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Understanding an SPA - (Part
2)
22/12/2006 The Sun - Law & Realty By Cheong Yoke Ping
In this Part 2, the writer continues to explain some additional terms and
conditions of a normal and typical transaction relating to the purchase of a
Property from a Vendor, other than a developer.
Memorandum of Transfer or Deed of Assignment
When the Vendor signs a SPA to sell his Property, he is normally required to
simultaneously sign a Memorandum of Transfer (Form 14A) (“Transfer”), in a
case of a Property with title, or a Deed of Assignment (“Assignment”), in a
case of a Property without title.
The Transfer or Assignment is usually deposited with the Purchaser’s
Solicitor as stakeholder. Sometimes the Assignment is kept by the Vendor’s
Solicitor as stakeholder until the Purchaser bank’s (“Purchaser’s Bank”) has
given a written undertaking to the Vendor to release the Loan to enable the
Purchaser to complete the transaction.
Developer’s consent
In a case of a sale of Property without title, it has been the practice to
require the Vendor to obtain the consent of the Developer to the sub-sale of
the Property from the Vendor to the Purchaser (“Developer’s Consent”). The
Developer will normally grant its consent when the conditions stipulated by
the Developer are complied with, including the settlement of an
administrative fee, all outstanding charges due in respect of the Property,
and receipt of certain documents, e.g. the Receipt & Reassignment (“R&R”)(if
applicable).
Delivery of documents by Vendor
The SPA will provide for the Vendor to deliver the following documents upon
or after the signing of the SPA and payment of the Deposit of 10%:
• Duly executed Transfer or Assignment
• Quit rent and assessment receipts for the current year
• Certified copy of Vendor’s NRIC, Income tax reference no. and place of
assessment, if any
• Redemption statement of the Vendor’s bank.
The purchase of a Property without title usually requires the Vendor to
produce all documents tracing the transactions from the original purchaser
to the Vendor, including all SPAs, loan agreements, Assignments and R&R.
Adjudication of Transfer or Assignment and Receipt and Reassignment (“R&R”)
Adjudication is the process of determining the stamp duty payable on the
instrument of Transfer or Assignment. Stamp duty is payable on the relevant
instrument based on its consideration or market value, whichever is higher.
The Transfer or Assignment is submitted by the Purchaser’s Solicitor to the
Pejabat Duti Setem, Lembaga Hasil Dalam Negeri, and this will involve the
valuation of the Property by the Valuation Department. Nowadays, the
adjudication process has been computerised in some States, and computerised
adjudication will normally take 2-3 weeks to be completed. The manual
adjudication will take 2-3 months.
Once the Purchaser’s Solicitor has received the Stamping Notice (Notis
Taksiran) from the Pejabat Duti Setem, he will proceed to stamp the Transfer
provided that the Purchaser has deposited the correct amount of stamp duty
with him. The stamp duty is usually deposited earlier by the Purchaser to
avoid any delay in the payment of the same.
The ad valorem stamp duty must be paid within 30 days of the date of the
notice, failing which, a penalty is chargeable.
Unlike a Transfer, an Assignment will not be dated or sent for adjudication,
soon after the date of the SPA. Where the rights over the Property have been
assigned by the Vendor as security to the Vendor’s Bank, such rights have to
be reassigned by the Vendor’s Bank to the Vendor by way of the R&R. The R&R
is to be signed by the Vendor and the Vendor’s Bank.
Once the Redemption Sum is paid by the Purchaser or the Purchaser’s Bank, as
the case may be, and a copy of the R&R is received by the Purchaser’s
Solicitor from the Bank, the Purchaser’s Solicitor will date the Assignment
and submit the Assignment for adjudication and subsequent payment of ad
valorem stamp duty. (This is one of the reasons why the purchase of a
Property without title takes longer to complete than a Property with title).
Based on the Purchaser’s Solicitor’s earlier undertaking to the Purchaser’s
Bank, he will then forward the duly adjudicated and stamped Assignment to
the Purchaser’s Bank’s or its Solicitor.
Redemption Statement from Vendor’s bank and release of documents
The Vendor’s Solicitor or the Purchaser’s Solicitor (in a case where the
Vendor is not represented) will write to the Vendor’s Bank for a redemption
statement, which will set out the amount owing by the Vendor (“Redemption
Sum”). The Vendor’s Bank is usually requested to furnish an undertaking to
refund the Redemption Sum in the event that (a) the discharge of the
Vendor’s Bank cannot be registered for any reason (for Property with title)
or (b) the R&R or the Assignment cannot be perfected for any reason.
The Vendor’s Bank is also required to give to the Purchaser or the
Purchaser’s Bank a letter of undertaking that upon the receipt of the
Redemption Sum by the Vendor’s Bank:
(1) it will release the original title, duplicate charge and instrument of
discharge to the Purchaser’s Solicitor (in a case of Property with title);
or
(2) it will deliver the duly executed R&R, original loan documents and other
documents in its possession (in a case of Property without title).
Vendor’s undertaking to refund
The Vendor is usually required to furnish a written undertaking to the
Purchaser’s Bank to refund the Loan in the event that the Transfer cannot be
registered for any reason or in the event the Assignment cannot be perfected
for any reason. This undertaking is to be delivered within 7-14 days,
failing which additional time may have to given to the Purchaser to pay the
balance purchase price without interest.
Part I appeared in the Law & Realty
column a fornight ago.
The writer is a member of the Conveyancing Practice Committee, Bar
Council, Malaysia www.malaysianbar.org.my. |
