Property Transactions and Documentation
The sequence
The typical subsale runs: negotiation, booking or earnest deposit, option to purchase or direct SPA, loan application and valuation, consents (State Authority for restricted or leasehold land, developer or mortgagee where relevant), execution and stamping of the SPA, payment of the balance, discharge of the vendor's charge, and finally presentation and registration of the transfer at the land office. On a master title, the buyer receives a deed of assignment rather than a strata title until the strata title issues.
Documents a candidate must know
Sale and purchase agreement, deed of assignment, charge and discharge of charge, loan agreement, power of attorney, statutory declaration, and, for developer sales, the statutory forms under the Housing Development Act 1966 (Schedule G for landed, Schedule H for stratified), with the 24-month defects liability period.
Stamp duty
Ad valorem duty on the instrument of transfer follows a scale: 1% on the first RM100,000; 2% on the next RM400,000; 3% on the next RM500,000; 4% on the excess above RM1,000,000. Loan agreements attract duty of about 0.5% of the loan amount. Stamping is due within 30 days of execution in Malaysia, or 14 days if executed abroad; late stamping attracts penalties. Real Property Gains Tax applies to the vendor on disposal, at rates that depend on the holding period and the vendor's status.
Worked example
A property sells for RM600,000. Duty = 1% x RM100,000 (RM1,000) + 2% x RM400,000 (RM8,000) + 3% x RM100,000 (RM3,000) = RM12,000.
Traps
Confusing booking and earnest deposits and their refundability; forgetting consent requirements; forgetting that duty is on the higher of price or market value; treating the SPA as passing title.