What is a subsale agreement?
A subsale is a sale of property between two parties neither of whom are property developers. So when you purchase from a party who is NOT a developer, the agreement that you sign is called a Subsale Agreement. This agreement is important as it covers all the terms and conditions between the two parties. Remember a subsale transaction falls under the Housing Development (Control and Licensing Act), 1966. So what are the important aspects that you need to know?
Read more!
The important aspects are:-
1) ‘With’ Title or ‘Without’ Title
First you need to know if the property is ‘With’ Title or ‘Without’ Title. This means you need to know if the individual document of title (IDT) has been issued. IDT is to land what an identity card is to a Malaysian. Why is this significant? Well, whether a property is with or without title will determine the entire transaction process. Different documents are used for both types and the rights under the law are also different.
2) Leasehold or Freehold
Another aspect that you need to know before you buy a property is whether the property is a leasehold property of a freehold property. These two types of property affect both your decision to buy and the documents that are involved in the transaction. Two of the main issues to consider are that a leashold property are usually consider to depreciate in value (although not necessarily true) and the time it takes to complete the purchase is usually double that of purchasing a freehold property.
3) Citizenship / Residency of the Purchaser
If you are a foreign national, the good news is that you no longer need to get the approval from Malaysia’s Foreign Investment Committee as long as the purchase price is above RM250,000.00. Properties below that price cannot be purchased by a foreign national. Do remember, however that you STILL need to get the relevant state’s consent to the sale. For instance, if you purchase a property in Selangor, you need to get the Selangor Land Office’s Consent.
4) Seller’s Loan
If the property is still charged or assigned to a bank for a loan taken by the Seller, make sure you check to see that the amount that he owes his/her bank is NOT more than 90% of the purchase price. If it is more than that, there is a risk that the Seller may ‘run away’ before the sale is completed and the only way for you to complete the transaction is to pay whatever extra that the Seller owes his/her bank.
5) Make Sure You Can Pay
Before you even pay an earnest deposit to the real estate agent or the Seller, please make sure that if you intend to get a loan to finance the sale, your loan can be approved. If you do not have the necessary proof of income or if your name has been blacklisted for consistent failure to pay your monthly installments on your debts (credit cards, car payments, personal loans etc.) your loan could be rejected. If your loan is rejected after you have paid your deposit, the seller has the right to forfeit the deposit if you do not go ahead with the purchase. Play safe, get the loan before paying any monies or better yet, get the Seller to agree to give you two weeks to get the loan approved and if it is not, any deposit paid should be returned to you. Lastly, make sure you get it in writing!
Did you find this useful? Want to know more? Our seminar is coming soon. Please send us a message or email us.
No comments:
Post a Comment