Any of you who own a property probably already know that for buying and selling a property in Malaysia, you need to appoint a lawyer to handle your case. In case you are wondering why you are paying so much for the legal fee, it is because it involves a lot of tedious work to complete the transaction. For the previous year, I am handling almost every conveyancing cases in the firm and yet I would not say that I have seen it all. How a lawyer charge you for the professional fee are according to the purchase price stipulate in the Sale and Purchase Agreement (SPA). 1% for the first RM500,000 subject to a min of RM 500, 0.8% for the next RM 500,000, following by 0.7% for the next RM2,000,000 and 0.6%for the subsequent RM2,000,000 and 0.5% thereafter. If you are wondering, what is the rationale behind this calculation, it is because the higher the purchase price in the SPA, the higher the risk need to be bear by the lawyer handling the case. A conveyancing lawyer's obligation is to ensure the property is transferred from the vendor to the purchaser in a timely manner without flaw. The last thing a conveyancing lawyer wants is someone filing a legal suit to trace the proceed of the selling money from you as a vendor or a 3rd party claiming his ownership of the title to the property from you as a purchaser. I am summarizing my superficial knowledge of conveyancing matter in this article, hoping that it will help those who are new in the industry to understand a bit more about what they are doing. I will further divide the article into five different sections, namely, 1) Identification, 2) Execution, 3) Redemption, 4) Adjudication, and 5) Presentation of transfer.
Identification
Planning is of essence in every conveyancing matter. The first thing you need to do no matter you are acting for the vendor or purchaser is to have a copy of the title and identified whether it is a Master title, a title under the Developer's name or it is an individual/strata title under the vendor's name. This is critical because the steps and documents involved in the transfer can vary from title to title. I have summed up some of the main differences in the table below:
After identifying the title and having a rough plan on your mind, it is important to identify other aspects of the transaction. To do so, I have prepared some golden rules as below to follow:
1. Conduct a land search to ensure the copy of the title you received is genuine. 2. Review the land search to identify whether the property is charged to a bank or free from encumbrances. 3. Review the land search to identify whether it requires a state's consent to transfer the property. 3. Conduct a bankruptcy search on the vendor and purchaser's NRIC to ensure they are non-bankrupt. 4. Get a copy of the current year latest quit rent and assessment bill. 5. Get a copy of the previous SPA and utility bill. 6. Cross check the other side lawyer particular from the Bar Council website to ensure they are holding a valid practice license.
Execution Now, if you are acting for the purchaser, you can start preparing for the Sale and Purchase Agreement (SPA), the Memorandum of Transfer (MOT) and other necessary documents. Before sending over the SPA and MOT to the vendor's lawyer for execution, the balance deposit has to first be settled. In practice, the total amount of deposit needs to be pay from the purchaser to the vendor is 10% of the total purchase price. The 10% deposit can be further divided as below:
2-3% of the total purchase price to the property agent upon execution of the offer letter being the earnest deposit.
3% of the total purchase price to be pay on behalf of the vendor to LHDN being the retention sum.
4-5% of the total purchase price to the vendor upon the execution of the SPA being the balance deposit.
After the vendor's lawyer has clear the cheque and returns the executed SPA to us, we can now send the SPA for stamping. The duration to complete this will usually take up to 2-4 weeks.
Redemption Now, let's say we are acting for the vendor and we notice that the property which the vendor is looking to sell is not fully redeemed, which means he still owes a sum of money to the bank from a loan he obtained during the purchase of the property, we then need to request a redemption statement from the bank and forward it to the purchaser's lawyer. The purchaser's lawyer upon receiving the redemption statement will either advice their client to pay for the amount stated in the statement directly to the bank or advise a drawdown from the purchaser's bank if the purchaser is also getting a loan. After the loan has been fully settled, the vendor lawyer will need to prepare the discharge documents and sent them to the bank for execution, this can either be a Deed of Receipt or Reassignment or a Discharge of Charge form depending which category the title belongs to, please refer to my chart above. Subsequently, when we received the original title and discharge documents from the bank, we will need to send it for stamping again. If you think this is a straight-through process, then you are wrong, the bank enjoys rejecting our documents for minor typo error, and this could mean the same documents can be going through and forth a few rounds before it can be finalized. The whole process will usually take up to 4-8 weeks.
Adjudication
There is a compulsory Ad valorem duty as specified under the First Schedule of Stamp Duty Act 1949 to be bear by the purchaser for the sale and transfer of property. This stamp duty is different from the ten ringgit stamping we mentioned in the Execution and Redemption stage, this stamp duty will usually cost the purchaser at least a few thousand ringgit and is being revised every year under the financial bill. The latest rates on stamping the transfer doucments are calculated on a tiered basis as below:
The adjudication process can be performed by inserting the particulars of the Sale and Purchase Agreement and uploading the necessary documents to the https://stamps.hasil.gov.my/stamps/ portal. The officer from the inland revenue will review the case and issue a Notice of Assessment to the purchaser's solicitor, the purchaser's solicitor can then make payment via the same portal and received a Stamp Certificate immediately upon payment.
Presentation of tranfer
The last step to perfect the transfer is the presentation of transfer to the Land Office. The purpose of this step is for the Land Office to issue a new original title under the purchaser's name. We need to be extra cautious on gathering and submitting the required documents to the Land Office because every rejection from the Land Office will incur a penalty to be bear by the lawyer. The Land Office will usually take 2 weeks from the submission date to process the application. After we received the new title from the Land Office, the transfer is now completed, we can then advise the bank or our client to settle the balance purchase price and to arrange for the handover of vacant possession.
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