Conveyancing

An Introduction
Roles of the conveyancing lawyer
• transferring ownership of the property in S&P
• preparing security documents for housing loans
• acting as stakeholders
• abide by timelines
Parties relevant to S&P
• 1) Vendor
• 2) Purchaser
• 3) Vendor's solicitor
• 4) Purchaser's solicitor
• 5) Vendor's financier
• 6) Bridging financier
• 7) End-financier
Vendor
• person(s)/company(ies) that sell(s) the property
• must own the property, if not, no legal capacity
to sell the property
• duty to convey 'clean title' a.k.a unencumbered
• title issued - land office to confirm the registered
ownership
• title not yet issued - developer to confirm the
beneficial ownership
Purchaser
• person(s)/company(ies) that buy(s) the property
• to pay the purchase price as per S&P
• if fails to pay within the stipulated time, the
Vendor has the right to forfeit 10% of the
purchase price that has been paid to the Vendor
Vendor's Solicitor
• to ensure the selling price is received by the V
within the completion date.
• to ensure the clean title delivered to the P's sol
free from encumbrances.
• if the V makes profit out of sale, V's sol has to
file a property gain tax form - Real Property
Gains Tax Act 1976
Purchaser's Solicitor
• to ensure the property is properly conveyed to
the P.
• P's sol to check:
- whether the V is the RP
- whenther the property is free from
encumbrances
- whether there are restrictions in interests
• title issued - conduct land search to verify the V
is the rightful owner of property.
• title not yet issued - developer, the RP of master
title, to confirm beneficial ownership.
• if the property sold to individuals, the P's sol to
include the chain of ownership of the property
in S&P from the V right back to the first owner
Vendor's Financier
• if the V has not fully settled his housing loan and
the property is still charged to the F - title kept
by F as security for loan
• the S&P will involve settling the V's loan - then
the original title can be obtained from V's F
• V's sol has to prepare the DOC for execution by
V's F when V's loan is settled.
• title not yet issued - once V's loan is settled, V's F will
execute DRR
• standard practice - V's outstanding loan (the redemption
sum) is settled from the PP that is to be paid by P.
• P will get a loan to finance the purchase of the property - the
redemption sum for V's existing loan will be settled from the
P's loan
• At the end, V will get his selling price less redemption sum.
Bridging Financier
• is the party that gives the developer a loan to
finance the cost of developing a housing project.
• the loan is known as a bridging loan - it bridges
the gap from the time the developer didn't have
funds to develop the housing project to the time
when the developer sells the houses and
receives proceeds of the sale
End-Financier
• party that provides loans to end user of housing
project, ie Ps, to finance the purchase of housing
units from the developer.
Terminology: Build then sell (BTS)
• BTS - developer to build and complete the building of
the house before it can claim the full purchase price
(PP) from buyer - Schedule I & J
• Upon signing S&P, developer is allowed to collect only
10% of PP.
• The balance of 90% PP is collected after notice of
delivery of VP supported with certificate of fitness (CF).
Sell then build (STB)
• After receiving the first 10% of the PP upon
signing the agreement, the developer then bills
for progressive payments according to the
stages of completion of the house.
• Schedule G & H
Bridging loan
• it is repaid when individual units of property are sold.
• when the P gets a housing loan, his end-financier sol
will write to bridging F to find out the sum payable
(redemption sum) to redeem the P's unit.
• once redemption sum is paid, the bridging F will have
no more claim over the unit.
• redemption sum constitutes part of the PP
Chargee
• the bank or any body to whom the property is
charged as security - usually for a loan
Chain of beneficial ownerships
• in case where title to property not yet issued -
the current ownership has to be established by
tracing an unbroken chain of ownerships right
back from to the first owner.
• developer normally would be the first owner.
End-financing
• loan given to a P to buy property from
developer.
• End-financing - P is the end-user of housing
development
• Part of the housing loan received by the
developer from the proceeds of the sale of
the house is used to settle the bridging loan
Parcel
• Strata Titles Act 1985 defines 'parcel' as a unit in a
subdivided building.
• in practice, it refers to an apartment, a flat or
condominium, which constitutes a unit of property
within a building.
• 'Parcel'- becoz it represents a parcel of air space
above the ground where the boundary is defined by
four walls, the floor and the ceiling, the earth or
land being totally excluded.
