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Mastering Sub-Sale Procedures: Convincing Advice for Trouble-Free Real Estate Deals (Part 1)

Updated: 5 days ago

Both the Purchaser and Vendor are Malaysians. The property is a freehold property with the Strata Title issued and registered under the name of the Vendor. However, the title is currently encumbered. Considering that the Vendor has owned the property for more than 5 years, what are the procedures for this transaction?


What is the purpose of both Vendor and Purchaser to sign the Letter of Offer?

The Letter of Offer, also called as The Letter of Intent to Purchase, is a written commitment from a potential Purchaser to the Owner/Developer of a property, expressing their desire to purchase a particular property. It is usually accompanied by an upfront payment, often called an earnest payment/deposit. It is standard practice for 2% - 3% of the Purchase Price to be paid upon the execution of the Letter of Offer.


What are the first steps that Solicitors will do to ensure the entitlement of the property before drafting a Sale and Purchase Agreement (“SPA”)?

It is standard practice for Solicitors to carry out a land search to obtain the title details of the property to identify any restrictions or encumbrances over the property. It is also common practice for the Purchaser’s Solicitor to carry out a bankruptcy or winding-up search on the Vendor.


Who will execute the SPA first and why?

Once all terms under the SPA have been agreed to by both the Vendor and Purchaser, it is standard practice for the Purchaser to execute the SPA first. Thereafter, the Purchaser’s Solicitor will forward the same to the Vendor’s Solicitor for the Vendor’s execution. This is because the Purchaser will need to pay the balance of 7%-8% of the Purchase price upon the execution of the SPA.


What are the next steps when both parties have signed the SPA?

Once the SPA has been executed by both parties, the Purchaser’s Solicitor will then need to stamp the SPA with a nominal fee of RM10.00 per copy.


Is there a timeline for the completion of the sale? If so, when does the SPA timeline commence? Will it be from the date of the SPA or from the date of the stamping?

The common timeline in SPAs would generally be 3 months and commences from the date of the SPA. There will always be a timeline for the completion of sales in SPAs. This is because there are various other matters that will be required to be attended to before the property can be registered under the Purchaser’s name, such as the discharge of charge over the property if the Vendor had taken a loan to finance the Vendor’s purchase of the property.


What is the next step when the SPA is stamped?

The original and duplicate SPA will be kept by the Purchaser while another copy will be forwarded to the Vendor for his/her safe keeping and records. Subsequently, the Purchaser’s Solicitor will proceed to enter a private caveat to file the necessary Real Property Gain Tax (“RPGT”) forms within 60 days from the date of the SPA.


Does the Vendor need to pay for RPGT if the Vendor owned the property for more than 5 years?

Yes. If the Vendor is a Malaysian or a Permanent Resident of Malaysia, he/she will be charged 5% in property taxes after the 5th year according to the latest RPGT rulings. Different rates would apply if the Vendor is a foreign national or is a company.

For more information about any subsale, you may request a free quotation for legal fees from us today.

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Messrs. Donny Wong & Co.

📌: D2-U1-3 & 3A Solaris Dutamas (Publika), No. 1, Jalan Dutamas 1 50480 Kuala Lumpur

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Legal Disclaimer

We trust that you have gained some information from this article. If you have any specific questions related to this article, please contact us at

The article posted is for general information purposes only and should not be construed as legal advice. Facts and circumstances differ from case to case. Please consult your lawyer for specific legal advice and action to be taken.


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