Property Law in Malaysia: Perfection of Transfer
Property Law in Malaysia: Perfection of Transfer

Property Law in Malaysia: Perfection of Transfer

Introduction

Many buyers of the strata properties, such as apartments, condominiums, town houses, duplexes, flats, and commercial buildings, whether they bought directly from the developer or other properties’ owners, were often shocked by their lawyers’ calls subsequent to the completion of transaction for perfection of transfer; and perfection of charge if they were taking a bank loan to finance the purchase. 

Either procedures, will have to be done at the buyers’ own cost, be it legal fee, stamp duty and other miscellaneous charges or disbursements. 

This happened because when these buyers bought their properties, the strata titles to the properties have yet to be issued or delivered to the buyers. This is evident by them only entering into a deed of assignment (by way of transfer) as proof of their ownership.

The truth is, in Malaysia, the ultimate proof of our ownership to a property is the title or strata title instead of a deed of assignment (by way of transfer). A title or strata title is also called as ‘Geran’ or ‘Grant’ by many Malaysians.

Once there is the issuance of the strata title under the developer’s name, the perfection of transfer can then be processed by transferring the strata title unto the property’s owner name. 

Normally, the developer would write to the buyers and suggested them to go to a designated lawyer to deal with the process.

Be that as it may, buyers can actually appoint their own lawyer of choice in dealing with the same.

Obligation on Developer to Ensure Strata Title issued upon Delivery of Vacant Possession with effect from 1 July 2015

Post 1st of July 2015, such hidden process and cost in buying a strata properties are very much alleviated by virtue of the Housing Development (Control and Licensing) (Amendment) Regulations 2015 (‘the 2015 Regulations’) which set to further improve the rights and interests of house buyers.

It is now stated in the statutory sale and purchase agreement under the 2015 Regulations, i.e. Schedule H (used for property under construction) and Schedule J (used for completed property), that the manner of delivery of vacant possession to the buyer has been amended in which the buyer must be furnished with the Certificate of Completion and Compliance (‘CCC’) and strata title, failing which the developer will have to pay late delivery interest to the buyers.

Unless, the developer had obtained a written certification issued by the Controller of Housing from the National Housing Department to exempt the furnishing of strata title when deliver vacant possession. In which case, the Controller of Housing would impose a time frame for developer to ensure the delivery of strata title, normally 4 to 6 months’ time after the delivery of vacant possession.

The net effect is, perfection of transfer can be done upon delivery of vacant possession after the 1st of July 2015.

As compared to the statutory sale and purchase agreement prior to 1st of July 2015, such provision does not exist, thus issuance of strata title could be a matter of 2, 5, or even 10 years, depending on the developer’s initiative to apply for it.

Legal Fee for Perfection of Transfer

The legal fee for perfection of transfer is regulated under the Solicitors Remuneration Order 2005 (as amended), with effect from 15th March 2017, depending on the property’s purchase price or ‘consideration’ as follows. The mandatory scaled legal fee is subject to either 75% statutory deduction the appointed lawyer is also the previous lawyer representing the buyer in his/her purchase or 50% if it is not:-

Consideration or Adjudicated Value (whichever is higher)Scale of Fee
For the first RM500,0001.0% (subject to a minimum fee of RM500)
For the next RM500,0000.8%
For the next RM2,000,0000.7%
For the next RM2,000,0000.6%
For the next RM2,500,0000.5%
Where the consideration or adjudicated value is in excess of RM7,500,000Negotiable on the excess (but shall not exceed 0.5% of such excess)

Stamp duty for Memorandum of Transfer (‘MOT’)

MOT, being the instrument to effect the transfer of strata title, will be imposed an ad valorem stamp duty under the Stamp Act 1949 calculated as follows: –

ItemStamp Duty RateAmount (RM)
First RM100,000(Property Value) x 1%x
Rm100,001 to Rm500,000(Property Value) x 2%x
Rm500,001 and above(Property Value) x 3%x
Total Stamp Duty Payablex

Be that as it may, the government at times introduced various stamp duty exemption orders for the benefit of the house buyers whether from middle or lower income group for the purchase of low cost as well as medium cost property, as seen in the recent years.

For example:

Stamp Duty (Remission) Order 2014 [PU (A) 360/2014]

– there is a 50% remission of stamp duty on MOT for the purchase of the first residential property cost not more than RM500,000, subject to sale and purchase agreement signed in between 01.01.2015 and 31.12.2016.

Stamp Duty (Remission) Order 2016 [P.U. (A) 365/2016]

– there is a 100% remission of stamp duty on MOT for the first RM300,000 in the purchase of first residential property cost not more than RM500,000, subject to sale and purchase agreement signed in between 01.01.2017 and 31.12.2018.

Conclusion

It is always advisable to engage one’s own lawyer in any property transaction in order to have one’s very own rights and interests protected in an expensive purchase to many.

About the Author: 

This article is written by Chia Swee Yik, Partner of this Firm (+6016 2148 218, chia@chialee.com.my) (assisted by paralegal, Ooi Zhuang Hong) who has provided practical advice on property transaction.

Feel free to contact him if you have any queries.

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