SALE OF PROPERTY WITHOUT TITLE

Developer Sale of Property with Master Title

Sale Transaction
Abbreviations: Vendor: V, Purchaser: P, Vendor Solicitor: VS, Purchaser Solicitor: PS,
Purchaser Bank: PB, Vendor Bank: VB
Step 1: Preparation of SPA
Ascertain identity of parties (chap 1, part 3)
VS shall prepare SPA (Schedule H or J since it is master title). The SPA is to include particulars
e.g. V’s name, address of registered office, license no. of V (licensed developer), details of
property as per Schedule H/J e.g. floor plan etc.
Once prepared, VS will forward 5 sets of the SPA to PS for completion of particulars e.g. name,
NRIC, address of P, and for P to execute it.
Step 2: Examine SPA
PS will examine SPA, and write to P to ask him for his details as stated above. PS will also ask
for 10% deposit to execute SPA and a copy of solicitor’s bill.
Step 3: Conduct searches, prepare documents
Conduct winding up search, title search (use this term, not land search). etc Same provisions as
in chapter 1 part 3.
PS can prepare to lodge caveat, but this will affect subdivision as the caveat will be on the whole
land. PS has to specify in Form 19B that he is just caveating the specific parcel and not the whole
land. PS will prepare Form CKHT 2A (required to show the year when P acquired the property
although P is not V here. Refer chapter 2).
If P is foreigner, same requirements in chapter 1 apply i.e. apply for consent. If V is wound up,
same requirements in chapter 1 apply i.e. void transaction.
PS to prepare statutory declaration that P x bankrupt.
Step 4: Execution of documents and stamping.
If everything is in order, P to execute the document and pay the 10%. Executed documents and
the 10% deposit to be forwarded to VS. PS also will prepare 5 sets of stamping proformas (now
use e-stamping).
Step 5: Notice to developer
WHS asked to add this, but its not very relevant as this is developer sale. Refer to subsale at
below for more.
Step 6: Lodge caveat
P to lodge caveat. In practice, consent of V will be needed as this affects subdivision.
LOAN TRANSACTION OCCURS HEREEEEEEEEEEEEEEEEEEEEEEEE
Step 7: Delivery of vacant possession
Same as in chapter 3 part 1.
Step 8: Borang I
Upon delivery of VP, PS to file Borang I under S. 160 of Local Government Act to change the
name of ownership to P’s name.
***Documents needed: Schedule H/J, Form 19B and G for entry and removal of caveat, CKHT
forms, stamping proforma. MOT and DOA not required as P is the first purchaser.
P has reasonable time to finalise his loan after the sale transaction.
Loan Transaction
Terminology used is assignee bank and not chargee bank. Assignor = purchaser/borrower. Need
to use clear terms in exam.
Note that CHARGE WILL NOT APPEAR HERE as there is no title yet.
Abbreviations: Vendor: V, Borrower: P, Vendor Solicitor: VS, Borrower Solicitor: PS, Purchaser
Bank: PB, Vendor Bank: VB, purchaser bank solicitor: PBS, vendor bank solicitor: VBS.
Previously, third residential property of RM 600k above was subject to 70% financing limit i.e.
you won’t be able to get 90% loan. PENJANA has removed this, so you can possibly get 90%
loan for third property too. If commercial property, normally is 85% if under your own name.
Step 1: Approach bank
Borrower (P) approaches PB with copy of SPA and applies for a 90% loan. Bank will process the
application and issue a letter of offer to P and PS and PBS if it accepts. PS to reply to this letter
of offer to accept.
Letter of offer will have: loan, loan amount, interest rate, security documents, penalty for early
settlement, installment period, installment sums.
Step 2: Preparation of documents by PBS
PBS to prep LACA, PA, entry and removal of caveat, statutory declaration of borrower that they
are not bankrupt.
Once documents are ready, PBS to write to P to ask him to come to PBS’s office with original
SPA, NRIC, settlement of professional fees as per the bill. Original SPA is necessary to ascertain
the chain of ownership to prove that P is the beneficial owner of the parcel (because no title yet,
so only got beneficial ownership). Any disappearance of any stage = problems with beneficial
ownership.