Real property
• land and houses - in legal term, real property or
immovable property
• property other than land - personal property or
movable property
Titles
• block title
• separate or individual title
• issue document of title
• master title
• register document of title
• strata title
• land parcel or landed strata title
S&P between developer & individuals
• depends on whether the P buys from a developer
or a V other than the developer eg individuals
• Property bought from a developer -
the S&P is prescribed by the Housing Development

Regulations 1989.
• Property bought from other V - S&P are to be
agreed between the V & P.
Time frame given for completion of contract
• buying from developer - time frame of 24
months (Schedule G & I) or 36 months (Schedule
H & J) from the date of S&P given to the
developer to finish the construction of building
• buying from V who is not a developer -
completion period of the S&P is usually 3
months from the date of signing the S&P
• the P has to get his loan fast to pay PP within 3
months - then the property will be delivered to
him with vacant possession.
• if PP is not paid within 3 months, an extension of
1 month (grace period) is normally given for P to
pay balance of PP & interest payable - 3 + 1
terms for completion
Restrictions in interests
• limitations expressly endorsed on the IDT and the RDT,
which limit the rights of proprietor to deal with the
property.
• eg, proprietor cannot sell his property without obtaining
consent from SA.
• if Strata title - P's sol has to check Form 3 of the title to
see whether there are restrictions on the title.
• restrictions in interests run with the land - such
restrictions bind the present and all future owners
Documents essential in sale & purchase of
property
• S&P - sets out the terms and conditions of sale
• document that transfers the property:
- Instrument of transfer or memorandum of
transfer (MOT) - IDT is available; or
- Deed of assignment (DOA)- title is not yet
issued.
Stamping of documents
• the S&P and the MOT or DOA have to be
stamped - Stamp Act 1949
• S&P - is stamped for RM10
• MOT & DOA - has to be stamped with stamp
duty ad valorem
Adjudication of instruments
• procedure requires all instruments be sent to
stamp office for government's assessment for
the value of the property.
• the government's valuation department will first
assess the market value of the property, then
the stamp office notifies the P of the stamp duty
payable.
• now, adjudication is done online through e-
adjudication
• once adjudication is done, Notice of Assessment
of stamp duty payable will be issued to the P.
• payment of stamp duty must be paid within 14
days of the of the date of the notice, failing
which penalty of 10% will be imposed
Adjudication of DOA
• no title issued - V has assigned it to his F as a
security for loan, so he cannot assign his
property to a P until his loan has been settled
and the bank has reassigned the property back
to him by way of DRR (deed of receipt and
reassignment).
• the date of DRR must precede the DOA that
conveys the property to the P.
• the DOA cannot be sent for adjudication until the
DRR is signed by the V's F.
• practice - to date the DOA the same date as the DRR
• this does not apply to property with titles - the
effective date of transfer is not dependent on the
date of doc but on the date the doc are presented
for registration at the land office.
• So, MOT can be dated before the DOC but doesn't
take effect until the MOT & DOC presented at the
same time.
Real Property Gains Tax (RPGT)
• a tax payable by V when he sells his property at
a price higher than the price that he bought - he
is making a gain on the sale of his property.
• although the V has to pay the tax, both parties
to the S&P have to file their RPGT form with
Inland Revenue department within 60 days of
S&P - s13(1) of RPGT Act 1976.
Foreign buyers
• s433A NLC - non-citizen, companies incorporated
in Msia where 50% or more of the shares are held
by foreigners/foreign companies.
• Part 33(A) NLC - restricts dealings in real property
by non-citizens and foreign companies.
Foreign buyers
• s433B - non-citizens/foreign companies must apply
approval from SA.
• no approval for property that is subject to industrial
use.
• application must be made by the foreign P and not
V.
• each SA has its own rules differ from other SAs.
Foreign buyers
• Foreigners are prohibited from buying property
below specified sums of PP.
• The threshold was RM1million, but starting year
2020, RM600k.
• If buying property more than RM20 million and
above - apply for approval from the Economic
Planning Unit of PM's Department.
Conveyancing documents
• documents that are created in the course of
buying and selling property and in getting loans
from financing institutions
Documents for SPA
Documents for loan