“When we buy a luxury car for RM800,000, we don’t need a lawyer and can get our bank loan in two or three days. But when we buy a house for RM300,000, we need a lot of lawyers and it takes an average of three to six months to finish the deal.”
On the basis of this simple comparison, there have been calls to get rid of lawyers when real estate is sold or bought.
The idea is that you could do a lawyer’s job if you could understand legal language. Is a lawyer’s job in the sale and purchase of real estate so simple that it can be compared to buying a car on hire purchase?
The only thing that needs to be done to fill out the pre-printed form of a hire purchase contract (HP) is to write in the model, make, chassis, details of the loan and its monthly payment, and the hirer’s name, address, and identity.
Then, all the bank officer has to do is sign, stamp, and keep the contract after notifying the JPJ (Department of Motor Vehicles) of the claim to ownership. The renter only needs to follow the HP by making the monthly payments or risk having the car “repossessed.” That’s the end of the story.
Do you not know, on the other hand, that signing a sale and purchase agreement (SPA) is just the tip of the iceberg?
Even before paying deposits, you should talk to a lawyer.
Most of the time, if you want to buy a house, apartment, condo, shop, office, or land, you would talk to a conveyancing lawyer. The property agent or someone you know could give you a recommendation.
Some real estate agents spread the idea that both the buyer and the seller can share the same lawyer to save money on legal fees. That is not true, and it hurts the vendor. Lawyers can’t work for both the seller and the buyer in a real estate deal. If a vendor does not hire an attorney, that vendor is not legally represented. Most real estate transactions that involve lawyers tend to go well because the lawyers know how to deal with the technical and procedural issues that come up with land and tax laws. The fees for legal services are more than made up for by the benefits of having legal advice and a smooth transaction. Don’t try to save money by being stupid.
We would suggest that you talk to a lawyer right away, before you agree to buy, and not after you’ve paid a deposit to the seller or real estate agency. When you meet with your lawyer early on, he or she will be able to give you advice on the terms of the sale and purchase, the conditions of the property, including the effects of encumbrances that could slow down the transfer, restrictions-in-interest, and the financial commitments needed to complete the purchase.
“Let the buyer beware,” which is what the Latin phrase “caveat emptor” means, is very true about properties. No buyer would want to put down a deposit only to find out that the property doesn’t exist, can’t be bought because of the law, or that the seller is a con artist using someone else’s identity. If a transaction goes wrong, it can cause a lot of trouble, like going to court or losing money because you have to pay liquidated damages. So, the lawyer’s job isn’t just to sign, but also to look out for your best interests and make sure there aren’t any problems with the deal.
There are some differences between buying a home from a builder and buying it from a person who already owns it. In this article, we will focus on how to buy a home from a licenced housing developer.
The way people get around has changed.
The Housing Development (Control and Licensing) Act of 1966, which has been changed over time, has rules about how to buy a home from a housing developer. The Housing Development Regulation 11(4) says that the developer must give the buyer’s lawyer a full set of the SPA, including all addenda, “free of charge.”
From a buyer’s point of view, it’s very easy to buy from a developer. You choose a unit, get a loan, sign the SPA, pay the deposit, and pay the legal fees. You expect (and rightly so) that the lawyers will finish the legal process so that the housing loan can be released to the developer in stages, and when the project is finished, you take possession of the empty unit. It seems simple enough.
But the people involved in a transaction don’t know about most of the lawyer’s work. The real process is not just made up of three steps. Over time, the process of conveyance has become more complicated. This is to make sure that the right person gets the right property and to stop fraudulent transfers.
Test of initial verification in SPA transaction
Before you sign an SPA, you need to find out if the developer has the right licences and approvals from the government and other agencies, confirm the unit you’re buying, the type of property you’re buying, the approved layout plans of the property, what essential items come with the property, the payment schedule, the developer’s and buyer’s identification documents, and if there are any contingencies in the contract.
If all of these things are in order, the parties can sign the SPA. Now that the SPA has been signed, it will be stamped. Online stamping is done, and a certificate is given by the stamp office to show that duty has been paid.
A buyer does not become the owner of the SPA just because it is stamped. At this point, the lawyer for the investor will have to work with the lawyer in charge of the SPA to put together the paperwork for the loan facility.
Also, Section 211 (Fifth Schedule) of the National Land Code of 1965 says that “an advocate and solicitor” and a number of other people are allowed by the law to attest to or witness the signatures on all dealing instruments, including the Memorandum of Transfer. Officers of the bank, people who take oaths, or clerks cannot vouch for the signers.
This is the first part of an article with two parts. The second part will be out next week.
This article is meant to give you an idea of how the conveyancing process works when you buy or sell a home or get a mortgage. If you’re not sure, please talk to a lawyer on your own.