Conveyancing In Malaysia: The 4 Steps In The Process, And Why It's So Important

The process of transferring a property can be done with the help of a lawyer, or on your own. While you may save money if you DIY, you'll have to learn relevant laws and legal codes governing the conveyancing process, take time to file necessary forms and pay for the requisite fees.
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In a nutshell, conveyancing is the process of transferring a property title from one individual to another.

This usually occurs between a Seller and Buyer, both of whom have signed a sales contract for a piece of land or residential property.

Conveyancing can be carried out in two ways: You can either hire an experienced and qualified conveyancer, or simply do it yourself.

Each method has its advantages and disadvantages. Hiring a conveyance lawyer ensures that you have the best protection under the law, and you get to benefit from related legal advice.

When purchasing property from a developer, the developer will usually have their own panel of lawyers to carry out the title transfer.

If that doesn’t suit you, you can hire your own conveyance lawyer or ask for a referral for one from the bank giving you the mortgage loan.

 

What is the difference between a conveyancer and a solicitor?

In the context of buying and selling properties or transferring property titles, a conveyancer and solicitor functions just about the same, only with minor differences.

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For what it’s worth, a conveyancer/solicitor can help you with almost everything related to buying a house – even contract requirements and council regulations that you’ll need to be aware of if you’re planning to expand/build your property.

Conveyancer

Solicitor

Only works in conveyancing and doesn’t have qualifications in other areas.

Specialise in real-estate.

Can be found at real estate agencies or property advisor offices.

Works for a firm (most of the time).

More affordable fees compared to a solicitor.

Covers different areas of the law hence, might have better knowledge of the law.

 

May have higher fees than a conveyancer.

 

What goes on during the process of conveyancing?

If you’ve decided that you’re better off hiring a lawyer, here are the steps involved.

Step 1: The first step is, of course, to find a suitable conveyance lawyer. You may be able to find one online. Otherwise, you can rely on recommendations from family and friends, or referrals from your bank.

Step 2: Once you have found the right conveyance lawyer, he or she will draw up a draft contract that includes information such as the charges and the required deposits. 

Step 3: The legal process formally begins when the lawyers for both the buyer and seller begin reviewing the legal documents.

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During this time, make sure you’ve gone through the documents yourself, and highlight any concerns you may have. 

While a conveyancing lawyer can help take the stress out of the whole process, it’s always useful to perform checks yourself. This could include running your own background research on the property. 

Step 4: The final step is the preparation of the Sale and Purchase Agreement (“SPA”), its signing, as well as the making of payments.

The conveyancing lawyer’s fees for drawing up the SPA may vary depending on the price of the property, but the general rule of thumb is:

First RM500,000

1% (subject to a minimum of RM500)

Subsequent RM500,000

0.8%

Subsequent RM2,000,000

0.7%

Subsequent RM2,000,000

0.6%

Subsequent RM2,500,000

0.5%

Do take note that these legal fees to pay also include the registration of transfer/assignment and any legal documents further needed to process your SPA. You will also need to pay stamp duty too.

 

How is conveyancing performed without a lawyer?

If you choose not to hire a lawyer, you may need to learn relevant laws and legal codes governing the conveyancing process. You should also take the time to file necessary forms and pay the requisite fees. 

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Here is a general guide for a self-managed process: 

Step 1: The first step is to determine the type of title for the property, which is essentially the legal ownership documents for the property.

Note that there may be certain legal considerations that apply to non-landed properties. For example, condominiums only have master titles upon the point of sale. Subsequently, strata titles are issued to each unit. 

Step 2: Run a simple land title search to check for any encumbrances. The most common type of encumbrance is when the seller has charged the property to a bank, in order to secure the home loan.

Simply put: If the property has been used as a collateral for the mortgage, a process called ‘redemption’ needs to be carried out.

This process involves issuing a redemption letter to the seller, determining the amount that's owed to the bank, as well as agreeing on an expected time frame for the seller to settle the remaining mortgage sum.

Step 3: Following the encumbrance check, you’ll also need to check on the state's restriction on the property title.

The most common state restriction is getting consent from the State Authority or land office of the particular state.

The word 'consent' here refers to the application for permission to proceed with the sale. Every state has a different set of rules or requirements, and it may take anywhere from 1 month from the submission of the application, or 3 months after that, or even more!

conveyancing-process3

Step 4: The next crucial step is to make sure all documentation is in order, as you’ll need to fill up the required forms and documents for submission to the land office.

Among these are the real property gains tax (RPGT) form, and Sales and Service Tax (SST) form. If this step is carried out properly, you shouldn't have much else to worry about.

Step 5:To pay stamp duty on the title transfer document, you’ll need to go through what's known as an 'adjudication' process.

This is basically just a method to determine (or judge) how much stamp duty is payable for the instrument of transfer.

You’ll need to submit the transfer documents to the stamp duty office (also known as the Inland Revenue Board Of Malaysia or LHDN) before receiving further instructions.

The waiting time is about 2 to 3 weeks for completion if the process has been computerised (in certain States), or 2 to 3 months if the process is still manual.

Step 6: The final step is to submit official forms to the land office for them to process the change of ownership. Once the required payments are made and the documents are finalised, the conveyancing process is complete.

 

So… should you DIY it yourself or hire a professional?

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There will definitely be some money involved to hire a professional conveyancer and the amount may prompt you to run in the other direction and do it all by yourself, but hear us out.

When it comes to transferring properties, or any process of conveyance for that matter, there are other organisations or bodies involved than just the buyer and seller.

With these external parties, complications can arise that will take up even more time and effort, and if worse comes to worse, what if there are issues with the buyer too?

Although you can perfectly DIY the process of conveyance yourself as there are no special requirements needed, you will need to take into account if you have the capacity to deal with any potential problems and legal issues.

If not, it’s better off hiring a conveyancer to save you the headache!

Pros

  • Cheaper as you don’t have to pay someone else to do it.
  • Able to work independently and maintain privacy.
  • Handles everything for you, from paperwork to negotiations and settling issues.
  • Especially useful if the property transaction is long-winded and complicated.
  • Reliable and experienced.

Cons

  • Can be difficult to manage if there are many issues or complications.
  • Inexperience can lead to even more problems and time lost.
  • Will need to allocate costs for hiring a professional and may be out of your budget.

Hiring a conveyance lawyer may come at a higher cost, but it’s one that’s worthwhile to ease the process of transferring property titles.

Their professional experience will come in handy to provide you with any advice, and you won’t need to wrack your brain trying to understand and apply complex legal jargon!

 

Want to learn more about signing a property’s Letter of Offer and the Sale and Purchase Agreement? Read our next article here!

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