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A Purchaser's Responsibilities
20/10/2006 The  Sun LAW & REALTY By Loh Wann Yuan

ONCE a purchaser has engaged a lawyer to act for him in a purchase transaction, his solicitor will act accordingly to protect the purchaser's interest in the transaction. The purchaser must not assume that his lawyer will do everything "under the sun" for him as there are some matters relating to the purchase transaction which must be attended to by the purchaser himself and are out of the scope of responsibility of the lawyer. Most of the matters that require the action of the purchaser are during the pre-contractual stage. On these matters it is important that the purchaser gives to his lawyer clear and detailed instructions so that proper provisions can be made for in the sale and purchase agreement.

Inspection of the physical condition of the land

A purchaser's lawyer is not expected to inspect the physical condition of the land to be purchased by the purchaser. The purchaser must inspect the location and condition of the land, himself. For example, a purchaser may not want to buy a land with high tension cables laid across the land or to buy a land which is now submerged under the sea!

The purchaser may be introduced by a property agent to buy land A which has been viewed by the purchaser, but the copy of title deed given to his solicitor to conduct the necessary search and enquiries may be for land B instead. Thus, the purchaser may wish to appoint a land surveyor to confirm the location and physical condition of the land he is about to purchase. If there is a building erected on the land, the purchaser must ascertain for himself the state and condition of the building and the defects thereon. He must instruct his solicitor whether he is buying on an "as is where is basis" or whether he requires rectification works to be done by the vendor before completion of the transaction.

It is also important for the purchaser to inform his solicitor during the pre-contractual stage: -

Whether the purchase of the land is based on a per-square foot basis?
Whether a land surveyor needs to be engaged to confirm the area of the land and who has to bear the costs for the survey?
What if there is a discrepancy between the area of the land surveyed and the area as stated in the qualified title?
Whether the purchase of the land is with vacant possession?
Whether the purchase of the land is subject to any conversion and change of conditions or restrictions in the title?

Arrears or non-payment of the charges for water, electricity, sewerage and telephone service

It is prudent for a purchaser to ascertain for himself whether there are any arrears or non-payment of the charges for water, electricity, sewerage and telephone service supplied to the land especially when the land has been leased or tenanted before. If the arrears are of a substantial amount, the purchaser must instruct his solicitor to provide for deduction from the purchase price in the sale and purchase agreement.

Costs Fees and Expenses

Generally a purchaser is liable to pay legal costs and expenses including stamp duty and registration fees. If the purchaser requires a loan from a bank to finance the acquisition of the land, he must inform his solicitor. He must also budget for payment of legal costs and expenses for the purchase transaction and the loan transaction.

Loan

A purchaser who needs a bank loan to finance his acquisition must take immediate and necessary steps to apply for such loan and obtain the approval from the bank as soon as possible. Once his loan has been approved, the purchaser must ensure that the bank instructs its solicitor to prepare the security documentation.

Some lawyers may assist the purchaser by recommending him to apply to certain banks. However, the application for a loan must be made by the purchaser himself, and the purchaser must bear in mind that there is no guarantee that his loan will be approved or that he will be granted the amount of loan applied for, or that his loan will be approved in time for him to complete his acquisition without having to pay late payment interest to the vendor for an extension of the completion date.

Payment of purchase price directly by purchaser to vendor

Once a purchaser has confirmed that he wish to go ahead and purchase the land, he should not pay any monies directly to the vendor or to an estate agent, or sign any agreement or option to purchase the land, until after he has had a chance to consult a lawyer and his lawyer has advised him that it is proper for him to do so.

He should wait until his lawyer has had a chance to conduct a search and preliminary inquiries on the land. For example, if the land is still charged or assigned to a bank for a loan granted to the vendor or some other borrower, it is important to ascertain that the amount owing to the vendor's bank is not more than the purchase price. The vendor's liability to pay real property gains tax, if any, should also be taken into consideration before making any payments to the vendor.

The writer is a member of the Conveyancing Practice Committee, Bar Council, Malaysia www.malaysianbar.org.my.

 

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