Conveyancing: What Should You Know Before Buying A Property
Are you still in the era thinking that buying a property only consists of negotiating the price, getting a loan from the bank, and gain access to the property? There are way more details that you should take into consideration that could affect your legal procedures during the purchase.
The common misconception of the public is that once the Sales and Purchase Agreement has been signed, the rights of the property will automatically pass to the purchaser. It is crucial to take note that there are legal rules and procedures to complied with before the transfer process of any assets.
Here is a brief outline of the basic conveyancing procedure along with the details that you should take to know when buying an asset. However, the below outline only applies to residential properties, not commercial properties.
Step 1: Letter of Offer
It is very crucial to check if there are any defaults on the property or any repair works that have to be done as listed in the Letter of Offer. The timeline of the work done also has to be double-checked. Upon the execution of the Letter of Offer, the standard practice for 2% of the purchase price has to be paid (usually referred to as the “Earnest Deposit”). In this case, the date of the document is important as the Sale and Purchase Agreement has to be executed within 14 working days, or else the earnest deposit may be forfeited by the vendor. Always make sure that both the parties, vendor, and purchaser have signed the Letter of Offer.
Step 2: Drafting the Sale and Purchase Agreement (SPA)
The standard practice will be the conveyancing lawyer to research whether the property is freehold or leasehold; strata title or individual; under a master title; charged to a financial institution; has caveats lodges against, or any State Authority consent is needed due to any restriction in interest. The conveyancing lawyer has to carry out bankruptcy or winding up search upon the purchaser. Under a usual SPA, the balance purchase price has to be paid within three months from the date with an extra one-month extension period given with interest. Your lawyers will be taking care of the amending or removing any clauses in the SPA to protect your interest.
Step 3: Execution and Stamping of SPA
Once all the term has been agreed to, the SPA will be forward to the Vendor’s lawyer for execution. The balance 8% purchase price has to be paid upon execution of the SPA and other documents such as Form 14A, CKHT forms, Form 19B and Form 19G will be executed together. When all the documents have been returned, the SPA has to be stamped with a fee charge of RM10.00 per copy. The original and duplicate copies of the SPA will be forwarded to the purchaser for any housing loan application.
Step 4: Purchasing Loan and Memorandum of Transfer
If a loan is taken by the purchaser to finance the property purchase, the lawyer has to issue a letter once the loan has been approved and requesting a letter of undertaking. Once the full purchase price has been disbursed, vacant possession of the property will be delivered normally within 5 to 7 days.
If you have any questions regarding the conveyancing process in Malaysia, contact us today! For more info visit: https://simrahman.com/