Example of chain of ownership:

Developer sold to Ali (original purchaser) (SPA)
Ali assigned to Ali’s bank to get loan (LACA, DOA, PA)
Ali subsequently sold to Ah Chong (SPA, DOA) *
Ali still owes the bank so he cannot assign the property (cannot use 16N to discharge)
Ah Chong will obtain loan to redeem the property from Ali’s Bank (DRR)
Ah Chong will assign this property to Ah Chong’s Bank (LACA, DOA, PA)
Ah Chong sold to Muthu (SPA, DOA)
Muthu will get loan.
Step 3: Searches
PBS to conduct 3 mandatory searches i.e. bankruptcy search, land search, company search (only
if a party is a company). Same provisions as in chapter 1 part 3.
Step 4: 3 letters of enquiry
PBS to PS
Can ask for NRIC and income tax number of the purchaser
Has MOT been executed and adjudicated and if so forward the duly adjudicated and registrable
MOT; and
Where applicable the Consent / Notice of/ to the original title holder (usually the developer) and
in the event of any restrictions in title the Letter of Consent from the relevant authority to the
same in favour of the Purchaser (e.g. for foreigner).
Did purchaser lodge any private caveat.
Since this is master title, MOT cannot be provided as no individual title yet. Hence PS needs to
undertake to execute and forward to MOT once IDT is issued i.e. forward duly executed,
stamped and registrable MOT.
Example: Either PS or VS will reply to the issue of forward of MOT as : “Upon the issuance of
strata title to provide a duly executed, validly stamped and registrable MOT of the said property
in favour of the Purchaser upon issue of separate IDT so that the assignment to PB can be
converted to a charge in favour of PB to the said property”.
Can ask PS to provide the SPA.
Don’t ask for the original documents here because P won’t have them, this question to be
addressed to VS.
PBS to VS
Whether differential sum has been settled.
Confirm who is the chargee bank (NOT THE PB IN THIS CASE, THIS IS VB), assignee and
the redemption statement. Combine these into one thing also can.
Letter of undertaking to refund the loan in case the assignment or property in favour of the P
cannot be perfected from V to PB.
Terminology to be used is “in the event the assignment in favour of P to PB cannot be
perfected”.
PBS to ask VS to undertake to deliver DRR and letter of release and disclaimer (exempting the
purchaser’s parcel from being forclosed) upon receipt from VB, original documents to establish
chain of ownership, quit rent and assessment receipt, developer’s license number, advertising
and sale permit, housing development account.
**Upon consultation, the contents of letter to VS appears to have combined elements of letter to
VB (undertaking) into letter to VS as the PBS will ask to VS to deliver VB’s undertaking.

PBS to VB
PBS to request for redemption statement cum letter of undertaking (only if there is prior
encumbrance on the property).
VB shall undertake that (i) in consideration of PB paying the redemption sum, to provide a Letter
of Release and Disclaimer from VB once the redemption sum is paid, in order to release P’s
parcel from any legal proceedings e.g. foreclosure proceedings against V; (ii) in consideration of
PB paying the redemption sum, VB to give a letter of undertaking to PB to refund the
redemption sum released to them in the event the redemption cannot be perfected; and (iii) to
forward all the original documents evidencing title starting from the first owner to determine
beneficial ownership.
Step 5: Replies to the 3 letters
PS will reply
Title not issued yet, will undertake to forward the MOT in favour of P once issued (need proviso,
refer to sample). PS may add on that no consent is required if P is Malaysian, and forward
withdrawal of caveat in Form 19G if applicable.
Undertake to forward all those documents requested by PBS (refer sample).
VS will reply
Differential sum has been settled (if not settle refer to chapter 2). VS will also provide the
particulars of VB, and undertake to refund loan if x perfected.
Undertake to forward all documents requested by PBS (refer sample).
VB will reply
To provide the redemption statement cum letter of undertaking whereby upon release of
redemption sum, they will undertake to deliver all the original documents and duly executed
letter of release and disclaimer excluding the P’s parcel from any foreclosure proceedings upon
receipt of the full redemption sum for P’s parcel.
Step 6: Release of redemption sum by PB
Done upon receipt of the 3 replies and VB’s particulars.
