How To Transfer Or Purchase Property Ownership In Malaysia And The Cost
Generally, there are two (2) types of sale and purchase of real property in Malaysia.
Firstly, purchase from the property developers. For residential development, the sale and purchase is mainly governed by the Housing Development (Control and Licensing) Act, 1966 (“HDA”). For these kinds of transactions, the sale and purchase agreements (“SPA”) are generally prescribed under Schedule G (for subdivided land) or Schedule H (for subdivided building or property with strata title) of the HDA. The salient features to take note in these SPA are the time frame for the delivery of vacant possession, the defect liability period, the schedule of payment, the late payment and late delivery charges and the rate of adjustment on the purchase price if the area of the property varies from the area originally stipulated in the SPA. On the contrary, the HDA is not applicable for non-residential development. For commercial development, the developer and the purchasers are bound by the contractual documents between them.
On the other hand, purchase from the subsidiary market in Malaysia or commonly known as sub-sale. It may be completed by way of transfer (for property where its separate title has been issued) and legal assignment (for property where its separate title yet to be issued). Briefly, a normal and typical sub-sale transaction may involve:
a) payment of deposit;
b) signing of SPA, the relevant legal documents and the loan documents (if buyer takes a loan);
c) retention from the selling price for the purposes of Real Property Gain Tax (if applicable);
d) payment of redemption sum to the vendor’s bank;
e) exchange of undertakings between the parties and procurement of consent or approval (if applicable);
f) payment of the balance purchase price and delivery of vacant possession.
As the sale and purchase of real property in Malaysia is highly procedural intensive and involving numerous legal aspects, it is important to engage a conveyancing lawyer to ensure a smooth transaction and to avoid any infringement of law. Lawyers are bound by the Solicitors’ Remuneration Order for the conveyancing and banking related transactions.
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