It seems to be a common perception that purchasing property involves negotiating the purchase price, getting a loan, signing the sale and purchase agreement (SPA), picking up the keys and the place is yours.
The reality is quite different, don’t you think? In the sale or purchase of any property, there are legal procedures and timelines that have to be complied with before the transfer of ownership is complete.
Let us shed some insight into Malaysia’s conveyancing process for those unfamiliar with the legal requirements when buying a home. It will also help you to decide on whether to seek legal services or to go on your own.
What is conveyancing?
Conveyancing is the legal transfer of home ownership from the seller to the buyer. The conveyancing process starts when your offer to buy is accepted and concludes when the property title is successfully transferred to you.
A simple conveyancing example: every step that makes buying your first home a success – from the point of putting down the deposit up to the time you happily collect the keys (and title deed).
A Quick Dive into Malaysian land titles
First, let’s get familiar with some common property terms:
The Malaysian land law is governed by the National Land Code Act 1965 and is based on the Torrens System where “the registration of title is everything…”
Land is classified as Freehold and Leasehold. When you buy a freehold property, you own both the property and land until you sell it. Whereas if your property is on leasehold land, you own only the property but not the land. You can continue to reside in this property so long as the land tenancy is still valid.
Both freehold and leasehold land fall under a Master Title. This is a title for an extensive area of land where properties can be built on.
The Master Title is further split into two. – Individual title For individual property such as terrace house, semi-D and bungalow. – Strata title For multi-storey buildings like apartments, condominiums and townhouses.
Who does the conveyancing?
A conveyancing lawyer or conveyancer usually does the conveyancing process. Of course, you can also choose to do it on your own. Although, if you choose this route, be aware that it is a tough road ahead.
Besides researching the property you are buying, you also need to prepare and review all the legal documents involved. You will also need to be conversant with the legal jargon and be your own runner.
In comparison, the experts are, well, experienced. A conveyancing lawyer will draw up all of the legal and loan documentation, conduct the necessary searches (to ensure there are no other issues on the property that may impact the process of ownership transfer) and arrange all details until the transfer of the property to you is complete.
It is their job to provide legal advice, help you make the right decisions and navigate through the whole process successfully.
Where can I hire a conveyancing lawyer?
There are several options you can consider:
Developers normally have a panel of lawyers that you could engage with.
Referrals from banks which you plan to get your loan from. The solicitors here can assist you with both the conveyancing process and your bank loan.
Recommendations from family and friends with prior experience with conveyancing lawyers.
Conduct your own online search.
Before appointing a conveyancing lawyer, we would recommend that you first hold a preliminary meeting (i.e interview) with them. The experience and credibility of the legal firm or lawyer should give you some confidence. Let them share their success stories, but verify them yourself as well. At the same time, get a brief run-through of how they handle the conveyancing process. Different lawyers will have different methods of calculating their fees. So, ask them for a breakdown of their charges in their quotation.
How the conveyancing process works
STEP 1 – start with a serious offer.
The buyer indicates his interest in a house and will make an offer. The real estate agent will then draw up a letter of offer (LO) to reserve the desired property. To confirm the reservation, the buyer will have to pay an earnest deposit (or booking fee) of up to 3% of the total purchase price.
The LO also outlines the timeline for the execution of the Sale and Purchase Agreement (SPA). i.e within 14 working days from its date. It is important to note the date of the LO and the SPA timeline because if it is overdue, the earnest deposit could be forfeited by the seller.
TIP: The earnest deposit is usually part of the 10% down payment for the new home.
STEP 2 – apply for financing.
Individuals will start approaching various banks for a housing loan. For this purpose, banks will require the following documents:
LO from step 1 above
Photocopy of MyKad (front and back)
Salary slip (latest 3 months)
Bank account statement (latest 3 months)
Current EPF statement
Employment letter
Other supporting documents to show the availability of any additional or emergency funds.
A copy of the SPA (this could be done once the SPA is signed and stamped)
The bank will check your background and assess your credit health or CTOS to see if you meet their criteria. Apply to at least 2 or more banks so that you can compare interest rates and look at the type of loans that will suit your needs.
Once the bank approves your loan, they will issue an LO for your acceptance.
STEP 3 – conduct a comprehensive background check on the property.
This is to determine:
the title of the property, i.e freehold, leasehold, strata title or individual under a master title.
the status of the property, i.e whether it is still charged to a financial institution or any other encumbrances that could impact the transfer of ownership.
whether there are any restriction-in-interest on the property. In Malaysia, the most common is a limitation imposed by the State Authority. If this is the case, buyers must seek consent from the state authority for the transfer of property.
STEP 4 – draft the SPA.
Your appointed lawyer will proceed to draft the Sale and Purchase agreement (SPA). The draft spells out details of the purchase mutually agreed upon by both buyer and seller such as the purchase price, payment terms, conditions of the property, loan details, and other pertinent details related to the property.
