The Sale and Purchase Agreement (SPA) is an important part of buying a home. Signing the SPA means you’re ready to finalize the deal, so be sure before you sign! But don’t worry, we’re here to guide you through everything you need to know about the SPA.
What is a Sale and Purchase Agreement (SPA)?
A Sale and Purchase Agreement (SPA) is a contract between a buyer and seller that outlines the details of a property purchase. It’s usually prepared by the seller’s lawyer and signed by both parties. The terms and conditions in the SPA are legally binding and must be agreed upon by both sides.
The SPA protects both the buyer and seller from any unexpected changes to the agreement. However, if the property is inherited or bought at an auction, an SPA isn’t required.
What are the types of Sale and Purchase Agreements (SPA) in Malaysia?
Different property types need specific documents:
- Brand New Property
This is when you buy a new property directly from a developer. In this case, you should refer to the Housing Development (Control and Licensing) Regulations 1989, which includes two main schedules:
– Schedule G: For landed properties like terrace houses and Semi-Ds, with their own individual titles.
– Schedule H: For strata-titled properties like condos or apartments that share common facilities like swimming pools and parking areas. - Subscale Property
This means buying a pre-owned property from its current owner. For this type of purchase, you’ll usually need a Deed of Assignment.
- Brand New Property
What are the procedures of SPA?
You’ve found your dream property, so what’s next? First, sign the Letter of Acceptance (LOA) after picking the bank with the best loan rates for you.
Next, sign the SPA and pay a 10% deposit of the total purchase price within two weeks of signing the LOA – this is the usual process.
Then, after signing the SPA, it needs to be submitted to the Inland Revenue Board (LHDN) for stamping to make it official. Finally, sign the Loan Agreement with the bank, and you’re all set!
What are the key legal terms in the Sale and Purchase Agreement (SPA)?
Going through a Sale and Purchase Agreement (SPA) can be overwhelming, especially if you’re not familiar with the legal jargon. It’s a good idea to hire a lawyer to help you understand it. Here are some important terms to look out for:
- Defect Liability Period:
This is the warranty period when the developer is responsible for fixing any defects in a new property you buy. - Vacant Possession:
This is when you receive your house keys and can access your new property, which should be free from any obstructions, like ongoing construction or previous tenants. Generally, you’ll get the keys within 24 months for landed properties and 36 months for strata properties after signing the SPA. - Liquidated Damages:
This is the amount developers must pay you if they fail to give you vacant possession on time. It’s usually specified in the SPA and is commonly set at 10% of the property price per year. - Indemnity Clause:
This clause protects you, allowing you to receive compensation if the other party breaches the contract, plus additional payment for any losses or damages you incur.
What are the costs associated with the SPA?
The buyer is responsible for the costs of drafting the Sale and Purchase Agreement (SPA), which are included in the legal fees. Here are the SPA charges:
Stamp duty and legal fees for the Sale and Purchase Agreement (SPA) depend on the property’s price. For instance, a stamp duty of 1% applies to the first RM100,000 of the property’s price, and it can increase to 4% for properties costing more than RM1 million.
Can you terminate the SPA?
Yes, you can cancel the Sale and Purchase Agreement (SPA) under certain conditions, but it will cost you. If you decide to cancel, a penalty of 10% of the property’s purchase price will be charged to the party who cancels the SPA. For example, if you bought your house for RM450,000, you’d have to pay RM45,000—ouch!
Buying a home is not as quick as grocery shopping. It’s a detailed process that requires careful attention, so take your time! You can also check out our property listings for great deals, like exemptions on stamp duty and the memorandum of transfer through the government’s Home Ownership Campaign (HOC) initiative. Be careful not to sign a contract that you don’t fully understand, as this could lead to legal and financial trouble if you break any conditions.
Zero-Cost Ownership Perks with Berinda Properties!
Enjoy the benefits of homeownership without the extra costs! For our projects—Molek Pine 4, Molek Pulai, and Ponderosa Lakeside—all legal fees, stamp duties, and related costs are fully covered by the developer.
