When you passed by a beautiful house you may wish to know who the owner of the house is and you may also dream to have a house as beautiful as the one you saw. You may then go round housing estates hunting for your dream house. Can you find one? If you could find a dream house, do you have the money to buy? Is the location of your dream house suitable for you and your family?
To purchase your dream house or a simple house, there are many things that you may need to consider.
1. Approach the Owner and Get Necessary Documents
Once you have set your mind to purchase your dream house, the next thing you may need to do is to approach the owner or the developer of the house and to find out whether the house have a separate title. After that you may do the following things:
i. Request for a photocopy of the title;
ii. Request for a photocopy of the quit rent receipt;
iii. Request for a photocopy of the current assessment receipt.
Above all, make sure that you deal with the owner of the house or his duly authorized agent. You must make sure that the agent has authority in writing to deal with you and you may wish to confirm this with the owner of the house. This is because other persons are not able to make any binding commitment to you. You may even be cheated in your dealing!
2. What happen if the house/apartment has no title?
Yes, you can still purchase, but, before you purchase you need to get evidence of the seller’s ownership, for example, by a copy of the sales and Purchase Agreement (SPA) made between the seller and the developer. If the seller is a second/third hand owner, then, you need to get from him:
- The 1st SPA made by the 1st Owner with the developer;
- 2nd SPA made between the 2nd Owner and seller(if 2nd Hand); and,
- 3rd SPA between 2nd Owner and 3rd Owner seller (if 3rd Hand)
as proof that the seller is the owner of the house/apartment.
3. Find Out Whether The Property Is Still Under a Loan
You may also need to know whether the seller takes a loan to buy the house/apartment (“property”). If the purchase of the said property is still under a loan from a financial institution, you may need to get the seller to provide you with a copy of the bank’s statement of how much he still owes to the bank. This balance unpaid is what we normally called the “Redemption Sum” to be paid to discharge the property from the bank. With the bank’s statement (redemption statement) you will then be able to know how much the seller was still owing to the bank. Another purpose of the of the Redemption Sum is also for you to know how much money you can release to the seller and how much money need to be paid to bank concerned to obtain a discharge of the property from the bank.
4. If It Is An Apartment, Find Out The Maintenance Fees
If an apartment is involved, you may also need to find out the maintenance charge and other charges (normally to be paid every month) that need to be paid to the developer or to the management committee. You should also check with the seller whether the same had been paid up to date and that there are no arrears due to the developer or the management committee.
5. Find Out Whether There Are Any Restrictions Imposed on the Property
At the same time you may need to know whether the property was developed by statutory bodies of the state concerned. If so, the SPA of such schemes normally imposes restrictions on the buyer selling the property, such as, it could not be sold within a stipulated period or without the consent of the government. If apartments are developed by private company, restrictions may at times be imposed, such as you need to obtain the consent of the developer or the private company before the seller can sell the apartment to you. Fees may at times be imposed by the private company or the developer to obtain the consent.
You may also look at the restrictions imposed on the title to the property. You can find out these restrictions from the title or search of the title, in which, normally are print-outs obtained from the Lands Office with payment of a fee. The title may impose conditions such as consent need to be obtained from the state government or from the Lands Office to have the property transferred. Consent to transfer may take months to be approved. To all these, you may not be able to do them and it should always be wise to engage a lawyer to act for you.
6. Hire a Lawyer and Sign Necessary Documents
After you have decided on the property and where the owner is willing to sell, the next step is for your lawyer to prepare a Sales and Purchase Agreement. It is advisable for you to have your own lawyer rather than a common lawyer to advise you on the terms of the sales and purchase of the property.
- Sales and Purchase Agreement;
- Memorandum of Transfer
- Caveat Form and Withdrawal of Caveat Form
- Statutory Declaration (may be required depending on circumstances of the transaction)
- CKHT form (this form is required to be submitted by Vendor and Purchaser to the Inland Revenue Board Malaysia;
- Deed of Assignment (if title yet been issued).