Step 7: Execution
Execution of documents in Step 2 i.e. LACA, PA. Advisable for borrower to negotiate with bank
to convert the LACA to charge once IDT issued. However, even if x do this, cases indicate that
the LACA will be valid (refer chapter 3 part 2).
Effect if PA is to surrender all of the P’s rights to the bank. PA to be registered at HC (refer
chapter 1 part 3).
Step 8: Release of redemption sum to VB
PBS will release this to VB to settle the loan. Upon this, VS needs to undertake to forward the
original documents evidencing title of the said property and an undertaking to refund the same in
the event that the LACA cannot be perfected.
Step 9: VB to execute deed of receipt and reassignment
Necessary as previous rights over the parcel were assigned to VB. VB needs to reassign back the
rights to V so that V can assign them to P, and P can assign to PB etc.
Step 10: VB to provide letter of release and disclaimer
This is to be forwarded to VS/PBS together with all original documents evidencing chain of
ownership. PBS to:
(i) date and stamp the LACA; and
(ii) advise PB to release the balance of the loan to the VS as applicable. (according to payment
schedule in Schedule H/J)
(iii) PBS will also proceed to register the PB’s Power of Attorney pursuant to the LACA and
(iv) lodge the private caveat for PB.
(v) the original of these will be sent to the PB and copies to the Purchaser.
Step 11: Once loan has been settled, PB will reassign back the rights to P; and revoke the
PA.
The flow is step 1 to 6 of sale transaction, then loan transaction, then back to remaining steps of
sale transaction.
Subsale of Property with Master Title
Abbrievations: New purchaser: P2, New purchaser solicitor: PS2, new vendor: P1 (probably the
q will come out as baby q where the vendor is the previous purchaser), new vendor solicitor:
PS1, initial vendor: V.
Sale Transaction
Same steps as sale transaction for developer sale without title. Same searches etc to be carried
out.
Only notable extra is DOA. However, DOA will not be signed by P1 until notification of the
redemption of P1’s loan (if applicable). P1 will only sign the SPA.
Some documents and things to be added to Step 2 as below since it’s a subsale:
Bar Council Praktis Checklist: Need to take note of whether there are any tenancies since it is a
subsale. Need to ask for preceding SPAs, deeds of assignment, DMC, current quit rent receipt
etc. Take note of any previous charges and encumbrances.
Since this is subsale, need to calculate CKHT too. File CKHT Form 1A. (calculations as per
chapter 1 part 2). 3% percent of sale price to be retained by solicitor for payment to DG to Inland
Revenue.
Notice of the sale needs to be given to the developer as well. PS2 will request PS1 to do this.
(refer chapter 3 part 2)
Note that this is only for residential properties. If it’s a commercial property, might need to get
consent of developer. Depends on what is in the SPA.
S. 3 HDA: Housing accommodation includes any building which is wholly or principally
constructed, adapted or intended for human habitation or partly for human habitation and partly
for business premises and such other type of accommodation.
Means that if question says its some terrace house etc, you just need to give notice. If its office
shoplot, SoHo, SoFo, or SoVo, its commercial property and thus developer can withhold
consent, impose terms etc based on the agreement.
S. 22D (1) HDA: Notice in writing of assignment given to developer = effectual in law to pass
rights, interest etc to assignee. Means don’t need consent of developer.
S. 22D (6): Requiring consent would be a breach of HDA if the property involved is residential
property. V can be fined min RM 50k and max RM 100k or imprisoned for max 3 years or both.
V can also be punished if V imposes conditions, fees etc.
S. 22D (2) HDA: PS1 to give notice of subsale to V upon completion of S & P. This notice is to
be given with the duly stamped SPA and duly executed DOA. If don’t have, PS2/PS2’s bank
needs to undertake to deliver these 2 documents within 14 days after stamping. P1 also has to
make full payment of all sums due to V (refer to beneficial ownership in chapter 3 part 2). The
effect of this notice = all rights and interest etc will pass to P2.
S. 22D (3): Upon receipt of the notice, V shall keep and maintain proper record so that until
separate strata title has been issues, they will know who is supposed to be the registered
purchasers.
