Guidebook on Registering Property in Malaysia.pdf

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GUIDEBOOK on REGISTERING PROPERTY in MALAYSIAWALKING THROUGH THE SYSTEMB. Property without Title (Freehold, Leasehold)The case given here is for the purpose of illustration only. The names and vital informationmentioned are fictitious and attached for ease of understanding.Note: The terms of the SPA are for illustration purposes only and mirror general terms normally forsimilar transactions. They may vary according to the agreement between the buyer and seller asadvised by their respective lawyers.Johari (“Seller”) is the owner of a newly completed condominium unit in KualaLumpur (“Property”) and intends to sell it to Hakimi (“Buyer”) for RM 280,000.00(“Purchase Price”). To formalise the purchase Hakimi will pay Johari an earnestdeposit equivalent to 2% of the Purchase Price. A formal Sale and PurchaseAgreement (“SPA”) is to be signed by both parties within 14 days thereafter.29Upon receipt of the earnest deposit, Johari will give a photocopy of the SPAbetween him and the Developer (“Principal SPA”) to Hakimi as proof that Johari isthe beneficial owner of the Property. Hakimi will then appoint a solicitor to conductthe necessary searches and prepare a draft SPA. The terms and conditions ofthe SPA usually provide that a deposit of 10% (“Deposit”) shall be payable uponexecution of the SPA. As 2% is already paid, the balance 8% will be paid uponsigning of the SPA.The balance 90% of the purchase price (“Balance Purchase Price”) is to be paidwithin 3 months from the date of the SPA. An extension period of 1 month is givenif Hakimi is unable to pay Johari within 3 months. An interest rate ranging from 8%to 10% is usually chargeable for the extension period.Hakimi will appoint a lawyer to represent him to conduct the sale transaction whowill ensure that the terms and conditions of the SPA are favourable to Hakimi andhis rights are also protected. Simultaneously, Hakimi approaches a Bank to applyfor a loan (“Loan”) to partly finance the purchase of the Property.The lawyer acting for Hakimi will, in the usual course of events, proceed to conduct the followingsearches:-• Private land search at the Land Office / Registry on the Master Title on which the parcel iserected;• Bankruptcy searches on both Johari and Hakimi; and• Winding-up search on the Buyer / Seller (if it’s a company), developer and land owner (ifdeveloper is not the land owner).
GUIDEBOOK on REGISTERING PROPERTY in MALAYSIASTEP 1 Private Land Search on Master TitleA private land search is a process which allows a person to obtain up-to-date information on thestatus of a particular piece of land.The information stated on the private land search report is extracted from the Register Documentof Title (“RDT”) and is usually similar to the information stated in an IDT. It should be noted theprivate land search report may reveal additional information not available on the IDT such asprivate caveats or charge.To conduct a land search on the Master Title, the lawyer has to fill up a form known as PrivateLand Search Form (Borang Permohonan Carian Persendirian) (Appendix 2).30Submission is made at the Kuala Lumpur Land Registry with payment of a prescribed fee ofRM 30 per title search.Bankruptcy SearchThe search is conducted at the Insolvency Department of Malaysia (Jabatan InsolvensiMalaysia) to determine the legal status of both Johari and Hakimi.• The search is conducted online with a prescribed fee of RM 12 per name search.• If Johari is a bankrupt, the sale transaction requires the Official Assignee’s approval.• If Hakimi is a bankrupt, he is prohibited by law from entering into a contract of sale and thuscannot purchase any property.Winding-Up Search• Winding-up search is conducted if either or both Seller and Buyer is a company.STEP 2 Signing of SPAHakimi and Johari will sign the SPA.• Deed of Assignment• PDS 15 (Appendix 5 or 5A)STEP 3 Redemption StatementJohari needs to settle all of his outstanding loan to his bank before he can sell his Property toHakimi. The SPA will address the arrangement to the effect that Johari’s outstanding loan to hisbank will be paid by Hakimi or the bank from which Hakimi is obtaining the Loan. Such paymentwhich will form part of the purchase price is known as “Redemption Amount”.• Johari’s lawyer will proceed to request for a Redemption Statement from Johari’s bank.• Johari’s Bank will, upon receiving such request issue a Redemption Statement usually within 2working days in favour of Hakimi (if cash purchase) or in favour of Hakimi’s bank (if purchasewith Loan) as set out in Diagram 10.
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