The process flow for a purchaser buying a property in resale/subsale or secondary market is explained in Process of Buying a Property In The Secondary Market.


Completing the property deal

A purchaser would have to execute the SPA and Loan Agreement (if cash buyer, this is not applicable). It is highly desirable that a purchaser executes his or her SPA and Loan Agreement with different lawyers.

The purchaser signs both the SPA and Loan Agreement. Once that is done, the lawyer will follow up from there to stamp the agreements and perform the transfer registration at the land office registry, which normally should not take more than 3 months from the signing date.


Sale and Purchase Agreement (SPA)

According to Investopedia, the Sale and Purchase Agreement (SPA) is a legal contract that obligates a purchaser to buy and a seller to sell a product or service.

SPAs are found in all types of businesses but are most often associated with real estate deals as a way of finalizing the interests of both parties before closing the deal.


What do I have to pay when executing a SPA and Loan Agreement?

When executing a SPA and Loan Agreement, a purchaser has to pay the following:

(1) legal or lawyer fees payable to the appointed lawyer who will prepare the SPA and Loan Agreement,

(2) stamp duty payable to the government and it will be collected by the lawyer on behalf of the government, and

(3) disbursement and miscellaneous costs incurred by the lawyer in preparing the said documents.


Legal fees for SPA and/or Loan Agreement

The legal scale fees are as follow: 

 Consideration or Adjudicated Value  Scale Fees  For the first RM150,000  1.0% (subject to a minimum fee of RM300)   For the next RM850,000  0.70%  For the next RM2,000,000  0.60%  For the next RM2,000,000  0.50%  For the next RM2,500,000  0.40%  Where the consideration or adjudicated value is in excess  of RM7,500,000  Negotiable on the excess (but shall not exceed 0.4%  of such excess)


Having in mind the above legal scale fees, a purchaser may normally negotiate for discounts on legal fees at the discretion of the lawyer, and the final price is normally confidential between the purchaser and the lawyer. 

For property price exceeding RM7.5 million, legal fees of the excess RM7.5 million is negotiable.

Below is an example calculation:  

 First RM150,000 @ 1.0%  RM1,500  Next RM850,000 @ 0.70%  RM5,950  Next RM2,000,000 @ 0.60%  RM12,000  Next RM2,000,000 @ 0.50%  RM10,000  Next RM2,500,000 @ 0.40%  RM10,000  Next RM3,000,000 @ 0.20% (negotiated rate)  RM6,000  Total Legal Fees  RM45,450


Stamp duty on SPA

A purchaser of a property has to pay stamp duty to the government when the purchaser buys a property.


How to calculate the stamp duty payable on SPA?

The stamp duty chargeable on the SPA is RM10 each.

The stamp duty chargeable on the Memorandum of Transfer (MOT) is calculated based on the property purchase price (as per SPA). The rates are mentioned as follow:-

 First RM100,000  1.0%  RM101,000 to RM500,000  2.0%   From RM501,000 and above  3.0% 


Stamp duty on Loan Agreement

The stamp duty chargeable on the Loan Agreement is RM5 for every RM1,000 of the loan amount, or 0.5% on loan amount.  


When should these documents be stamped?

All SPAs and Loan Agreements executed in Malaysia are to be stamped within 30 days of their execution.

If the SPAs and Loan Agreements are executed outside of Malaysia, the duration for stamping remains the same, which is 30 days after they have been first received in Malaysia.

As for the MOT, it has to be sent to the stamp office for adjudication to determine whether the stamp duty is chargeable based on the contract price or the market value of the property.

The MOT shall be stamped within 30 days from the date of the notice of assessment.


Penalty on document not stamped within time

If a document is not stamped within the timeframe, the purchaser will have to pay, in addition to the stamp duty payable, a penalty and the rates of the penalty are as follow:-

 Duration of Delay  Penalty Rate  Within 3 months after the time of stamping  RM25 or 5% of the duty, whichever shall be greater  Later than 3 months but not later than 6 months  RM50 or 10% of the duty, whichever shall be greater   Later than 6 months  RM100 or 20% of the duty, whichever shall be greater


The purchaser may appeal to the Collector of Stamp Duties for reduction of penalty.


The consequence of a document not duty stamped

A document which is not stamped or insufficiently stamped is not void or unenforceable for that reason alone.

However, such document may be rejected as evidence if it is required to be produced before the Court.

In that event, the party who wishes to produce the unstamped or insufficiently stamped document will have to pay the stamp duty payable and penalty before such document can be received as evidence.


Disbursement costs

A lawyer’s disbursement costs normally cover the following:

 Stamping of SPA (RM10 per copy x 4)  Bankruptcy/winding up search  Company search (if applicable)  Land search (before preparation of the SPA & prior to the filing of the Form 14A at the Land Office)  Registration of Transfer at Land Office  Affirmation on the Statutory Declaration to request for the 50% waiver on the stamp duty on the transfer/on  the assignment.  Stamping on the Statutory Declaration to request for the 50% waiver on the stamp duty on the transfer/ on the  assignment  Transportation  Printing/facsimile/telephone/photocopy charges/stationery  Other miscellaneous charges


Valuation scale fees

Particularly important is getting the right value of the property, especially when a purchaser is buying a property in the resale/subsale or secondary market.

The standard valuation scale fees calculated on the property price are as follow:

 Property Value  Scale Fees   First RM 100,000  0.25%  Residue up to RM 2 million   0.20%   Residue up to RM 7 million   0.17%   Residue up to RM 15 million  0.13%  Residue up to RM 50 million  0.10%  Residue up to RM200 million  0.07%  Residue up to RM500 million  0.05%  Residue over RM500 million  0.04%


Having in mind the above valuation scale fees, a purchaser may negotiate in advance the agreeable price with the registered valuer.


An example property purchase scenario

Example If Purchase a property of RM1.5 million in the subsale market, the transaction cost involved are as follow: 

Coming Soon.


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