7. Registration of Title
The process involved in getting you registered as the owner of the property (in cases where title is issued) are as follows:
- Both seller and you as buyer have to sign Memorandum of Transfer;
- Lawyer has to send the transfer form to Stamp Office for adjudication to ascertain how much stamp duty is to be paid on the property;
- Stamp Office then informs the Valuation Department of the transaction and the Valuation Department will then value the property and informs Stamp Office of the valuation.
- Stamp Office then issues Notis of Taksiran to the lawyer. Buyer is normally given three to four weeks to pay stamp duty failing which, a penalty would be imposed.
- The lawyer then has to collect from you as purchaser the stamp duty and to pay on your behalf the stamp duty to the Stamp Office. Stamp duty may be payable in equal share between the Purchaser and the Vendor depending on the arrangement between them. This may take about a week for the Stamp Office to return to your lawyer the duly endorsed form.
- After the transfer form been stamped, your lawyer will then need to present the transfer form to the Land Registry/Office for registration. It is only upon presentation of the transfer form that will then become the registered owner of the property purchased.
The whole process used to take several months, but, in Sarawak, this may also take about 2-3 months. This depends very much on the Lands Office concerned before the physical title could be returned by the Land Registry/Office. However, with the recent implementation of computer system in all Lands Office throughout the country, this process had been significantly shortened.
In the event that a loan been obtained to finance the purchase of the property by you, the title would then be sent to the bank and if this be done, you then get a copy of the title from your lawyer for your record.
Here are another 4 important things for you to take note.
1. How to calculate the stamp duty?
For the transfer/assignment, if no individual title is issued, based on the current adjudicated value by the Stamp Office, the stamp duty payable should be calculated as follows:
- On the first RM100,000.00, the percentage duty is 1% equivalent to RM1,000.00
- On the following RM400,000.00, the percentage duty is 2% equivalent to RM8,000.00
- The following RM500,000.00, the percentage duty is 3% and so on.
Stamp duty on a charge is RM5.00 per RM1,000.00 or part thereof of the loan amount, for example, if the loan is RM100,000.00 the stamp duty is RM500.00 on the original and per copy of the document thereof is RM10.00.
2. How the Assessment of Stamp Duty by Valuation Office be made?
The assessed value is the value assessed by the Valuation Office and normally this is based on the purchase price or the market value of the property, whichever is the higher. So it is also advisable for you to value the property by a qualified valuer before purchase made. This is to ensure that you may not wish to over value the property as stamp duty payable may depends on the purchase price, which may be higher than the current market price.
3. Appointment of Lawyers
From our experience, many purchasers had been told by bank officers for reasons known to themselves that you can only engage the bank’s panel lawyers to act for you in the transactions, whether it is a purchase from a developer or from an individual. This is not correct and should not be encouraged. This is against the right of free choice. After all, you are the one who has to pay for the legal fees, etc. All are to be borne by you.
How about if the developer or individual tells you that you need not pay any legal fees at all and or the stamp duty to be borne by them?
Do not be taken by what they told you. The best thing is you insist to have your own lawyer who can independently advise you on the transaction to the terms that you could be satisfied. If you go to the lawyer preferred by the developer or the individual, the lawyer may not listen to your terms. This can land you in trouble as the lawyer will most probably receive instructions from the developer or individual alone on the terms of the SPA without seeking your instructions or views. Once signed, you may spell trouble and may not be able to plug your problem out from the SPA.
In appointing a lawyer, you should know that the person is a lawyer and that he has a valid practising certificate for the current year. You may inquire this from the local Bar.
When you want to purchase a property, you may need to budget out what you may need to pay your lawyer as his fees and disbursements. The fees for your lawyer are governed by the law and the lawyer could not give a discount on the scale fees. To do so would make him liable to disciplinary action and he could be barred from practice. So, it is not correct for you being told that a lawyer so and so could give a discount from the legal fees.
So, when buying a dream house, be sure that the house suits your budget and that you are able to have the property registered in your own name because there are cases when a property was bought the title was still in the name of the developer and no transfer could be done because the developer had not comply with certain requirements imposed by the relevant authorities. Sometimes, the property concerned was subjected to court proceedings caused by disputes between the landowner and the developer.