This question is not only asked by
the purchaser of a property transaction but is also asked by the seller who
sells the property to get money out of it. Most seller and purchaser expect a
property transaction to be completed within a month or two. That is not the
case as there are various factors to be taken into consideration and various
parties involved other than the seller and the purchaser.
A lawyer is involved in a property
transaction as a facilitator. A lawyer manages the various parties involved in
the property transaction which include :
1) the seller;
2) the purchaser;
3) the lawyer representing the seller
(if the lawyer is acting for the purchaser) and vice versa;
4) the housing developer (which an be the seller
or involved in the transaction as the property is not issued with an individual
title yet);
5) the land office (where the property
is registered as proof of ownership);
6) the state authority (which is
actually represented by the land office but is involved if the property is a property which requires a consent to transfer or consent to charge - usually leasehold property);
7) local authority (to pay for any assessment
notice arrears);
8) bank or banks (depending whether the purchaser
purchase the property by taking a housing loan and if the seller still owes the
bank any money which need to be paid first)
The duration of a property
transaction from the time that the Sale & Purchase Agreement is signed to
the time that the purchaser can say that he is the new owner of the property
fluctuates according to the type of property being transacted. The easiest type
of property to transfer will be a piece of land but this type of property also
has pitfalls which can drag the transaction into many months. If the property
is a house, the package that it comes in will be the key to the process. A
house can be built on a piece of land and sell as a terrace house, a bungalow
or a semi-D. A house can also be an apartment, a condominium and a penthouse. Agreements
governing the sale of the house built on land and the one sold as a strata
property are different.
When you buy from a property
developer, the sale of a house on land will use the agreement provided for in
Schedule G under the Housing Development (Control and Licensing) Act 1966 which
is the sale of building and land. The time frame provided for the property to
be completely built and delivered to the purchaser is two years. Within the two
years, the housing developers at their own pace must built the structure of the
house, get all the infrastructures within the housing development ready, deal
with authorities and finally deliver the key to the house buyer. The sale of strata
property will use the agreement provided for in Schedule H of the Housing
Development (Control and Licensing) Act 1966 which is the sale of building or
land which will be subdivided into parcel. As for strata property, the
timeframe is increased to three years as there are a lot more complications in
building a property with many units within it.
As housing developers has their own
capability in building their housing project, you cannot actually say they are
not delivering because you do not see any construction is taking place at the
place where your new house is supposed to be. As much as housing developers are
said to have a reputation as businessmen who don’t deliver what they have
promised, they can set the schedule of building the houses according to their
own time frame. If they are serious businessmen, they will want more purchasers
to purchase their housing project and keep them in business. Only when there are no progress in the
housing development for more than one year should you worry about the fate of
your house, if you buy the property from a housing developer.
However, if you are buying a property
from another individual, the timeframe for the completion of the transaction
can fluctuate between three months to more than a year (even more), depending
on the type of property that you are buying and how you intend to finance your
purchase. If the property that you are buying is not charged to any financial
institution and the property does not require to be approved by the state
authority to be transferred, whether the property has been issued a title or
not, the time for it to be transferred can be a short time of two or three
months. This is a very rare occurrence in this day and age as most property is
purchased by the vendor in the first instance using a financial institution.
If the property is charged to a
financial institution, the time for the transfer will be determined by the
efficiency of bank which has put a charge on the property before it is sold.
The bank will only release the property from its control once it has receives
the full amount of payment due from the purchaser’s financier. Just imagine the
intricacies that are involve as your lawyers have to communicate with your
financier, with the vendor’s lawyer, with the vendor’s bank and in certain
matters, the vendor himself, in trying to get the property unencumbered. Once
payment are made, the lawyer who handles the finance side of your purchase will
have to secure the interest of the financial institution that you have chosen
to finance your property transaction. That will take another duration which
will depend on the efficiency of your lawyer and to some extent, your
financier.
One of the
timeframe which usually delay the completion of a property transaction is when
consent to transfer need to be acquired from the State Authority. ‘Application
for Consent to Transfer’ as it is called usually takes between 3 months or more
especially if the transfer is from a bumiputra seller to a non-bumiputra
purchaser. Surprisingly, once consent to transfer is obtained, a consent to
charge will only requires a maximum of 2 weeks to be obtained from the same
department.
If the property
is still not issued with an individual title, the housing developer which had
built the property needs to be involved in the equation. Although Section 22D
of the Housing Development (Control and Licensing) Act 1966 has specifically
stated a housing developer should not withhold confirmation of any arrears and
can only charge RM50-00 for issuing an undertaking to the lawyer(s) handling
the transaction, things get complicated if there are arrears, if Joint
Management Body decided to be tough and if the property is under receivership,
to quote a few ‘complications’. Add between two weeks to three months for your
lawyer to resolve this.
Another delay
will usually happen when the property needs to be redeemed from the seller’s
financier. As the seller’s financier is in the process of losing a customer,
the department that handles the issuance of redemption statement and handling
the redemption itself usually takes time to do as such. Another factor is the
security documents are usually kept by a storage company and takes some
reasonable time to be located. Add in another one or two month to the equation.
These are just
some examples which can crop up when a property transaction is being conducted
by your lawyer. A good advice for novice or even seasoned seller or purchaser
of property to follow closely your lawyer who conducts your property
transaction and help them facilitate the transaction wherever you could.
This article was first published in Property Insight magazine, April 2015 edition
No comments:
Post a Comment