Nature of transaction

In a sale transaction of a residential property, two things must first be determined. The first is whether the sale is directly from the developer or through a subsequent owner (also known as a “sub-sale transaction”). The second is whether the property is with or without a title. This is important because the procedures are different in each case.

Direct sale from the developer (Residential property)

If the property is sold directly from the developer, terms and conditions of the sale and purchase agreement shall be in accordance with the Housing Development (Control and Licensing) Act  1966 (Malaysia)  whereby:

1. (a) If the property is a landed property (not strata), it shall be in accordance with schedule G of the Act; and
2. (b) If the property is a building or land intended for subdivision into parcels including an apartment and condominium, or landed strata development (gated community), it shall be in accordance with schedule H of the Act.

Direct sale from the developer (Commercial property)

If the property is for commercial purposes, it is not governed by Housing Development (Control and Licensing) Act  1966 (Malaysia) . However for shop houses (where the ground floor is a shop and the upper floors are residential dwellings) and where within the same lot there are residential and commercial complexes, the residential block will still fall within the Housing Development (Control and Licensing) Act  1966 (Malaysia) .

In such a situation the solicitor must be cautious in drafting the sale and purchase agreement as the terms and conditions of the agreement are not customized. Quite often in such situations the developer and the proprietor would try to incorporate their own terms and conditions to take advantage of the situation.

An example is where the clause for progress payment and/or late delivery charges may differ from the norm of those mentioned in schedule G and schedule H of the Housing Development (Control and Licensing) Act  1966 (Malaysia) .

Sub-sale transaction

When the sale is not directly from the developer, it is generally known as a sub-sale transaction. In such cases the solicitor must be cautious because in a sub-sale transaction, the terms and conditions of the sale and purchase agreement are not governed by any statute. The sale and purchase agreement in sub-sale matters are essentially governed by the principals of the law of contract.

As such as in any contract, the terms and conditions of the sale and purchase agreement need to be negotiated between the parties. There is no standard sale and purchase agreement and the parties would have to negotiate the terms and conditions of such an agreement very carefully to ensure neither party are disappointed or frustrated by the outcome.

This preview is an excerpt from the following publication. this publication for access to all the commentary and precedents.

Jump to this this section below.