Propsocial property sales purchase agreement signing contract
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When you buy a property, there will seem to be a never-ending end of processes and documents to sign. Nevertheless, the most important document that will pass through your hands is the Sales and Purchase Agreement - otherwise also known as the SNP or SPA.

A SPA document is where all the prices, terms and conditions are hammered out between the buyer and the seller, or in most cases between the buyer and the developer. Everything will be stated there, from the payment manner, date of delivery for vacant possession and the details of the property.

Even the exact specifications of the property will be stated in the SPA, such as the fixtures, fittings, ceiling height, building material and parking lots (if it is a stratified high rise). This is applicable in both new and secondary homes.

It is therefore imperative for you to study your SPA carefully before signing it as you will thereafter be legally bound by it. Much as you would view a showroom before purchasing your property, a SPA document tells you all the particulars - even those that might be misrepresented in a show unit.


Focusing on the Salient Points

Unfortunately for most people there is no fixed SPA document, as things such as the price of the property and other bargains agreed on from both parties can be added in. But the good news is that, within Peninsular Malaysia anyway, there is a fixed set of terms that must be in the SPA - laid down by the Housing Development (Control and Licensing) Regulation 1989.

The only way that a developer can change this fixed set of terms is if they are offering something better than that such as a shorter delivery period, or a longer defect liability period. These fixed terms have cut down on the number of court cases that arise due to ambiguity of a SPA signed.

Although this set of SPA terms is applicable only to developer properties, it is nevertheless a great guideline for other SPAs as well, including property buyers looking to purchase subsale homes or commercial properties from developers.


Manner of Payment

One of the most important thing to focus on in your SPA is the manner of payment. As a purchaser, you will definitely need to know this as to not accidentally breach your contract by claiming that you ‘did not know’. If you are buying from a developer, the manner of payment will be stated clearly in Schedule 3 of the SPA, which will clearly stipulate the billing stages.

If you are buying a subsale property, the process will be much easier as the property is usually ready for delivery, and subsale properties usually have shorter transaction periods. The usual process is for the buyer to give the seller a 2% or 3% booking fee upon signing the Letter of Offer, while the remaining 10% deposit is paid during the signing of the SPA. The remaining 90% is then usually paid within 3 months of signing the SPA.

The 3-month period may occasionally be automatically extended for 1 month, which will incur late payment interest.


When’s the Vacant Possession?

This is the next most important question for you to ask. By law, vacant possession means that your new property is ready to live in. In other words, when is the developer going to hand you your keys and access card to your unit. The standard time for developers to hand over the keys for landed properties is 24 months, while for high rise stratified buildings is 36 months.

Subsale properties do however have a much shorter vacant possession period - normally within 3 to 5 days upon full payment of the full purchase price. This is however subject to change as agreed upon between the purchaser and seller. In effect, the purchaser will be the legal owner but do not have the keys to the unit. On the other hand, all the rental yields and what not will be delivered to the purchaser by way of assignment of tenancy.


Defect Liability Period

If you are buying your property from a developer, then this is one clause you need to look carefully at. This is the clause that gives you a warranty from the developer to fix anything that was defective upon vacant possession. There is usually a 6-month period or so, but this differs from developer to developer.

If you are buying a subsale property, you will however find this page missing in your SPA. This is because the previous owner is not obliged to give you a warranty for anything. Therefore careful inspection of the property is required before purchasing it, and you will need to check everything from the sewage and piping to fixtures and fittings, leakages and electrical appliances. Should the seller agree to fix anything for you, ensure that your lawyer puts it into the SPA.


Wrapping it Up

Buying a property is probably going to be the biggest purchase of your life. Therefore, be meticulous about it and do not be afraid to ask questions. Do not make assumptions, only to find them sorely wrong later.

If you are not sure of anything, ask your lawyer. If the sales agent agrees to give you anything extra such as an air-conditioner, make sure it is stated in your SPA document. Do not sign your SPA until you completely understand it and are very sure that everything you were promised is stated in it.



(Reference: http://propertyinsight.com.my/legal/understanding-sales-and-purchase-agreement/)

Signature 28 logo  custom  small

Great article! Nowadays i believe most developer give "free" SnP and legal fee? They probably mark up their prices to cover it.


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Yup. When signing SPA don't rush, take your time to read and understand the clauses in the SPA, and feel free to ask the lawyer any legal related matters. If you have any commercial questions in relation to the property, there is no point asking the lawyer. 

