The property buying process can either be an easy or complicated depending on your property knowledge.
Previously covered on PropertyGuru were the;
- Guides to planning your property buying budget
- Selecting the right property
- Signing the necessary legal documents for a purchasing commercial properties
- Signing the necessary legal documents for a purchasing a residential property
This final guide will coach property buyers on what to expect upon signing off the aforementioned documents.
Understanding Residential & Commercial Development For Subsale (Second Hand) Properties
For subsale property buyers, upon signing the SPA, Letter of Offer and Loan Agreement, the next step for a purchaser to make is to complete making the final payment for their purchase.
They will need to:
- Pay the balance of their legal fees
- Complete payment of their Stamp Duty and other charges
Upon completion of payment, the property buyer’s lawyer will then ensure that the property’s outstanding fees are all fully paid up.
An example of such fees include the Assessment Fees, Quit Rent and various bills such as the Indah Water bills and so forth.
Upon ensuring that all the payments have been duly made, the buyer’s lawyer will then transfer the balance of the payment to the seller’s lawyer.
Following that, each party’s respective lawyer will prepare the necessary documents to acknowledge the completion of payment and to transfer the property over to the new owner.
The buyer’s lawyer will follow up on the SPA, ensuring that everything is being paid within the stipulated timeframe – an important factor to avoid late payment charges on the buyer’s side.
Vacant Possession And Keys – Subsale Property
By the deadline of the SPA, all the necessary documents should have been prepared, signed, and monies passed over to the correct parties.
The seller’s lawyer would have also produced the Agreed Apportionments.
With this document, the buyer’s lawyer will be able to identify which bills have already been paid.
The Agreed Apportionments will also include details of sinking fund, water and management fees payment among others.
Upon ensuring that everything is in order, the seller will handover the keys to the property to the new owner. This process is also known as the “handover of keys”.
Both parties’ lawyers would have met to complete the transfer process.
Upon receiving the keys, the new owner, aka the buyer, should also ensure from his end that all outstanding fees on the property has been made.
This includes management fee payments, various utility bill payments, quit rent and assessment fees.
Residential & Commercial Development – New Development
As mentioned above, buyers of new property developments will follow a slightly different procedure. Depending on the completion of the development, the unit may not be ready for handover yet.
Upon signing the Letter of Offer, Loan Agreement and SPA, they will still need to complete all their payments. The fees that they will still need to complete payment on is as below:
- Balance of their legal fees
- Complete payment of their Stamp Duty and other legal charges
Following this, each party’s respective lawyers, the purchaser and the developer’s, will prepare the necessary documents to acknowledge the completion of payment.
This is however where the similarities end.
When purchasing a property from a new development, the purchaser will most probably be using the developer’s lawyer as well; but in a subsale transaction, the buyer will appoint their own lawyer.
While some of the more seasoned property buyers will opt to use their own lawyer when purchasing a new development, many still prefer to use the lawyer provided to save on cost.
The next difference would the fees that need to be paid. As of Q3 2019, developers are still offering many freebies in lieu of the weak market sentiment.
Among some of the freebies are free legal fees, free Stamp Duty and in some cases even a “rebate” that will be given back to the purchaser after the SPA is approved.
In these cases, the fees that the buyer of the new developments may have to bear will be significantly lesser than it would have been had it been a subsale property.
In selected cases, the buyer will need to pay for the fees with their own funds first, but will get the “refunds” from the developer themselves at sometimes a much later date – in some cases, upon completion of the development.
These fees are occasionally given names such as “loyalty fees” and “moving in rebate”.
The next difference is that the balance of the payment for the property can be paid in stages, unlike in a subsale property purchase where the buyer will have to pay the full amount immediately.
The amount that needs to be paid will depend of the completion rate of the development.
For example, at a 10% completion rate, the purchaser may only need to pay 10% of their loan amount. The bank will then release 10% of the developer’s loan to them.
If however the development is already at a high stage of completion such as at 90%, the bank will immediate release the full sum to the developer as of their completion stage.
Vacant Possession And Keys – New Development
Upon completion of the development, buyers will still not be able to move in until the development has at least gotten its Certificate of Completion and Compliance (CCC) to ensure its safety.
This process may take up to 6 months.
Thereafter, the process of transferring the unit’s name from the developer’s to the owner’s will begin gradually. The process is also known as the Memorandum of Transfer (MOT).
This guide concludes the property buying process. To view the previous steps, you can visit the below:
- The complete guide to purchasing a new, subsale or commercial property in Malaysia
- Finding the best property for investment in Malaysia – New, Subsale or Commercial
- Learn how to prepare mortgage loan documents
- Understanding commercial property loans and how to get the loan
- Signing the Letter of Offer, Sales & Purchase (S&P) and Loan Agreement
Below are the other useful information you will need when purchasing a new home:
- Understanding the differences of freehold, leasehold and bumi lot land titles
- Payment schedule of new and under construction property project
- Loan documents for buying a property
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