We signed the title transfer for our house on Dec 26, 2007 with the Sales and Purchase lawyer’s office. This title transfer is important as it means that the title of the house was transferred to us from the developer. Meaning, the land and house is now under our name.

There is another document to sign with the lawyer handling the bank loan. This is to charge the title to the bank, because we took loan from the bank to finance the house. In other words, the land and house would belong to the bank as long as the loan is in effect.

As for the construction progress, we have taken some pictures end of Nov 2007.

We’ll let the pictures do the job as pictures speak a thousand words.

How the construction of the houses look right now. This picture was taken from the balcony of one of the houses. Can see the two-and-a-half storey houses and the double-storey houses?

This is the other end of the housing development, taken from the same spot as above.

Most of the houses are ready for the construction of fences and compound of the house.

The construction of the drainage system has already started. And of course, the bank has very promptly deducted money from the loan account…

And this, the classic ’spy room’ hehhe!
ok ok , this is an inside joke. can’t help it but present it that way! hahhaaha Some suspense is good for life ;p

The Malaysian 2008 budget was tabled in Parliament two weeks back with numerous goodies for those shopping for a new home. The government hopes that these new measures would help stimulate the property sector in Malaysia.

For starters, the Stamp Duty for the Land Title Transfer for properties costing less than RM250,000 has been halved. This benefit is applicable for the purchase of one house for the whole of financial year of 2008.

Property           Price Stamp      Stamp Duty in 2007      Stamp Duty in 2008
House A            RM250,000              RM4,500                      RM2,250 (-50%)
House B            RM150,000              RM2,000                      RM1,000 (-50%)
House C            RM350,000              RM6,000                      RM6,000 (unchanged)

(Based on the current rate of 1% for first RM100,000 and 2% for RM100,001 to RM1,000,000)

With this new measure, I can foresee new home buyers benefiting in 2 ways:

• Significant Stamp Duty Savings
• Encouragement to property developers to provide more properties at sub RM250,000 price tag to entice home buyers to invest.

However new home buyers please note that in the home buying process, you will incur two major Stamp Duties namely the Stamp Duty for Title Transfer and the Stamp Duty for the Bank Loan Facility Agreement.

(Refer to Key Learnings – Lawyers Lessons 2 and Lawyers Lessons 3)

The Stamp Duty for the Bank Loan Facility agreement remains unaffected by the above changes. The current prevailing rates of 0.5% of Loan amount still prevails.

Read more »

Hi all,

Welcome to my third and last installment on Lesson 2. This last instalment is on the Land title transfer charges as well as tranferring the Title Deed to the bank as charge.

• Lesson 2.3 - Title Transfer

Land Title transfer is the most important as well as the most expensive legal process in your home buying process. It involves the division of the Master Title (as held by the developer) into individual land titles/deeds for the individual house buyers.

For the case of Condominiums/Apartments or Flats, individual Strata titles will be issued to all house buyers of the mentioned property.

In Malaysia, individual property owners would need to pay a Stamp Duty on the Title transfer. The total stamp duty is calculated based upon the purchased price (Price as documented in the SnP Agreement) and the amount payable can be calculated using the guidelines below

•  For the 1st RM100,000      –>  1%
•  For the next RM100,000 to RM2,000,000 –> 2%

Take for an example a property worth RM300,000. The Stamp duty for the title transfer will amount to almost RM5000.

As for the lawyer fees for this process, typically you will have to fork out roughly ~1/3 the amount that you have paid for your SnP Lawyer fees earlier.

Having Individual or Strata titles as soon as possible is important Read more »

Hi Everyone,

Apologize for the late release of this article. I’ve been overseas for the past month on a business trip. Anywayz here’s an article to keep my Key learning’s series going

•  Lesson 2.2 - Bank Loan Agreement

Bank loan agreement is an agreement between the bank and you. Basically it can consists up to 3 different agreements namely

1. Facility Agreement
2. Power Of Attorney
3. Deed Of Assignment / Title Charge

Firstly the Facility Agreement  is an agreement made between you (the borrower) and the bank. This agreement basically consists of all the terms and conditions which has been set forth in the Letter of offer. Do note that different banks have different Facility Agreements. Your Lawyers would need to purchase this document from the bank.

Secondly, Deed Of Assignment is a temporary agreement made between you and the bank to ”Assign” the property to the bank as a guarantee. Deed of Assignment is only required for properties that has yet to obtain their individual land titles. Upon obtaining the land title for the property, another agreement will be executed to charge the Land Title to the bank.

