Hello how are you! Hope everyone is healthy and employed during this pandemic.
Last September I uploaded some photos of my flowering cactus. Well since then, the same plant has been blooming every few months. Today I want to share something special because it bloomed three flowers at the same time!
Behind the flowers you can see two small pups that have started growing for a few months now. Maybe at the end of this year I’ll pull them off and put them in their own pot.
I was in the hot sun when taking the photo above so the exposure is a bit low.
That little pink part under the left flower is a flower stalk from a previous flower that already dried up.
Recently I’ve purchased a house in Petaling Jaya via the subsale market (subsale means I bought it from another owner, not from developer).
It was so difficult for me to find out how the property transaction process works in Malaysia or what happens after I sign the SPA, so I am sharing my experience here in the hopes of helping others.
For my house there was an extra complication. The owner passed away and there were some additional procedures for buying a property when the registered owner had passed away.
Disclaimer: The procedures here may only apply to Selangor for freehold, non-bumi residential properties so please check with a legal expert if you have a different scenario. I only share from what I remember so I may have missed something.
Before you buy the house, there’s a few things to consider.
As a buyer you don’t want to buy a house with problems that either cost a lot of money to fix, or problems that cannot be fixed at all. If you are a serious buyer, you can ask the agent to let you inspect the house until you are satisfied. You might want to bring along a trusted contractor to inspect together with you. But please don’t go and abuse this by inconveniencing the seller with multiple visits. There is no after sales warranty and the seller will not be responsible to fix any damages discovered after you take possession of the property.
You should ask the seller to show you the house title to prove that they are the real owner. If you have any other concerns, you should ask it now before starting the whole transaction. It is unfair to delay the transaction process with questions and concerns AFTER the transaction has begun.
A note about making an offer : usually sellers will expect some negotiation to happen, so they will list the price higher. You need to do some research to see prices for similar houses around the area. You might want to counter-offer something lower than the listed price especially if the house will require some refurbishment or renovation to make it “acceptable” to you. It can be a fair and respectful negotiation until both sides are happy.
Obtain Court Executor Order
This is for cases where the seller has passed away.
There must be an official legal document from the court that identifies the legal executor. Only the legal executor can sign the sales transaction documents and can receive the payment.
Sign Agreement to Purchase
Vendor and Buyer
This is an agreement prepared by the real estate negotiator.
Upon signing, the buyer pays 2%-3% as an earnest deposit and it is usually issued to the real estate company as their commission.
Buyer can add some special clauses to this agreement. For example, add more days to obtain bank loan approval. Make sure there is a clause to get your money back if unable to get a bank loan.
Before paying any money, please check that the real estate company exists, and the real estate negotiator is licensed and registered : http://search.lppeh.gov.my/
If possible, ask for a copy of the title to prove that the seller is really the legal owner.
Find Solicitor for SPA
Vendor and Buyer
Both buyer and vendor can now go and look for a solicitor (specializing in property) to handle the sales & purchase process.
Buyer and seller might want to share the same solicitor to save cost but this is not advisable because you want your own interest to be protected.
You can try to ask a few legal firms to give you a quotation and choose the best one. They have a fixed rate for legal fees but they can usually give a discount.
They will also quote you an amount for stamp duty and that is non deductible.
It is important to find a solicitor that is responsive, professional and not always too busy to entertain you – you will need to deal with them a lot.
If you already know which bank loan you are interested to take, you can also ask if the SPA solicitor is a bank panel lawyer.
You will need a solicitor to handle the bank loan process and if using the same law firm you can ask for more discount.
Please read further about the bank loan legal process below, there is something important you need to take note of.
The seller’s solicitor is supposed to prepare the Sales & Purchase Agreement (SPA). In my case, the seller was unrepresented so my solicitor prepared the SPA.
If either vendor or buyer have any special clauses they want, they can ask the solicitor to put it in the SPA.
The solicitor usually has a standard template they use, so you can modify it after looking at the draft.
As a seller, you want to protect your ownership of the property until you receive the money. And you also want to make sure you are not liable for any future damages or claims after handing over.
As a buyer you want to protect your money until you get the property.
The vendor and buyer’s solicitors will then negotiate among themselves to make sure the SPA is fair to both parties.
Depending on the clauses in Agreement to Purchase, you may have 14 – 21 working days to get the SPA signed.
Getting a Bank Loan
If you are buying the house with a mortgage, you will need to get a bank loan approval while waiting for the SPA to be finalized.
If you are a serious home buyer then you should already have researched about which home mortgage products you are interested in before buying a home. Otherwise you won’t have much time to make a decision!
You must know how much you are borrowing exactly and what is the loan tenure you want.
You can ask your agent or friends to recommend someone but I just called my nearest bank branch.
Banks might give a better interest rate compared to what is advertised, especially if you are borrowing a large sum. I heard some friends say even different branches of the same bank can give different rates, but I never verified this.
Usually you will need to give proof of income like bank statements, payslips, EA Form and EPF statements. They will check CCRIS to see your credit history so make sure your credit is clean!
My suggestion is to get at least 2-3 offer letters from different banks. You are not obligated to sign on the spot when you get the offer letter.
Please read all the terms and conditions and fine print carefully to make sure the loan offered is exactly what you wanted.
Once you decide, then you can go back to the bank and sign the loan offer letter. When signing you will usually have to pay some processing fees.
There will be fines or penalties if you change your mind after you sign the offer letter. So please sign only after you are very sure.
You will also need to choose a lawyer from the bank panel of lawyers.
