registry/Office. With the computerization process recently implemented in all Land Offices/ Registries in the country, the process is expected to be shortened.

If you obtain a loan from a bank to buy the property, the title would be sent to the bank. You should get a photocopy of the title from the lawyer for your record.

How is stamp duty calculated?

For the transfer/assignment (if no individual title is issued), based on the adjudicated value by the Stamp Office:

For Charge

Stamp duty on a Charge is RM5.00 per RM1,000/- or part thereof of the loan amount e.g. Loan of RM100,000/-, stamp duty is RM 500/- on the original. The stamp duty per copy of the document is RM10/-.

The assessed value is the value assessed by the Valuation Office based on the purchase price or the market value of the property, whichever is higher.

Appointment of Lawyers

1. You have the right to appoint a lawyer of your choice to act for you in any transaction whether

it is a purchase from a developer or an individual. After all, legal fees etc, are borne by you. You should ascertain that:-

he is a lawyer;

that he has a valid practising certificate for the current year.

Verification of the above can be done with the Bar Council.

Each party to the transaction is advised to retain separate lawyers to protect their respective interests.

A lawyer can:

advise, prepare and /or vet documents such as SPA, deed of assignment, deed of

reassignment, deed of mutual covenants, deed of reassignment and loan document. However, the SPA for purchases of residential properties from a developer is a standard form agreement fixed by law;

conduct land, bankruptcy/insolvency and company searches to ensure that there are

no surprises, such as a different registered owner, encumbrances (charges, caveats), conditions or restrictions on the title (important for a buyer), or that a party is bankrupt/insolvent;

if there is an individual title, to enter a private caveat to freeze all dealings in the

property until it is transferred to the buyer;

send documents/instruments to the Stamp Office for adjudication and arrange for their

stamping;

act as stakeholder, to hold all money paid, retain 5% of the purchase price for the

purpose of Real Property Gains Tax; and/or to hold the balance of the purchase price;

prepare and witness the execution of statutory forms;

for a sub-sale where the individual title has not been issued, get the consent of the

developer to the sale of the property to the new buyer and to undertake the registration of the property in the name of the new buyer. The lawyer should also get an undertaking from the developer not to further encumber the property, and for a development project with a master title, a letter of disclaimer from the chargee of the master title confirming no right or interest in the individual property;

if the buyer takes a loan, get a letter of undertaking from the lender. The undertaking

will include an undertaking that it will not foreclose the property if the loan, interest, etc has been repaid/paid; and

present the transfer (Form 14A) and if applicable, the charge (Form 16A) for

registration at the land office.

Can a lawyer act for the seller, buyer and the buyer's lender?

A lawyer may only act for one party in one transaction, but may witness the execution of any documents/instruments by any party. A sale and purchase is one transaction and a loan is another separate transaction. Therefore a lawyer can act for a seller or buyer, and also a lender or borrower. However, the solicitor concerned should have regard to any possible conflict of interest situation.

Lawyers are bound by the Solicitors' Remuneration Order 1991 (SRO) and there are scale fees for all conveyancing transactions and secured banking transactions done by a lawyer.

Lawyers are not allowed to give any discount. If any lawyer gives a discount on the scale fees, he could face disciplinary action.

There are fixed scales for lawyers' fees if you, as a seller or buyer, engage a lawyer. (stated herein is for fees only and does not include disbursements).

Lawyers' Fees

Click here to view or download Solicitors Remuneration Order 2006

House Seller's Guide

Documents/ information you must provide buyer/buyer's solicitors

Copies of your previous Sale & Purchase Agreement and Loan Agreement/Title.

Current year quit rent receipt.

Current year assessment receipt.

Redemption Statement from your bank (if you have charged your house to the bank).

Letter of Undertaking to purchaser's bank to refund purchaser's bank loan released to

you in the event the transfer/deed of assignment signed by you in favour of purchaser cannot be registered/is defective.

Income Tax file reference number.

CKHT form (required to be submitted by Vendor and Purchaser to Inland Revenue Department under provisions of the Real Property Gains Tax Act 1976 (Act 169)(RPGT))

1. Under the RPGT Act, you have to submit CKHT form 1 (for seller) and CKHT form 2 (for

buyer) within 30 days from date of your Sale & Purchase Agreement.

2. You can fill in the form and submit it yourself, or instruct the legal firm acting in the Sale &

Purchase Agreement to fill and submit same for you, in which case you would have to pay its professional fees. If you submit the form on your own, you must provide evidence of such submission to the purchaser's solicitors i.e. an acknowledgment of receipt of the form by the Inland Revenue Department.

3. Some material information needed to be included in the form:-

your income tax reference number;

copy of your previous Sale & Purchase Agreement to prove the price at which you

bought your house;

your IC No. and correspondence address;

expenses which you want to claim as deductions:-

e.g. receipt for your legal fees and disbursements incurred to buy your house; receipt for renovations done to house and receipts for agent's commission, etc.

4. An individual is entitled to claim exemption from RPGT in respect of the disposal of one

private residence only in his lifetime. Please consult your tax consultant on matters relating to RPGT.

Utility deposits

Make sure you make arrangements with purchaser to obtain refund of the remaining deposits i.e. water, electricity, telephone etc.

For Apartments

Make sure you make arrangements to obtain the refund of deposits which you have paid the developer. You would be required to provide the necessary original receipts to obtain the refund.

Notification of Change of Ownership of House/Apartment to Local Authority i.e. Majlis Perbandaran.

You or your lawyer must notify the Local Authority of any change in the ownership of any house/apartment so that its assessment record could be updated. It is an offence if you fail to notify the relevant authority.

Receipt of Balance Purchase Price

Generally, there would be a short time lapse between the payment of the balance purchase price by the purchaser to your lawyer and the date when you receive the balance purchase price from your lawyer depending on the completion of documentation. Please seek clarification from your lawyer.

Enquiries

Malaysian Bar Council
No. 13, 15 & 17, Leboh Pasar Besar,
50050 Kuala Lumpur.
Malaysia
Tel: 603.2031.3003
Fax: 603.2026.1313
Email: council@malaysianbar.org.my

Website: http://www.malaysianbar.org.my

National House Buyers Association
No. 31, Level 3, Jalan Barat,
Off Jalan Imbi,
55100, Kuala Lumper.
Malaysia.
Tel: 603.2142.2225
Fax: 603.2260.1803
E-mail: enquiries@hba.org.my
Website: http://www.hba.org.my

Note: Dream House Properties takes no responsibilities for any mistakes made above and does not

guarantee the accuracy of the information provided.