MISTAKES WHEN PURCHASING PROPERTY
LEGAL VIEWPOINT
PRE-AGREEMENT STAGE
- Not conducting proper title search
- Buyer may unknowingly purchase the property with caveats, encumbrances, or ownership disputes.
- With every property transaction, there are usually some forms of restrictions-in-interest that dictate how one goes about conducting the transaction. Some of the more common restrictions to look out for are as follows:
- The title for the property is a Leasehold title;
- There is a charge on the property (usually from a bank);
- The property is designated as a Bumi Lot;
- The property is designated as ‘Malay Reserved’;
- The property may require state consent
- These restrictions may delay the transaction’s initial timeline or outright prevent the transaction
AGREEMENT STAGE
1. Signing any document presented without first reading it or seeking independent legal advice
- Signing letters of offer from banks or vendors without prior advice from a legal practitioner may be detrimental as they may be complicated in nature and may contain terms that you may misinterpret.
- A Loan Agreement and a Sale and Purchase Agreement are complex documents which may require an experienced individual to help you navigate the obligations within said Agreement.
2. Not engaging a proper, experienced Conveyancing Lawyer to handle the transaction
- Not all lawyers are the same; just like how not all doctors are the same. A civil litigation lawyer may not be as well-versed in conveyancing matters as a specialized conveyancing lawyer.
- Buyer may miss out on or overlook key details in the transaction or may not perform certain due diligence tasks as well as a an experienced conveyancing lawyer.
3. Failing to meet the deadlines for exemption applications or payments
- Failing to meet RPGT deadlines for exemption applications may result in additional payments
- Missing the stamping deadline will result in a penalty becoming payable.
4. Failing to include key timelines/deadlines into the Sale and Purchase Agreement
- A property transaction depends on timelines and As such a Sale and Purchase Agreement should ALWAYS include key timelines such as the following:
- Timeline for the payment of deposits;
- Timeline for the loan approval;
- Timeline for the consent to transfer the property;
- Timeline for completion and possibly extension
5. Not including terms and conditions that are designed to protect the buyer’s interests
- The Agreement should also ALWAYS clearly state what would happen should certain events transpire such as:
- Non-payment of the Purchase Price;
- Late Payment Interest;
- Rejection of State Consent to Transfer – the property cannot be sold
- Defect Liability Period (if property is currently under construction)
FINANCING THE PURCHASE AND PAYMENTS TO BE MADE
1. Paying any money directly to the vendor or the agent
- While some people may think that paying money (i.e. deposits) directly to the agent or vendor would be best, it could not be further from the truth.
- It is advisable that all payments be made to the lawyer in charge of the transaction first as stakeholder to protect the buyer. This is because in the event the transaction is cancelled and money needs to be returned, a lawyer is duty-bound to refund the money whereas the vendor/agent would It is to protect the buyer’s interests.
2. Not securing a home loan early on
- The timeline to secure a loan starts immediately following the execution of the SPA. Any delay in getting the loan may delay the completion of the transaction.
- As previously stated, timelines and deadlines are paramount in property Therefore, any loan rejections and delays could result in a breach of terms which in turn will lead to penalties, interest payments and potentially the termination of the transaction and forfeiture of deposits.
- It is advisable then that the buyer contact the bank as soon as a property has been identified to begin the process of pre-screening and the like to see if a loan is available before signing the SPA.
COMPLETION OF THE TRANSACTION
1. Delaying the transfer of the title
- Most SPAs would have a deadline for the transfer of the property to the A delay in the final title change could result in a default in terms of the agreement.
- Furthermore, if you were to miss the deadline for the stamping of the Memorandum of Transfer (MOT), there will be a penalty payable for late stamping and late registration
2. Overlooking other outstanding charges
- Don’t make the mistake of thinking that a transaction is complete just because the purchase price has been While that is usually the case, it is advisable to pay attention to any unpaid charges which have yet to be settled before completion as they may then become the buyer’s responsibility/liability.
- These charges may include:
- Unpaid Ǫuit Rent and Assessments;
- Outstanding Maintenance fees;
- Utility bills
3. Not properly inspecting the property prior to and during vacant possession
- When you are about to collect the keys to the property, it is advisable that you ensure a proper handover. Furthermore, you should consider doing a final inspection of the property before taking the keys even if you have done an inspection prior.
- It is best to pay attention to the following:
- The items and fixtures within the property match the itemized list that is usually included in every SPA;
- That the utility accounts have been transferred to your name;
- That all the keys and access cards given are functional
