DETAILS: Part 2 details the mechanics of the sale once in the hands of lawyers
In Part 1, we established that:
The first rule of conveyancing is ‚buyer and seller must engage own lawyer‘. Consult a lawyer right from the start and not after you have paid the deposit. Reasons to use your own lawyer:
Under the law you are deemed to have read and understood every document you have signed. Furthermore, promises made by the seller or someone else about the deal may not be enforceable if the promises are not in writing unless you are able to provide proof of the same.
A lawyer cannot represent both the Vendor and Purchaser - if you are using the Vendor‘s panel lawyer, often, when disputes happen, the lawyer is unlikely to represent you against their bigger client.
A lawyer in general practice will be able to complete your purchase; however, lawyers with a focused real estate/conveyancing practice may prove a better choice if you are unsure of what to do, or have complications in your purchase agreement or mortgage. While you may think that you cannot afford the services of your own lawyer, consider whether you can afford not to.
Check out the FAQ in HBA website: www.hba.org.my
In Part 2, the writer continues to explain some additional terms and conditions of a typical sub-sale transaction in the secondary market.
Delivery of documents by Vendor: The SPA will provide for the Vendor to deliver the following documents upon or after the signing of the SPA and payment of the Deposit of 10 per cent:
• Quit rent and assessment receipts for the current year;
• Certified copy of Vendor’s identity card, income tax reference number and place of assessment;
• Redemption statement or bank statement of the Vendor’s bank or the bank installment receipts of the Vendor; and
• Copies of up-to-date receipts of service charges, sinking fund, insurance, etc of the developer, Joint Management Body (JMB) or Management Corporation (MC) in the case of stratified properties.
The purchase of a Property without title usually requires the Vendor to produce all documents tracing the transactions from the original purchaser to the Vendor, including all SPAs, loan agreements, assignments and receipt and reassignments.
Instrument of Transfer or Deed of Assignment: When the Vendor signs a sale and purchase agreement (“SPA”) to sell his Property, he is normally also required to sign an Instrument of Transfer (Form 14A) (“Transfer”), in a case of a Property with title, or a Deed of Assignment (“Assignment”), in a case of a Property without title.
The Transfer or Assignment is usually deposited with the Purchaser’s Solicitor as stakeholder. Sometimes the Assignment is kept by the Vendor’s Solicitor as stakeholder until the Purchaser’s bank (“Purchaser’s Bank”) has given a written undertaking to the Vendor’s Bank to release the loan of the Purchaser.
Developer’s confirmation: In the case of a sale of Property without title, the Purchaser’s lawyer must request the developer of the property for a written confirmation of the following:
(1) Full particulars of the Property;
(2) The name of the current purchaser (i.e. the Vendor) listed with the developer;
(3) The current chargee (developer’s bank) or assignee (Vendor’s Bank); and
(4) Total amount due to the developer under the SPA as at the date of confirmation.
Adjudication of Transfer: Adjudication is the process of determining the stamp duty payable on the instrument of Transfer or Assignment by the relevant authority. Stamp duty is payable on the relevant instrument based on its consideration or market value, whichever is higher. This is called ad valorem stamp duty.
The Transfer or Assignment is submitted online by the Purchaser’s Solicitor to the relevant stamp office, Lembaga Hasil Dalam Negeri (“LHDN”), which will then forward the particulars of the Property to the Valuation Department for valuation. Adjudication will normally take 1 - 7 days to be completed for a standard property.
Once the Purchaser’s Solicitor has received and downloaded the Stamp Notice (Notis Taksiran) from LHDN, he will proceed to stamp the Transfer provided that the Purchaser has deposited the correct amount of stamp duty with him.
The stamp duty is usually deposited earlier by the Purchaser to avoid any delay in the payment of the same.
The ad valorem stamp duty must be paid within 30 days of the date of the Stamp Notice, failing which, a penalty is chargeable.
Redemption Statement from Vendor’s bank and release of documents
The Vendor’s Solicitor will write to the Vendor’s Bank for a redemption statement which will set out the amount owing by the Vendor (“Redemption Sum”). The Vendor’s Bank is usually requested to furnish a written undertaking to refund the Redemption Sum to the Purchaser’s Bank in the event that:
(a) The discharge of the Vendor’s Bank cannot be registered for any reason (for Property with title); or
(b) The R&R or the Assignment cannot be perfected for any reason (for Property without title).
The Vendor’s Bank is also required to give to the Purchaser’s Bank a letter of undertaking that upon the receipt of the Redemption Sum by the Vendor’s Bank, it will:
(1) Release the original title, duplicate charge and instrument of discharge to the Purchaser’s Solicitor (for Property with title); or
(2) Deliver a document known as Receipt and Reassignment duly signed by the Vendor’s Bank, original loan documents and other documents in its possession (for Property without title).
Adjudication of Deed of Assignment and Receipt and Reassignment : Unlike a Transfer, an Assignment will not be dated or sent for adjudication soon after the date of the SPA. Where the rights over the Property have been assigned by the Vendor as security to the Vendor’s Bank, such rights have to be reassigned by the Vendor’s Bank to the Vendor via the Receipt and Reassignment which is to be signed by both the Vendor and the Vendor’s Bank.
Once the Redemption Sum is paid by the Purchaser’s Bank and the Receipt and Reassignment is dated, the Purchaser’s Solicitor will then date the Assignment and submit the Assignment for online adjudication and subsequent payment of ad valorem stamp duty. (This is one of the reasons why the purchase of a Property without title takes longer to complete than a Property with title).
Based on the Purchaser’s Solicitor’s earlier undertaking to the Purchaser’s Bank, he will then forward the duly adjudicated and stamped Assignment to the Purchaser’s Bank’s Solicitor to hold as security.
Vendor’s undertaking to refund: The Vendor is usually required to furnish a written undertaking to the Purchaser’s Bank to refund the Loan in the event that the Transfer cannot be registered for any reason resulting in the non-registration of the Charge in favour of the Purchaser’s Bank or in the event the Assignment cannot be perfected for any reason. This undertaking is to be delivered within 7-14 days, failing which additional time may have to given to the Purchaser to pay the balance purchase price without interest.
Part I appeared in the NST RED column last Friday.
The writer, YP Cheong @ Cheong Yoke Ping (Ms), is a member of the Conveyancing Practice Committee, Bar Council, Malaysia and this article has been contributed to National House Buyers Association for Education, Information and Empowerment
NATIONAL HOUSE BUYERS ASSOCIATION [HBA]
No. 31, Level 3, Jalan Barat,
Off Jalan Imbi, 55100, Kuala Lumpur
Tel: 03-2142 2225 | 012- 334 5676
Web Site: www.hba.org.my