STEP 5 – review the SPA.
This step involves participation from both the seller and buyer (or their solicitors). Communication is key to addressing any concerns and agreeing on the changes.
STEP 6 – sign the SPA.
Once all the changes are agreed upon and finalized, the SPA is ready for signing (normally 4 sets). This marks the start of the execution of the SPA. After signing the SPA, the buyer is required to settle the remaining balance of the 10% down payment (less the earnest deposit) for the property.
The signed SPA will then be sent for stamping. Stamping carries a nominal fee of RM10 per copy.
STEP 7 – complete all other documentation.
Within 60 days of the SPA, various forms have to be filled by both the seller and the buyer. These include Cukai Keuntungan Harta Tanah (CKHT) forms relating to Real Property Gains Tax (RPGT) as well as the Sales and Service Tax (SST). These forms are available at the land office.
STEP 8 – securing a loan approval and signing a Memorandum of Transfer (MOT)
When the buyer’s housing loan is approved, the bank will request additional information or documents from both the seller and the buyer (e.g letter of undertaking). This is the bank’s normal procedure before releasing the balance purchase price or redemption sum (i.e the seller’s housing loan is still active).
Simultaneously, the buyer’s lawyer will submit the MOT for adjudication. Adjudication is the process of submitting the MOT to the stamp office for the assessment of the property’s market value, and the calculation of the stamp duty.
Once the notice of stamp duty is issued, payment must be made within 14 days after which the MOT will be stamped and submitted to the bank. However, if paying cash for the property and no bank loan is involved, the MOT will be given to the buyer.
STEP 9 – and finally, handover the property.
We have reached the end! The completion date is the day when the purchase price is fully disbursed (i.e settled). The buyer will then be notified to collect the keys and handover over the property. This is known as vacant possession.
Congratulations on becoming the proud owner of a new place!
How long will the conveyancing process take?
How long will the whole process from Step 1 to Step 9 take? Well, that depends.
The duration of the conveyancing process varies from case to case. Factors that could affect the timeline include negotiation between seller and buyer, whether your application for a bank loan is approved or not, issues pertaining to the title, whether consent from the state authority is required, etc.
As a basic guide, the normal process of conveyancing practice takes generally 3 months. This covers the whole SPA process right up to the transfer of title to the buyer. However, this may take longer.
A good SPA would carry an “extension of time” clause to protect the buyer. In cases of delays, this clause will come into effect.
Note: If there are further delays beyond the extended completion date, the buyer may have to bear penalty costs.
What are conveyancing legal fees like?
Governed by the “Solicitors’ Remuneration Order”, conveyancing legal fees are calculated based on a percentage of the property’s purchase price. Under this order, the legal services should cover:
Preparation and execution of the sale and purchase agreement (SPA)
Registration of transfer or assignment of the property
Preparation of security or loan documents
An overview of the fees:
Property Price (RM)
Conveyancing Lawyer’s Percentage (%)
RM500,000 pertama
1%
RM500,000 – RM1,000,000
0.8%
RM1,000,001 - RM3,000,000
0.7%
RM3,000,001 - RM5,000,000
0.6%
More than RM5,000,000
0.5%
If you bought a house for RM700K for example, the legal fees are calculated like this:
The 1st RM500K at 1% = RM5,000
The balance of RM200K at 0.8% = RM1,600
Total of legal fees = RM6,600 (before SST)
Besides the SPA legal fees and the purchase price, do budget extra money for the following:
The real estate agent’s commission
SPA stamping fee of RM10 per copy (minimum 4 copies)
Legal fees for your bank loan agreement
Stamp duty fees (when the MOT is submitted adjudication)
Some reserves in case of penalties, etc
Stamp duty waiver for first home owners (homes <RM500K)
The Malaysian government has extended the Home Ownership Campaign initiative till 31 December 2025. First-time homebuyers are exempted from full stamp duty fees for the purchase of their first home worth not more than RM500,000.
Definitely. If the lawyer’s fees are not something you can afford or wish to budget for, you could try managing the conveyancing process on your own. Steps 1 – 9 of “How the conveyancing process works” can act as a guide.
You will have to be meticulous and patient. The process can be confusing for those without experience. Small mistakes may result in submissions being rejected, causing delays.
Our 2 sen
It is normal for complications to arise during the conveyance process. This is because many parties are involved in the transfer of a piece of property – seller, buyer, their solicitors, banks (and their solicitors), land office, stamp office, state authority, etc.
Although you can carry through the process of conveyancing yourself, consider your capacity to deal with several parties, the potential problems or legal issues. Tackling issues require time and effort. Put that together with your daily work and family routine, will you be able to cope? Think carefully before you embark on that solo quest.
In the end, it may be more expedient to leave conveyancing in the hands of the professionals.
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