Documentation & Procedures
The standard Sales and Purchase Agreements for purchases from developer has been provided for under Schedule G & H of the Housing Developers Act 1996.
Payment of the purchase price under the said Schedules G and H is by progressive payment based on completion of work as certified by the architects. A legal firm shall act as stakeholders will hold payment of the last 5% of the purchase price for the defect liability period; which is currently 18 months from the delivery of vacant possession.
There are no fixed rules on the form of agreement for purchases from existing house owners (more commonly called sub-sale). However, it is common practice that upon signing of the sale and purchase agreement 10% of the purchase price be paid to the seller, and the purchaser be given 3 months to pay the balance of purchase price with an extension of 1 month (subject to penalty interest) if he fails to do so within the first 3 months' period.
Interest at the rate of 10% per annum calculated on a daily basis is normally charged for the extension period. Payment of the balance of purchase price is usually made to the solicitors acting for the seller as stakeholders to ensure redemption of the house (if the same is still charged or assigned to a bank or financial institution at the time of sale) and payment of real property gains tax by the seller.
Other than the sale and purchase agreement, a memorandum of transfer, which is Form 14A of the National Land Code 1965, must be completed to transfer the title from the seller to the purchase. In instances where the title has not been issued, then if the purchase is from a developer, the developer will undertake in the sale and purchase agreement to transfer the title when the same is issued; and if the purchase is through a sub-sale, the transfer canl be done by virtue of an assignment of the sale and purchase agreement between the developer and the seller (Principal SPA) to enable the buyer to have the right and interest over the property concerned.
Sales & Purchase Agreement
SPA is a Sale & Purchase Agreement. It is a signed contract between the buyer and the seller which states the purchase price of the property and other terms and conditions pertaining to the above transaction. It can be between a developer and individual buyer or between individuals more commonly known as sub-Sale.
Legal Fees
The first Schedule of the Solicitors Remuneration Order 1991 sets out the fees to be collected by lawyers for work done in handling the sale or purchase of house based on the purchase price as follows:
a) 1% on the first RM100,000
b) 0.5% on the next RM4, 900,000
c) 0.25% on the remainder
For each sale and purchase of a house, the solicitors concerned can only collect fees based on the above scale from either the seller or the purchaser and not from both of them.
Down Payment / Stamp Duty
- What is Down Payment?
Down payment is the difference in purchase price and the loan amount. This is the portion of purchase price that you need to pay on your own. - How much is Down Payment for a house?
Under the general practice of the market, the down payment is normally 10% of the purchase price. Therefore you are required to pay the amount before signing the SPA.Once you have decided to buy a house, whether from the developer or from an individual, you have to express your approval of offer to the seller. Normally, a token sum of money of about RM1,000 to RM3,000 is given to the seller as security deposit.
You must ensure that a receipt for this sum is issued to you, indicating the sale of the property. This security deposit will be taken as part of the down payment for your property.
- Stamp Duty
Stamp duty is levied on the document of transfer (i.e. the memorandum of transfer if the title has been issued, or the deed of assignment of Principal SPA if the title has not been issued) based on the purchase price as follows:
a) 1% on the first RM100, 000
b) 2% on the next RM400, 000
c) 3% on the nest RM1,500,000 and
d) 4% on the remainder (item 32 [a] of the Stamp Act 1949)