Lastly, Power of Attorney, is an agreement between you (the Donor) and the Bank to appoint the Bank’s panel of lawyers to look after your rights as a borrower as well as the banks rights in the event of a dispute. Among the tenets of the agrreement is a clause for the Attorney to sell away the prperty in the event of a default.

The cost of the agreements varies with the loan quantum ie the higher your loan amount the more you will need to fork out to pay the lawyers :) 

Rule of thumb, - Estimated Legal Fees (percentage off the Loan Quantum)

• 1% of the Loan Quantum for the Facility Agreement
• 0.1% for Deed Of Assignment 
• 0.1% for Power of Attorney.

Lastly, you will need to factor in the cost of Stamping Duty. For Loan agreements, the stamping duty is set at 0.5% * Loan Quntum.

Let me conclude my article with an example. For a Loan Quantum of RM 300,000, here’s a breakdown of the estimated legal fees

• Facility Agreement  (1% * RM300, 000)               ~RM3000
• Deed of Assignment (0.1%* RM300, 000)           ~RM  300
• Power of Attorney  (0.1% * RM300, 000)            ~RM  300
• Stamp Duty           (0.5% * RM300, 000)            ~RM1500

Total costs = RM5100

Tip :- Always remember to Read more »

Hiring lawyers comes with a cost :). As such, to assist new home buyers who have just purchase, or those who are planning to buy their first dream home in Malaysia, I’ll be listing a list of Legal Fees to be aware of.

Lesson 2 - Lawyer Fees 

The fee structure listed below is applicable on to home buyers who fits the following criteria

1. Bought/Purchase a home which is still under developer master title
2. Obtained a loan facility from any Bank

For homebuyers who fulfilled the above criteria, do note that you would have to be prepared to fund the following lawyer Fees.

• Lesson 2.1 - Sales and Purchase Agreement (SnP)

SnP is an agreement between you (the homebuyer) and the developer. It serves to protect the interest of both paarties in the event of a dispute and the clauses in the document is safeguarded and dictated by Malaysian Law.

During the SnP, the developer may impose on the buyer several other “Agreements” for eg The Deed of Mutual Covenant. In brief the Deed Of Mutual Covenant is used to protect the rights of each and every individual household within the gated community as well as the right for the developer to run the maintenance and upkeeping of the facilities within the said property within a certain period of time upon completion.

Legal fees for SnP is dependent on the Purchase price of your Dream home. Basically you should be able to estimate your lawyer fees based on the following

1. First RM100000 - 1%
2. Next RM100000 - RM4.9 million - 0.5%
3. RM4.9million - RM10million - 0.25%
4. Above RM10million - Negotiable.

SO typically for a property costing RM300000, do expect to fork out at least RM2000 in professional fees alone for SnP.

There are several other Miscellanous fees attached tot he whole SnP billl as well for eg Travelling, Stamping, Photocopying, Miscelllanous (yupz there’s a space for Miscellanous) and Searches (Bankcruptcy, Title). These miscellanous fees could easily add another RM300-400 in your final bill. Read more »

Lawyers lawyers lawyers……

As i mentioned before, either u hate them or you love them. Thats pretty much what we did, love and hate them.

Lawyer firms in Malaysia are pretty complex. Some are one-man show lawyer firms while others are so called “MNC”(big) equivalent (with numerous partners). Well it might be the same for the rest of the world, but its certainly an eye opener for me when it comes to dealing with them.

Through our recent home buying deal, we learnt a painful lesson that we would like to share with all first time home buyers. This lesson is unique in a way that you will not learn it from any books. (Hmmm Would be a good topic for my ebook)

Lesson No 1 - Predetermined your Banker

The Bank you engage for your end-financing services will determined the law firm that you will work with. 

As such, before engaging the services of any lawyer firm, first predetermined the Bank. Different banks in Malaysia have different requirements on the lawyer firms that is “allowed” to do the loan processing. They have the so-called “Panel” lawyers that will be given the privilege to engage with you on loan documentations.

Therefore, once you have narrowed down your home loan choices to a few banks (ie 2-3), obtain the names of the law firms that is on the banks panel. Best case scenario would be to hire a lawyer who is on all 3 banks (of your choice) panel of lawyers. If this is not doable,  then rank and rate the banks of your choice based on the offer letter, and hire the lawyers accordingly.