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sometimes the built up area advertise in the brochure and land area does not come close to the figures in the SnP... but i can see that majority of owners don't bother to peruse through before signing on each sheet... maybe the excitement and suspense of property ownership...

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I think so long as they could secure a property in that desire area, the built up area is something they could tolerate with as upon delivery if the built up area is a few % bigger or smaller than the SPA stated most would be subject to a refund or something. 

Signature 28 logo  custom  small

"APPROXIMATE" is the keyword they always use....

James bond craig junio2006 small

Most of us won't really take the time to read the entire SPA. 

I have a few questions though:

1) If it's a commercial land title property but for residential usage, is it normal for them not to state the time of completion?

2) If it's a commercial land title property but for residential usage, will they still compensate if the handover of key (completion of development) is delayed by 1 year, but the time of completion is not stated in the SPA?

Signature 28 logo  custom  small

How about using as short term stay through Airbnb? no long commitments, can also meet lots of people from all around world.

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307988 277857705557864 1942731477 n small

@James Bob...I think not reading the terms and conditions is something common in Malaysia, but these terms are binding upon parties of the contract, so it is necessary to run through it...in the event of signing SPA i'm sure every purchaser would be interested in a few questions: 

late payment interest; delivery of vacant possession; manner of delivery; late delivery penalty; defect liabilities; loans; default termination; common facilities; adjustment rate; the schedule of payments; the schedule on the description of properties; specifications schedule; site plan; floor plan..etc. 

To answer your questions I don't think anyone is going to sign an SPA without a clause on the delivery of vacant possession. If any, I'm sure the lawyer drafting the SPA is not doing the job right. LOL

Just my 2 cents...

James bond craig junio2006 small

Lee Shun Zhong, I spoke to a few people, apparently, if it's a commercial title property, developers are not required to commit vacant possession in the SPA. Is this true? You seemed very experienced, thought you might help clarify this :)

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James, I think I get what you meant now. 

I think this is something technical and well drafted by the SPA solicitor for the developer. And that's why when we are looking into commercial SPA, we must take extra caution when running through the clauses. What is meant by not required to commit VP I assumed it's actually written in the manner of delivery of VP. 

Maybe that's when it was challenge. Correct me if I'm mistaken. 

James bond craig junio2006 small

Lee Shun Zhong, yes that's correct. Meaning they are not required to put it in writing on the actual VP date. If this is true, then what happens if they delay the completion of the development for a year or several years?

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James, in such situation I think only a real attorney can help you. Haha...as I yet to reach that level, I'm also not so sure about it either. Let me know about it if you found the answer. 

Referring back to the article above: 

**If you are not sure of anything, ask your lawyer.......Do not sign your SPA until you completely understand it and are very sure that everything you were promised is stated in it.**  

A case study for the delay in completion maybe we could refer it to one of the on going mega project (not going to name it.), the residents there might be able to give you an answer for your question. 

Whereas in my opinion, when such delays happened it is best to setup a meeting and talk to the developers. Developers want the money, purchasers/investors want the property. If it becomes a headline don't think it's good for the investors nor the developers. But hey, today's people are all about exercising their rights. I'm sure a lot of people will curse me on my opinion about this issue. LOL. Anyway, it's just my 2cents. Critics are welcome.  


James bond craig junio2006 small

Sadly, my lawyer is the developer's lawyer, which most like the SPA was drafted by them? Lol.

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HAHA...yes! Developer's lawyer. They should have let you sign a letter on the acknowledgement that they are representing the developer. 

At most you can only bring the case to a tribunal. How long has it delayed? LOL. Can drop some hint on the project or developers name? I go Lowyatt see see...

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James, have you try going through the Housing Tribunal? 

James bond craig junio2006 small

About a year. It's supposed to be ready by Jan 2017 but now postponed to Jan 2018. Their reason was because the piling took longer than expected due to some complications. 

No, I haven't been to Housing Tribunal because I wanted to be sure of my rights beforehand.

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Hmm...I'm not the right guy to give any advice. 

Haha..but I do have some contacts whom I could refer to you. But we can't PM here. LOL. You could PM me via Facebook. Name is the same as displayed. Maybe I have the right person who could advice you accordingly before taking any action. 

My opinion would be a resolution through Housing Tribunal la. 

James bond craig junio2006 small

It's ok, don't worry about it. It's just an open discussion :) I wasn't expecting you to get me out from this situation. Lol.

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