When it comes to buying or selling a house, there are quite a number of legal documents you’ll realise you need to sign.
After all, the transfer of property from one party to another (some of which can amount to millions of Ringgit), is no small matter!
In this article, we take a look at just ONE of the documents you might encounter if you’re buying or selling a piece of property – the Deed of Assignment.
What Is A Deed of Assignment?
Essentially, the Deed of Assignment (DOA) is a legal document that transfers the ownership of a property from one party to another.
A DOA is also a document that you’ll need to provide if you’re applying for a home loan in Malaysia.
Where Does The Deed Of Assignment Come In When Buying Or Selling A Property?
Apart from signing the Sale and Purchase Agreement (SPA) when buying or selling a property, you’ll also need to sign a Memorandum of Transfer (Form 14A).
However, in the event that the property in question doesn’t have a title, the Deed of Assignment will need to be signed instead. There are two parties involved in a DOA:
- Assignor: A person or company who will be transferring the rights they hold to the property, over to the assignee.
- Assignee: The assignee, in this case, would be the property buyer.
Applying For A Home Loan
For a residential property without a title, the Deed of Assignment is one of the security documents that you’ll need to submit to home loan providers when you apply for a loan.
This document will allocate your rights and interests (in the property) over to your home loan provider for the entire period of your loan.
All the purchasers of the property must sign the Deed of Assignment, as everyone must consent to the property being used as collateral, as well as the transfer of their property rights to the bank.
Other security documents which you’ll need to provide are the Power of Attorney, and the Facility Agreement.
Note that the financial institution may require you to provide other forms of security if it assesses that your financial background isn’t strong enough.
Is There A Stamp Duty For A Deed Of Assignment?
For a Deed of Assignment/Memorandum of Transfer, a stamp duty is imposed which will need to be paid by the party receiving the transfer of the property.
Property Purchase Price/Market Value
Stamp Duty Charges
For the first RM100,000
From RM100,001 – RM500,000
From RM500,001 – RM1,000,000
For RM1,000,001 and above
If the transfer of the property is completed before entering into a SPA with a developer, the 2 outcomes are:
- If the individual title is issued when entering into a SPA: The stamp duty will be calculated based on the property purchase price (as stated in the Memorandum of Transfer and SPA), or the property’s market value.
- If the individual title is not issued when entering into a SPA: Both the SPA and Deed of Assignment will bear a nominal stamp duty of RM10 on each copy of the documents. Once the individual title has been issued, the stamp duty will be assessed based on the property’s market value on the date of the SPA signing, not the date of the Memorandum of Transfer.
What Should I Look Out For In A Deed Of Assignment?
Legal agreements may be lengthy and dreary to read through, but it’s important to not simply gloss over one if you’re going to end up signing it.
Here are some key elements of the Deed of Assignment that you should take note of:
- If there’s more than one owner to the property purchased, the names of all owners must be mentioned in the document.
- Agreed price of the property, if applicable
- Size and description of the property
- Date of transaction
- Signatures of the parties
Additionally, if there are legal terms that you’re unfamiliar with, be sure to clarify what they mean with your lawyer before signing the Deed of Assignment.
Sample Of A Deed Of Assignment
Here are a few pages of what a Deed of Assignment in Malaysia should typically look like:
What’s The Difference Between A Deed Of Assignment And A Memorandum Of Transfer?
The Memorandum of Transfer (MOT) is a legal document that follows the SPA and confirms the actual transfer of the ownership of the property.
It’s used most often for ownership transfers of properties that have the relevant Master Title. Now, let’s think of this scenario like a pie!
Properties, both the landed and high-rises, are built and carry a Master Title (a whole pie). Once it’s sold to individual buyers, unit per unit, the Master Title is divided into multiple, smaller titles (slices of a pie).
Landed properties will carry Individual Titles whereas high-rise units will carry Strata Titles.
Once these high-rise units have been divided, the MOT needs to be filed at the Land Office to transfer the ownership of the unit from the developer to the buyer.
The buyer’s name will then appear on the title deed instead, making them the rightful and legal owner.
Since the MOT is signed once the units are divided and sold, what happens if the developer hasn’t divided the units yet at the time of purchase? That’s where the Deed of Assignment comes in!
Under the Master Title, the property still belongs to the developer. But don’t forget the fine print which reads that the developer “has assigned all their rights of the property” on individual parcels/units over to the buyer!
Based on this, you can head to the High Court to file for a DOA but do note that once the individual or strata titles are released, the process for the official transfer of ownership will proceed as standard.
Another thing to note is that for title-less properties, you are not allowed to transfer, mortgage, or sell the property without permission to do so from the owner of the Master Title (developer, or individual if it’s a subsale).
What’s The Difference Between A Deed Of Assignment And A Deed Of Mutual Covenant?
Perhaps you’ve also heard of the term ‘Deed of Mutual Covenant’ (DMC). Note that this shouldn’t be confused with the Deed of Assignment.
Applying only to strata properties, the Deed of Mutual Covenant is a set of rules that all homeowners agree upon, hence the term ‘mutual covenant’.
Some of these rules can include what types of renovations can be done in your property, as well as the number of pets you can keep in your home.
With a Deed of Mutual Covenant signed, all homeowners are required to adhere to the stated rules. In the event that any of the rules are violated, other homeowners can take legal action against the violator.
Note that the Deed of Mutual Covenant is applicable only for about 12 months before a strata development’s Joint Management Body (JMB) is formed.
Once a JMB is formed, the DMC will be superseded by rules set by the JMB.
In summary, a Deed of Assignment is used to transfer ownership of a property that does not have a title. A Deed of Mutual Covenant binds all the owners in a strata development to a set of rules, before the JMB’s creation.
What’s The Difference Between A Deed Of Assignment And A Sale And Purchase Agreement?
Basically, the SPA is only used once for the transaction of a property between the buyer and the seller, and has no other conditions except for the buying price of the property.
Whereas for a Deed of Assignment, it can be used to transfer contractual rights from one party to the other at any given time.
The DOA will only be needed if the property you’re buying doesn’t bear a title, and it’s commonly used by mortgage lenders such as banks.
Getting a new home soon? Check out this handy guide to the different types of documents involved in the home-buying process.
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