©The Sun
(Used by permission)
By Cheong Yoke Ping
IN this final part. the writer continues to explain the terms and conditions of
the Sales and Purchase Agreement (SPA) and the process of completing the
transaction of a purchase of a Property from a party (“Vendor”) other than a
developer.
Payment of Redemption Sum
Once all the conditions of the Loan have been fulfilled, the solicitors for the
Purchaser’s Bank’s (“Bank’s Solicitors”) will advise the Bank to release the
Redemption Sum to the Vendor’s Bank and obtain the original title and other
necessary documents (Please refer to Part 2 on the 22 Dec, 2006 issue of
Propertyplus).
Sometimes, the Redemption Sum is paid to the Vendor’s Solicitors for its onward
transmission to the Vendor’s Bank. There have been cases where some banks have
delayed in the return of the required documents thereby delaying the completion
of the purchase by the Purchaser. It is quite common to provide in the SPA that
where the Vendor’s Bank does not return the required documents, say, within 14
days, then the Vendor must grant an extension of time for each day of delay
which is in excess of the said 14 days. This means that if the Purchaser’s
Solicitor receives the documents say, 22 days, from the date of payment of the
Redemption Sum, then the Purchaser is entitled to extension of time of 8 days to
pay the Balance Sum without interest.
Presentation of Transfer and Charge (Property with title)
Once the Bank’s Solicitor has obtained the required documents (discharge,
original title and duplicate charge), he will stamp the discharge and the charge
(by the Purchaser in favour of the Purchaser’s Bank) and prepare all the
relevant documents including the stamped Transfer, received from the Purchaser’s
Solicitors, for presentation at the relevant land office or registry.
Presentation is the submission of documents for registration.
After the presentation and land search on the Property, the Bank’s Solicitors
will advise the Bank to release the balance of the Loan (Loan minus Redemption
Sum) to the Vendor.
Assignment and stamping of Loan documents (Property without title)
The Bank’s Solicitor will upon receipt of the R&R and other documents from the
Vendor’s Bank and the Assignment from the Purchaser’s Solicitors proceed to date
and stamp the Loan documents and register the power of attorney (“PA”) granted
by the Purchaser to the Purchaser’s Bank at the relevant High Court. When the PA
has been registered and extracted from the High Court, the Bank’s Solicitors
will advise the Purchaser’s Bank to release the balance of the Loan to the
Vendor.
Real Property Gains Tax (RPGT)
The payment of RPGT by the Vendor, if any, is a standard provision in a SPA. The
Vendor’s solicitor is normally required to retain an amount sufficient to pay
the RPGT, if applicable. The amount payable is based on a decreasing scale from
30% to 5% of the chargeable gain depending on the period between the date of
acquisition and date of disposal of the Property, and this ranges from within 2
years to disposal in the 5th year after the date of acquisition. If the Property
is disposed by an individual Vendor in the 6th year after the date of
acquisition, no RPGT is payable. The Vendor and Purchaser are required to
complete Form CKHT 1 and 2 respectively to inform the relevant authority of his
acquisition of the Property. This Form is normally prepared by their Solicitors.
Vacant or legal possession
The SPA will provide for vacant or legal possession of the Property to be
delivered by the Vendor, upon full payment of the Balance Sum by the Purchaser.
Where the Property is sold subject to an existing tenancy, the name and
particulars of the tenant together with the amount of the monthly rent ought to
be mentioned in the SPA. It is prudent for the Purchaser to obtain a copy of the
tenancy agreement, if any, to check for any onerous terms.
Where the sale is subject to vacant possession, it is the responsibility of the
Vendor to deliver vacant possession. If the sale is without vacant possession
and subject to an existing tenancy, there should be provisions in the SPA for
the assignment of the tenancy and the handing over of deposits. Notice of the
sale should be given by the Vendor to the existing tenant. The SPA should also
provide that the rent paid for the last month of the Completion Date should be
pro–rated as at the date of payment of the Balance Sum by the Purchaser.
In some cases, the parties may agree that the Purchaser may take vacant
possession of the Property prior to the payment of the Balance Sum. Sometimes a
monthly sum is payable by the Purchaser to the Vendor pending the completion of
the transaction. This arrangement ought to be included in the SPA. In such a
case, the Purchaser may be required to pay the quit rent, assessment, service
charges, insurance and other charges of the developer (where applicable). Proper
provisions for this in the SPA will avoid any dispute.
Payment of Outgoings
Outgoings include quit rent, assessment, Indah Water charges, telephone, water
and electricity charges. The Vendor is required to pay for such outgoings
incurred by him prior to handing over possession. The outgoings are normally
apportioned as at the date of delivery of possession. It is usual for the Vendor
to indemnify the Purchaser in respect of the payment of the outgoings. The
Purchaser is advised to check that all payments have been made and to obtain all
relevant receipts from the Vendor. If payments have not been made, the
Purchaser’s Solicitors may make arrangements with the Vendor to deduct any
non–payment from the balance purchase price or obtain payment from the Vendor
prior to release of the balance purchase price to the Vendor.
Conclusion
The process of ensuring the completion of the sale and purchase by the
Purchaser’s Solicitor is a complicated process. It is the responsibility of the
Purchaser’s Solicitor to ensure that the purchase of the Property is completed
within the time frame specified in the SPA. This process starts from the
appointment of the Solicitor until the presentation and registration of the
document of title in the name of the Purchaser or the assignment of the Property
from the Vendor to the Purchaser. However, this can only be completed with the
cooperation of the Purchaser. The Purchaser should be well informed and advised
of the terms and process of the purchase of the property.
Part 1 of this article appeared a month ago while Part 2
appeared a fortnight ago.
The writer is a member of the Conveyancing Practice Committee, Bar Council,
Malaysia www.malaysianbar.org.my
Note: This column is brought to you by the Malaysian Bar Council for your
information only. It does not constitute legal advice. You should therefore seek
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