21 Aug WHAT IS CONVEYANCING?
WHAT IS CONVEYANCING
Conveyancing is the legal transfer of a property title from one vendor (owner) to a purchaser (buyer) for a piece of land, residential premises or commercial properties. The process involves a conveyancing solicitor who acts on behalf of the purchaser to ensure their client receives the title deeds to the property and the land it sits on.
What do you know about Property Law in Malaysia?
The Malaysian land law is governed by the National Land Code Act 1965 and is based on the Torrens System where ‘the registration of title is everything and it would be wrong to allow an investigation as to the right of the person to appear upon the register when he holds the certificate of title’ (see the Federal Court’s judgment in Teh Bee v. K Maruthamuthu  2 MLKJ 7). The State Land Offices administer land registrations, which comes under the purview of the Department of Land and Mines, in turn part of the Ministry of Natural Resources and Environment.
Properties can be classified in three ways: Freehold, Leasehold, and Malay Reserved Land. Both freehold and leasehold land are originally held under Master Title. It relates to a larger parcel of land in which multiple properties may be built and will usually be in the name of the developer or some maybe proprietor. The development in which the master title is held can be for instance terrace house, bungalow, shop office, apartments, flats & etc. The master title then can be divided into two ways:
i) Individual Title – normally one property is built on the said title like terrace house, semi-detached house, bungalow, etc. Sometimes, the title itself issued under the individual title and not the master title;
ii) Strata Title – applicable to multi-storey buildings like condominiums, apartments, shop office, townhouse, etc. This type of title is originally from the master title.
For individual and strata titles which have restrictions in interest (most of the title with leasehold status), the process will take longer period where it requires the owner to obtain approval from the State Authority.
For Malay Reserved Land, the land or the property itself must be owned by a Malay and it cannot be transferred, sold, or leased to a non-Malay. The purpose is to prevent any private dealings between Malay and non-Malay in the land and to prevent any State Land in Malay Reservation Areas from being disposed by any means to non-Malays. It is an exclusive rights/ownership to Malays in Malaysia.
Do you really need a conveyancing lawyer to buy a property?
Basically, any individual can prepare the Sale and Purchase Agreement (SPA) and complete the requisite forms and subsequently file them with the authorities (Lembaga Hasil Dalam Negeri, land offices, High Courts, etc). However, that the do-it-yourself (DIY) style route, is devoid of any legal guarantees as the procedures itself are complicated and somewhat confusing. You need to have expertise in properties who can address any issues for your own interest as the sale and purchase itself sometimes are not straightforward and you may not anticipate what problems may occur while handling it by yourself.
A lawyer able to assist you in the entire process of the sale and purchase from the pre-contractual signature to the legal procedures required to transfer the ownership of the property into the buyer.
Other than that, a lawyer will make your case move forward and even be able to make follow ups with the other side of lawyers if the other party is stalling and. Your lawyer also will be able to highlight any issues which are buried deep in all the documentation or may foresee any issues that you may not be familiar with or never heard of before.
A lawyer will ensure all of your wording is correct so you will not end up giving up warranties which is a risk if the agreement and correspondence is not worded right. If a mistake is made in your correspondence, the other party’s lawyer could take advantage and it could result in you being sued or you may be at a disadvantage spot where no lawyer to assist at the crucial time.
Another point to consider if you are an owner is that the buyer’s lawyer will always prefer to send money to a valid lawyer’s account rather than direct to the owner as to protect against money laundering regulations.
What are the necessary documents needed to be prepared in selling or buying a property in Malaysia?
Before your lawyer may draft the sale and purchase agreement and other legal documentation, few documents from you as an owner or buyer need to be prepared beforehand. It helps to have a checklist set up so you can ensure you’re prepared.
If you buy a property directly from the Developer, all you need to prepare is your identification card only. While for sub-sale cases, these are the important documents that need to be prepared:
- Principal Sale and Purchase Agreement
- Previous loan documentation (applicable if the Owner purchase by mortgage/loan)
- Identification card
- Current duly paid Quit Rent
- Current duly paid Assessment
- Current duly paid Maintenance Receipt/Statement (applicable to multi-storey buildings)
- Copy of Title (applicable to individual/strata title)
- Loan Account No/Bank Statement in which the loan was granted
- Income Tax No & Service branch
- Utility bills (tnb, water, iwk)
- Identification card
- Birth Certificate (applicable to title/property held under Malay Reserved Land)
- Income Tax No & Service branch
Not sure how the lawyers calculate your fees?
Legal fees for conveyancing practice in Malaysia govern under Solicitors Remuneration (Amendment) Order 2017 (SRAO) which was gazetted on 2nd of March 2017. The SRAO increases the rate of the scale of fees in respect of specified non-contentious business, and would permit lawyers to grant a discount of up to 25% on the fees for specified non-contentious business.
|Consideration or Adjudicated Value (whichever is higher)||Scale of Fees|
For the first RM500,000.00
1.0% (subject to a minimum fee of RM500.00)
|For the next RM500,000.00||0.8%|
For the next RM2,000,000.00
For the next RM2,000,000.00
For the next RM2,500,000.00
Where the consideration or the adjudicated value is in excess of RM7,500,000.00
|Negotiable on the excess (but shall not exceed 0.5% of such excess)|
Here is an example. You buy a terrace house for a purchase price of RM650,000.00, you will have to pay a total of:
For the first RM500,000.00 x 1.0% = RM5,000.00
For the next RM150,000.00 x 0.8% = RM1,200.00
The total fees will be RM6,200.00 only. However, this is not the final amount that you will be paying to your lawyer as there will also be fees on the stamp duty payable on the instrument of title, registration fees at the state land offices and others. You may find that there will be a difference of charges by the lawyers if you request for a quotation from different lawyers in terms of the disbursement and reimbursement charges such as travelling, telephone, photocopies etc.
What does a conveyancing lawyer do in the conveyancing process?
The legal process formally begins when the lawyers for both owner and buyer begin reviewing the legal documents.
During this initial stage, make sure you have gone through the documents yourself, and highlight any concerns you may have. For instance, the buyer intends to settle/pay the 10% deposit by way of his/her EPF withdrawal, this matter should be addressed to the lawyer at the initial stage (before the drafting of agreements) as it needs the owner’s approval.
Though the lawyer’s role traditionally begins before any purchase offer is made as the buyer might engage a lawyer to get some advice on the title or property that he/she intends to buy. As the buyer itself, you will need to be sure that the property you are interested in is in good condition. Among other things that you need to consider is that: if the title is encumbered (charge/caveat/lease), whether the purchase price is enough to redeem the property; that the owner actually owns the title to the property; any rights or legal restrictions that come with the property; local land charges or obligations; etc. All these questions can be found out in the land search itself. You may conduct your own land search or you may request a copy of it from your lawyers. Your lawyer shall advise you accordingly based on the status of the land search report.
Lastly, your lawyer should assist you through all associated documents and agreements, and be able to clarify any points you do not understand throughout the process. The process will end once the vacant possession of the property is handed over to the buyer and the owner receives the balance purchase price.
For a normal process of a conveyancing practice, it will only take three months for the title to be registered under the buyer’s name as the new and legal owner. However, each case may vary. Some other cases may take up to six months depending on the type of title, status of the said title and other upcoming factors. Thus, engaging a good and convincing lawyer is a necessity to own your dream property.