Sale and Purchase of Houses
Source: The Malaysian Bar
1. Information which a buyer should obtain when
buying a house
1. Does it have a separate title?
2. Take a photocopy of the title.
3. Get a photocopy of :-
(a) current quit rent receipt;
(b) current assessment receipt.
4. Make sure you deal with owner of house or his duly authorised agent. (such
authority should be in writing). Any other person will not be able to make
any binding commitment to you.
5.1. If the house/apartment does not have any title, then get evidence of
the seller's ownership i.e. a copy of the Sale & Purchase Agreement (SPA)
made by the seller with the developer when he purchased the house/apartment.
5.2. If the seller is a Second/ Third hand owner, then he would have to give
(a) 1st SPA made by 1st owner with developer;
(b) 2nd SPA made between 1st owner and seller, (if 2nd hand); and
(c) 3rd SPA between 2nd owner and 3rd owner seller, (if 3rd hand).
as proof that the seller is the owner of the house/apartment.
6. Did the seller take a loan to buy the property?
For most cases, the answer is "yes". In such a case, you should get the seller
to provide you with the bank's statement of how much he still owes the bank
(redemption statement). With the redemption statement, you would know how
much money you can release to the seller and how much is to be paid to his
bank to obtain a discharge of the property from the bank.
2. Information relevant to apartment
1) Maintenance and other charges that need to be paid to developer/management
committee. You should check that seller is up to date with his payments and
there are no arrears due to developer/management corporation.
3. Housing Schemes that are developed by Statutory bodies e.g.
Penang Development Corporation (PDC), Perda, PKNS, etc
1) The SPA of such schemes may have restriction on the buyer selling the property
i.e. it could not be sold within a stipulated period or without the consent
of the government.
2) The title to the property may have restrictions. (the restrictions could
be read from the title or search of the title) e.g. property cannot be transferred
or charged without State consent.
3) The consent application may take a few months to be approved.
4. Documents you need to sign
1) Sale & Purchase Agreement;
2) CKHT form (form required to be submitted by Vendor and Purchaser to Inland
Revenue Board Malaysia
3) Stamp Duty form;
4) Transfer form 14A. (If title is issued);
5) Deed of Assignment (if title is not issued).
5. The process involved in getting you registered as the owner of the
property (in cases where title is issued)
1) Both seller and buyer sign transfer form 14A.
2) Lawyer sends transfer form to Stamp Office for adjudication to ascertain
how much stamp duty is to be paid.
3) Stamp Office then stamps 'transfer form' for a nominal value of RM10.00
and returns transfer form to lawyer.
4) Stamp Office then informs Valuation Department of transaction. Valuation
Department then values property and informs Stamp Office of valuation.
5) Stamp Office then issues PDS form to the lawyer. Buyer is normally given
three (3) to four (4) weeks to pay stamp duty failing which, a penalty would
6) Lawyer collects stamp duty from purchaser and proceeds to stamp transfer
form. It may take about a week for the Stamp Office to return the lawyer the
duly endorsed form. After stamping transfer form, lawyer presents the transfer
form to the Land Registry/Office for registration. On presentation, you would
be the registered owner of the property. However it may take several months
(depending on which Land Office) before the physical title is returned by
the Land Registry/Office. With the computerization process recently implemented
in all Land Offices/ Registries in the country, the process is expected to
If you obtain a loan from a bank to buy the property, the title would be sent
to the bank. You should get a photocopy of the title from the lawyer for your
6. How is stamp duty calculated?
For the transfer/assignment (if no individual title is issued), based on the
adjudicated value by the Stamp Office:
Amount charge (RM)
On the First
On the Following
Stamp duty on a Charge is RM5.00 per RM1,000/- or part thereof of the loan
amount e.g. Loan of RM100,000/-, stamp duty is RM 500/- on the original. The
stamp duty per copy of the document is RM10/-.
The assessed value is the value assessed by the Valuation Office based on
the purchase price or the market value of the property, whichever is higher.
7. Appointment of Lawyers
1. You have the right to appoint a lawyer of your choice to act for you in
any transaction whether it is a purchase from a developer or an individual.
After all, legal fees etc, are borne by you. You should ascertain that:-
(a) he is a lawyer;
(b) that he has a valid practising certificate for the current year.
Verification of the above can be done with the Bar Council.
Each party to the transaction is advised to retain separate lawyers to protect
their respective interests.