Ultimate goal is to be able to hire the same law firm for your Loan Documentation with the bank as well as engaging them to handle your Sales and Purchase Agreement with the developer. In Malaysia, the developers are usually pretty lax on the law firms that is used to represent the home buyer. On the other hand, Banks are very reluctant to work with Law firms that are not on their panel.

Rule of thumb - Foreign banks tend to prefer “MNC”(big) law firms due to their higher malpractice insurance coverage while most local banks are comfortable working with one-man show firms. Hence, Predetermined your bank and the bank will determined your lawyer firm.

 Tags: Lawyers, Lawyer, Banker, Malaysia, Home, Property, Properties, Law Firms

“Too many cooks spoils the soup” - too many lawyers and a simple transaction becomes a long and lengthy transaction.

The same key learning applies to home transactions as well. It is wise to keep all the legal transactions under one law firm whenever possible and limit to 2 for complicated one.

Not only will you save on legal fees, you would also save on the headache, heartache and stress of working with various lawyer firms. You will also save on time, especially when time is of essence in a house loan legal documentation.

As such to assist future first time home buyers, I will be writing a series of Key Learnings on the stuffs I have learnt based on my experience in dealing with 2 different lawyer firms on my recent house purchase activity.

So stay tune and look out for the upcoming Key Learning series.

In short, this is the proposed schedule of activities, based on our experience:

1. Search for a good property at a good location

2. Choose a good unit, taking into consideration the feng shui, the direction the house is facing, the surrounding things to take note of, etc. I’ll cover that in another post.

3. Put down a booking fee for the unit.

4. Shop for a good home loan. Go to or call up banks. The trick is to call the banks and get the banker to go to your house for a presentation. During the presentation, ask everything you need to know, including the penalties and perks.

5.  Choose either flexible or conventional plan. Difference is the interest rate and the flexibility. More details should be covered in another post. Personally, we prefer flexible loans, because we factor in the possibility of us earning much more in the future and are able to pay off our housing loan much faster.

6. Once you have found a good home loan deal, get the banker to generate an offer letter. The offer letter will be ready in a few days time. Sign it, in order to lock in the offer. If not, the offer will lapse after the limited period. Check with the banker because the expiry date would be different for different banks.

7. Once you have decided on which bank to take the home loan from, find out the bank’s panel of lawyers. Check if any of the lawyers is also on the panel of lawyers doing up the Sales and Purchase Agreement.

The objective is to have one lawyer handling both the loan documentation and the Sales and Purchase Agreement. Why? So that you can save on lawyer fees, which could range from hundreds to thousands, based on discounts given. Another advantage is that they can get the documentation up faster too, minimizing delays in payments etc, without having to deal with another party.

As for the shopping for home loans from banks, I would leave it to another post.

8. Once you have found the lawyer to do both loan and Sales and Purchase Agreement documentations, set a date to sign the documentations. Could be done on the same day or different days. If it is done on the same day, then it saves you time and hassle.

9.  Sign the documents, pay a deposit for the lawyer fees and wait for the lawyers to get back to you with the stamped documents. Once all the documents are in place, then only you pay the lawyer in full.

10. After that, it is time to anticipate the first draw down,  which also means, time to start paying the home mortgage. Usually the developer draws money from the bank in stages, according to a schedule given in the Sales and Purchase Agreement. Will put up a sample schedule in another post.

11. So, based on the schedule, you can plan your finances properly, in order to minimise the amount of interest you have to pay. Oh, btw, this only applies to flexible loans.

Simple isn’t it? If you practice this often enough, it will become like a second nature to you. Buying a house/property will be like buying rice. Ahh.. how good!

So what after the signing of the Sales and Purchase Agreement? Time to find ways to finance it, right?

No! Utterly wrong! Though there’s no hard and fast rules, but this is one mistake you could make, based on our experience. And this is THE mistake we almost committed.

Why?

Because by the time you have signed the Sales and Purchase Agreement, the clock has started ticking. You have limited time (how much, partner please help me to fill in) to get the method of financing in order.

And if you do not manage to secure a loan from any banks and when the first drawdown, meaning the developer is asking for money, you are liable to pay the interest of usually (how much again partner… hehee).

Usually, if you have a clean financial record and have a good relationship with all banks, the likelihood of you not being able to secure a loan is rather low.

Let me share with you the mistake we made.

After putting down the booking fee for the house, we went shopping for home loans, which is a correct thing to do. But the uncertainty we had was that we did not know when is the signing of the Sales and Purchase Agreement, as the developer was yet to receive their developer’s licence.