S. 22D (4): PS1 to write to D for letter of confirmation. Charge for this letter is max RM 50. This
letter needs to have:
(a) full particulars of the housing accommodation;
(b) the postal address of the housing accommodation;
(c) the current purchaser (means current owner) of the housing accommodation;
(d) the current chargee or assignee of the housing accommodation;
(e) the total amount due to the developer under the sale and purchase agreement as at the date of
the confirmation; and
(f) such other matters as may be prescribed from time to time (means can include other
confirmations)
S. 22D (7): New purchaser shall include a purchaser's financier or any beneficiary under the
estate of a deceased purchaser or an assignee under an absolute assignment whether with or
without consideration.
S. 22D (8): Completion is (2) = execution of DOA.
S. 22D (9): The above applies to any housing accommodation which no individual title.
After loan has been settled, delivery of VP is to be effected (refer chapter 3 part 1). Borang I to
be filed to change name of ownership.
Flow is prepare SPA and DOA, vet SPA and DOA, various searches and prep documents,
execute, give notice to developer, stamp, file CKHT, lodge caveat, loan transaction, file Borang I
upon VP.
Loan Transaction
Abbrievations: New purchaser: P2, New purchaser solicitor: PS2, new vendor: P1 (probably the
q will come out as baby q where the vendor is the previous purchaser), new vendor solicitor:
PS1, initial vendor: V, new purchaser bank: PB2, new purchaser bank solicitor: PBS2
Step 1: Approach bank
Same as for developer sale above.
Step 2: Prepare documents
PBS2 to prepare the same documents as developer sale above. Documents involved are LACA2,
PA2, statutory declaration by P2 etc. P2 will need to bring original SPA2 etc to PBS’ office
similarly.
Step 3: Searches
Same as for developer sale above.
Step 4: 3 letters from PBS2
To PS2
PBS2 will enquire whether the DOA has been executed and adjudicated, seek an undertaking to
forward duly adjudicated DOA. PBS2 will also ask PS2 to forward the notice to V and letter of
confirmation from V. PBS2 will also request that upon issuance of strata title, PS2 to forward the
duly executed, validly stamped and registrable MOT of the said property in favour of P2 upon
issuance of separate IDT to the said property, as well as the quit rent and assessment receipts for
the current year; and the original stamped SPA between V and P1 i.e SPA1 so as to establish the
complete chain of ownership.
To PS1
PBS2 to enquire whether the differential sum has been settled by P2; whether the property is
charged to any bank and if so, the particulars of the PB1 and the redemption sum for the
particular parcel; to forward the duly executed and stamped SPA2 and DOA between the P1 and
P2 and where applicable, the consent of or notice to the developer and proprietor, and the letter
of consent in favour of P2 from relevant authorities should there be any restriction in title; as
well as the letter of undertaking from P1 directly addressed to PB2 to refund the loan sum
released by PB2 should the assignment of the property in favour of P2 cannot be perfected for
any reason whatsoever.
To PB1
PBS2 to request for redemption statement in consideration of payment of redumption sum by
PB2, undertaking form PB1 to forward the duly stamped and executed deed or release and
reassignment with the PA1 revoked and registered in HC, and to remove their caveat. PBS2 to
seek letter of undertaking addressed to PB2 to refund redemption sum if DRR cannot be
perfected.
Note that DRR cannot be dated later than DOA because the property can only be assigned once
bank reassigns back the property.
Step 5: Replies
Same as developer sale above. PS1 will reply differential sum fully settled etc.
Step 6: Release of redemption sum
PBS2 will advise PB2 to release redemption sum upon receiving the replies. PB1 to execute
DRR upon receipt of redemption sum and to remove PA and remove caveat (step 10 of above
developer loan transaction).
Step 7: Execution of DOA
P1 will execute and stamp DOA in favour of P2 upon receipt of DRR.
Step 8: Forwarding of DOA
PS2 will forward stamped DOA to PBS2. P2 will then execute LACA2 and PA2. PA2 to be
registered in HC.
Sequence is: DRR then DOA then DOA + PA registered in HC.
Step 9: Release of balance loan
PBS2 to advise PB2 to release balance of loan upon receipt of all documents. Similarly, P2
should negotiate on whether LACA is to be converted to charge, but this is not mandatory.
Step 10: MOT
Original MOT to be sent to PB2 and copies to P2 once it is issued.