Concept Involved in Buying and Selling Real Property
- hrplegaloff
- Sep 18, 2019
- 3 min read
Duty of Vendor to deliver property free from encumbrances;-
Caveat Emptor: Duty of Purchaser, Solicitor to make land search
Purchaser’s solicitor has the duty to do due diligence
Caveat Emptor
Duty of Purchaser’s Solicitor to make Land Search
Time Frame given for completion of Contract
In cases of buying property from a developer , time frame is usually of 24 months or 36 months from the date of Sale and Purchaser Agreement is given to the developer to complete the construction of the building
Cases under Schedule G and H contracts, ( sell then build ) P pays the purchase price at each stage of construction as schedule under the schedule payment
Cases under Schedule I and J (build then sell projects) , purchaser pays 10% upon signing and 90% of the purchase price within 21 days from receipt of notice from the developer that the property is ready to be delivered
Cases of Vendor is not a developer, usually period of time is 3 months from the date of signing the Sale and Purchase Agreement
Restriction in Interest
It is a limitation that are expressly stated on the Issue of Document Title which will limit the proprietor in limiting his power in exercising his right upon the property
Restriction in Interest runs with the Land
Meaning the restriction not only runs with the current owner but also the future owner ,
where the restriction in interest is upon the Master Title , it applies to the beneficial owner even though the strata title is not yet issued .
Real Property Gain Tax (RPGT)
it is a tax payable by the vendor when he sells his property at a price higher than when he bought it, thus meanig a gain on the sale of his property
although it is the vendor who has pay the tax , both parties to the sale and purchase transaction have to file their respective property gain tax form with the Inland Revenue department within 60 days of the Sale and Purchasse Agreement as provided undder the Real Property Gain Tax Act
Foreign Buyers
Foreign buyer is defined under section 433A as a non-citizen.
Burden to apply lies with the foreign purchaser and not with the vendor
Foreigners are also prohibited from buying property below specified sums of money
Documents essential in the Sale and Purchase of Property
Two most essential documents for every sale and purchase transaction are:-
Sale and Purchase Agreement wihich sets out the terms and conditions of the sale ; and
Documents which actually transfers the property namely ; Memorandum of Transfer ( where title deed had been issued) and Deed of Assignment (where title has not yet been issued)
Stamping of Documents
The MOT and Deed have to be stamped in accordance with the Stamp Act 1949
Usually RM 10.00 per copy
Adjudication of Transfer
Adjudication is the process where all Instrument of Transfer (Mot or DOA) be sent to the stamp office for the gov assessment of the value of the property , valuation will be made by the (Jabatan Penilaian dan Perkhidmatan Harta) , assessment will be based on the market value of the property first then the Stamp Office notifies the purchaser of the stamp duty payable
Now, adjudication is via online using e-stamps
Once the notis taksiran is out then payment of stamp duty must be madde within 1 month from the date of the notice
Adjudicating Deed of Assignment
Where a property has not been issued its title yet, and the vendor has assigned the property to iit financier, for a loan, he cannot assign his to a purchaser until his loan has been settled and the bank has reassigned the property back to him .
The document to reassigned back the property is called DRR
The date of DRR has to precede Deed of Assignment that conveys the property to his purchaser
Significance: THE VENDOR HAS NO CAPACITY TO ASSIGN HIS RIGHT TO THE PROPERTY TO THE PURCHASER UNTIL THOSE RIGHTS HAVE BEEN REASSIGNED TO HIM BY HIS FINANCIER
- Hence,the DOA cannot be sent for adjudication until the DRR has been signed by the vendor’s financier
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