It was about 5 months wait, before we received a call asking us to sign the Sales and Purchase Agreement in 2 weeks’ time.

What went wrong was that, during the 5 months, after the initial hype of looking for a home loan and finally narrowing down to two banks, we did not sign any offer letter, despite one bank having generated one for us. We did not know that the offer letter will lapse if we do not sign it and thus making the offer invalid.

And so, after the lapse, we still continued to wait for news on the Sales and Purchase Agreement signing.

What we should have done was that, during that period of time, continue to monitor the banks for better offer on home loans and promotions given out. At the same time, find out the panel lawyers for both the banks and the developer. This information will come in handy when you need to decide on which lawyer to take.

Even though the uncertainty of a date for the signing of SnP was a challenge, we should have still decided on the bank we want to take home loan from, and then to generate the offer letter and sign it, meaning locking in the competitive interest rates. This way, makes it easier for you to decide on the lawyers.

Choose a lawyer who can handle both the SnP and the loan documentation, meaning the lawyer can represent both the developer and the bank. There’s always the option of using an outside lawyer, which could be to your advantage as well. More analysis on this in the coming posts.

So, our advise, based on our own experience (disclaimer: use this with your own discretion. Owner of the blog is not responsible to any loss incurred from using this advice.) to be on the safe side, to start shopping for home loans from all banks from the day you put down the booking fee.

Better still, secure an offer letter from the bank, a letter which states how much is the interest rate the bank is willing to offer to you, based on the buying price and the type of property.

But, be aware that if you do not sign the offer letter, it will lapse after a few days to 2 weeks, depending on banks. And once it lapses, you would have to submit an application for loan all over again through the banker.

And the banker would have to get approval from the headquarters again. The disadvantage to this is that you have to endure the paper work and getting documents in order again - hassle and inconvenience.

But again, do take note also that the rates on home loans are very competitive. The rates offered by a bank can vary within months, maybe even weeks! One advantage of securing a deal after the signing of Sales and Purchase Agreement is that you might get better rates for your home loan.

And yet again, there’s the risk of time running out. So you have to weigh the pros and cons.

Look out for the nutshell steps to what you should do when you buy a new house in the next post.

Now that we have shown our sincerity in buying the house by putting an earnest deposit (roughly 2-3% of the market value of the house) its time to call in the lawyers to seal the deal.

Lawyers

Either you love them or you hate. Then again they play a critical role in the transaction by ensuring that the rights of both parties ie you and the developer are protected.

There are a lot of lawyers in the market these days, both good and bad are available for hire. Certain developers do tend to make the buying process easier by providing a panel of lawyers for you to pick and choose.

My advice, get to know as much as you can from the lawyers in term of understanding your rights, the lawyers role and responsibility in the property purchasing process, and last but not least, the cost!!

However, don’t just be blinded by the cost, go for lawyers who are able to provide you with excellent service. Cause end of the day, its the service that counts.

 SnP (Sales and Purchase Agreement)

A legally binding agreement which is made between the buyer (you) and the seller (developer, owner etc). The agreement will document your purchase price, lot no, date (most important), your name, developers name and etc.

The document also spell out all the necessary terms and conditions as approved by Malaysian law. Honestly I havent seen one yet as I have yet to sign my SnP. However i was told that all Snp agreements are taken off a template that has been approved by the government.

 Taxes

A great man once said, “There’s 2 things thats certain in life, death and taxes”. Yupz, you have to pay taxes in order to buy a house. Thats the Malaysian Law and the taxes are called Stamp Duty.

In order to buy a house, you would have to pay a Stamp duty Tax on the SnP. This is actually the cost of transferring the land title of your house over to your name. Here’s how it is calculated

On the first $100,000 - 1%

On the next $100,000 to $ 4,900,000 - 0.7%

Note though that this is only payable to your lawyers in order to get the land title transferred to your name. In certain cases, you may save on this stampduty all together, but i am not gonna covered it here

The second tax that a buyer needs to pay is for the bank loan documents. Almost allnew and first time home buyers would have to pay for this unless of course, you’re buying you rnew home with cash.

The rates are as follows

0.5% of total loan amount.

This tax is payable upon signing the bank loan agreement.

 Hmmm other than that, there are a few more annual taxes that you’ll have to pay your local land authorities once you occupy your new home. We’ll cover that as we experience it.

Thats all for now… oh yah…never never pay your earnest deposit directly to the developer or the owner of the house that you plan to buy. Always go through a lawyer