A lawyer can:
(a) advise, prepare and /or vet documents such as SPA, deed
of assignment, deed of reassignment, deed of mutual covenants, deed of reassignment
and loan document. However, the SPA for purchases of residential properties
from a developer is a standard form agreement fixed by law;
(b) conduct land, bankruptcy/insolvency and company searches to ensure that
there are no surprises, such as a different registered owner, encumbrances
(charges, caveats), conditions or restrictions on the title (important for
a buyer), or that a party is bankrupt/insolvent;
(c) if there is an individual title, to enter a private caveat to freeze
all dealings in the property until it is transferred to the buyer;
(d) send documents/instruments to the Stamp Office for adjudication and
arrange for their stamping;
(e) act as stakeholder, to hold all money paid, retain 5% of the purchase
price for the purpose of Real Property Gains Tax; and/or to hold the balance
of the purchase price;
(f) prepare and witness the execution of statutory forms;
(g) for a sub-sale where the individual title has not been issued, get the
consent of the developer to the sale of the property to the new buyer and
to undertake the registration of the property in the name of the new buyer.
The lawyer should also get an undertaking from the developer not to further
encumber the property, and for a development project with a master title,
a letter of disclaimer from the chargee of the master title confirming no
right or interest in the individual property;
(h) if the buyer takes a loan, get a letter of undertaking from the lender.
The undertaking will include an undertaking that it will not foreclose the
property if the loan, interest, etc has been repaid/paid; and
(i) present the transfer (Form 14A) and if applicable, the charge (Form
16A) for registration at the land office.
Can a lawyer act for the seller, buyer and the buyer's lender?
A lawyer may only act for one party in one transaction, but may witness
the execution of any documents/instruments by any party. A sale and purchase
is one transaction and a loan is another separate transaction. Therefore a
lawyer can act for a seller or buyer, and also a lender or borrower. However,
the solicitor concerned should have regard to any possible conflict of interest
Lawyers are bound by the Solicitors' Remuneration Order 1991 (SRO) and
there are scale fees for all conveyancing transactions and secured banking
transactions done by a lawyer.
Lawyers are not allowed to give any discount. If any lawyer gives a discount
on the scale fees, he could face disciplinary action.
There are fixed scales for lawyers' fees if you, as a seller or buyer, engage
a lawyer. (stated herein is for fees only and does not include disbursements).
8. Lawyers' Fees
Order 2006 (click to view or download)
9. House Seller's Guide
Documents/ information you must provide buyer/buyer's solicitors
(a) Copies of your previous Sale & Purchase Agreement and
(b) Current year quit rent receipt.
(c) Current year assessment receipt.
(d) Redemption Statement from your bank (if you have charged your house
to the bank).
(e) Letter of Undertaking to purchaser's bank to refund purchaser's bank
loan released to you in the event the transfer/deed of assignment signed
by you in favour of purchaser cannot be registered/is defective.
(f) Income Tax file reference number.
10. CKHT form (required to be submitted by Vendor and Purchaser
to Inland Revenue Department under provisions of the Real Property Gains Tax
Act 1976 (Act 169)(RPGT))
(1) Under the RPGT Act, you have to submit CKHT form 1 (for seller) and CKHT
form 2 (for buyer) within 30 days from date of your Sale & Purchase Agreement.
(2) You can fill in the form and submit it yourself, or instruct the legal
firm acting in the Sale & Purchase Agreement to fill and submit same for you,
in which case you would have to pay its professional fees. If you submit the
form on your own, you must provide evidence of such submission to the purchaser's
solicitors i.e. an acknowledgment of receipt of the form by the Inland Revenue
(3) Some material information needed to be included in the form:-
(a) your income tax reference number;
(b) copy of your previous Sale & Purchase Agreement to prove the price at
which you bought your house;
(c) your IC No. and correspondence address;
(d) expenses which you want to claim as deductions:-
e.g. receipt for your legal fees and disbursements incurred to buy your
receipt for renovations done to house and receipts for agent's commission,
(4) An individual is entitled to claim exemption from RPGT in respect of the
disposal of one private residence only in his lifetime.
Please consult your tax consultant on matters relating to RPGT.
11. Utility deposits
Make sure you make arrangements with purchaser to obtain refund of the remaining
deposits i.e. water, electricity, telephone etc.
12. For Apartments
Make sure you make arrangements to obtain the refund of deposits which you
have paid the developer. You would be required to provide the necessary original
receipts to obtain the refund.
13. Notification of Change of Ownership of House/Apartment to Local
Authority i.e. Majlis Perbandaran.
You or your lawyer must notify the Local Authority of any change in the ownership
of any house/apartment so that its assessment record could be updated. It
is an offence if you fail to notify the relevant authority.
14. Receipt of Balance Purchase Price
Generally, there would be a short time lapse between the payment of the balance
purchase price by the purchaser to your lawyer and the date when you receive
the balance purchase price from your lawyer depending on the completion of
documentation. Please seek clarification from your lawyer.