Hopefully you can choose one with a convenient location to you. You will need to pay the bank loan legal fees, so if you want you can ask the bank for a few choices, call them up and see which one gives you the best price.
You might need to get an MRTA/MLTA at this stage. If you know you have some medical issues, please inform the loan officer. Ideally you want to get the medical checkup done as soon as possible as you have a limited time to get the SPA signed.
Signing the SPA
Vendor and Buyer
When the SPA drafts are agreed by both parties, it’s time to sign. Usually the buyer signs first.
Meet with your solicitor and make sure you bring your MyKad.
As a buyer you will need to pay the balance of the deposit to make up 10% of payment. So if you paid 3% as earnest deposit, you will need to pay 7% now. If you paid 2% as earnest deposit then you need to pay 8% now.
This balance of deposit is given to the seller (or seller’s executor).
You will also need to pay the stamp duty and legal fees. So be prepared to write some large cheques on this day.
Your solicitor should go through each page and each section of the SPA together with you and you should understand all the clauses.
The seller will then sign the agreement and receive the deposit cheque.
Signing the bank loan agreements
After signing the SPA you will need to sign the bank loan agreements.
It is important to know that residential mortgage loan agreements are non-negotiable. Banks will have a standard loan agreement and you cannot ask the lawyer to change any clauses.
The loan agreement will be heavily skewed to protect the bank’s interests and there’s nothing you can change about it, except to go to another bank.
So, even though you are paying the lawyer for the loan agreement, they do not represent you but they are representing the bank.
To me, as long as you pay your monthly loan installments then all is good. Once you don’t pay, all sorts of scary things can happen.
You will need to pay the loan legal fees in full at this signing.
If you are taking a bank loan, the bank will usually engage a valuation company to make sure your property is really worth the amount you are taking mortgage for.
For example, you can’t collude with the seller to increase the price of the house just to get a larger margin of bank loan.
The bank will choose from their panel of valuation companies.
Buyer will have to pay for it and you can usually ask for a discount. You can ask for a copy of the valuation report.
Obtaining Court Order for Sale
In my case, the executor had to apply for a court approval before they are allowed to proceed with the transaction.
This takes a few months and please follow up with your lawyer periodically to make sure there are no roadblocks.
The court will give an order which grants the executor permission to sell to you (the buyer) at a specific price. It also orders the executor to divide the proceeds of the sale to the beneficiaries.
As a buyer you will want to have a certified true copy of this court order.
In my case I had to give an additional document which is the court order for sale.
If everything is approved, you will get the money credited in your bank account.
After the SPA is signed, and court order is obtained if necessary, the legal firm will start to kick off the procedures to get the property transferred to the buyer’s name.
If the vendor still has a bank loan, then the buyer’s bank will need to settle with the seller’s bank to redeem the property.
After the redemption is done, it is time to apply to the land office to have the title transferred to your name.
This process will take a few months. If you are the seller, please make sure you make prompt payments for cukai taksiran, cukai tanah, utility bills and JMB maintenance bills in order to avoid unnecessary delays.
If you are taking MRTA from the bank, you must chase them to make sure the MRTA is approved. Otherwise it could delay the disbursement of the loan.
Personally I took up a life insurance from Prudential that has the same coverage as MRTA. But my bank still asked me to take up a minimal MRTA (like RM500 coverage) in order to qualify for a better loan interest rate.
Bank and Buyer
After the title is transferred to your name, your bank will put a caveat on the title, which means you cannot sell the property or mortgage it to any other party without the bank releasing their caveat.
When the bank is satisfied that everything is in order, they will release the loan amount to the seller’s solicitor.
As the buyer, you will have to pay 90% of the purchase price on this day. If you got a 90% loan then it’s no problem. Otherwise you will need to pay the remaining amount (maybe from EPF Account 2 Withdrawal).
For example, if you are taking a 70% loan, then you will need to pay the balance 20%.
After the bank pays out the money, you are now responsible to start servicing your monthly installments.
Vendor and Buyer
The vendor is supposed to make sure the property is in the same condition as when the SPA was signed (this clause should be in the SPA). Remember there could have been few months between the signing of SPA and the handover so there’s potential for things to go wrong!
The vendor is also supposed to deliver the property vacant. Meaning they should clear all the furniture and personal items before handing over to you. The exception is if the buyer and seller have already agreed to leave the old furniture and items.
As a seller it is important to take all your valuables. After you handover the key, you are no longer allowed to claim anything in the property.
The buyer’s solicitor will usually calculate the payment of utility bills up to the date of hand over. This is called apportionment. Usually the seller will pay the buyer some money to cover part of the next utility bill payment.
Once the buyer gets the key, they are finally the new owner of the property! They can go and move in to the property immediately if they wish.
It took us almost 7 months to complete our purchase transaction.
Change Owner Name
The new owner will need to go and update the ownership information in all the utility companies.
TNB : it’s really easy and I love it because you can do everything online including paying the deposit.
Indah Water : also easy, send email to firstname.lastname@example.org with a copy of the SPA.
MBPJ : visit their nearest office.
Syabas : visit their nearest service counter
Remember to obtain original copies of all loan documentations like SPA and loan agreement wherever possible. You can also ask your solicitor to prepare certified true copies in case you need them in the future.
Remember to update your correspondence address with all the companies you deal with, especially banks, insurance and government departments. We visited the district post office in Kelana Jaya to ask them to forward any mail from our old address to our new address.
Don’t forget to set aside some budget for repairs and refurbishment!