FAQS ABOUT PURCHASING A PROPERTY IN MALAYSIA

Purchasing a property may seem to be a simple buying and selling transaction to a lot of people. However, like all transactions, simple overlooking of things may make purchasing of a dream home becoming a nightmare. Below are a few frequently asked questions that may help avoiding problems:-

1. What are the differences between purchasing a flat and a landed property?
   

   The title to an apartment unit developed by developers are referred to as strata titles. Strata titles to apartment units are applied by developers to the respective authorities and usually it will take a longer time for the title to the property to be issued. Sometimes, it is rather normal that a few years may have elapsed after the Certificate of Completion and Compliance (CCC) is issued before a strata title is issued. Before a strata title is issued, the document which is the proof of ownership to the property is the original Sale and Purchase Agreement. The title to a landed property is referred to as a grant and comparatively, the grant to a landed property is issued faster than a strata title.

2. What should I do if I do not have sufficient cash to purchase the property that I wanted?
   

Obtaining a loan from a financial institution to help financing the purchase is a very normal practice. Before deciding which financial institution to get the loan from, it is wise for you to source around various financial institutions to look for the most suitable and desired interest rates that a financial institution may imposed on the loan as different financial institution will have different interest rates.

3. What are the requirements for a successful application of a loan to finance the purchase after I have found the desired financial institution?

In order for the financial institution to process your loan application, you will have to furnish them with the necessary documents such as 3 months of your most recent salary slips. This is for the financial institution to decide if you are able to service the monthly installment of the loan.

The normal percentage of a housing loan that a financial institution may give is up to 90% of the property value. Some financial institution may even provide loan for renovation purposes. As to the tenure of the loan, it is usually up to the retiring age of a person. Hence, if you are 28 years old when applying for the loan, the financial institution might allow the tenure to extend to 27 years.

4. What happens to the property if I obtain a loan for its purchase?
   

   After the application is allowed, the financial institution will ask an appointed solicitor to prepare the securities documents. The documents may consist of a loan document such as facilities agreement, deed of assignment or charge (depending whether your property has a title issued or not) and a power of attorney.

   A loan document will spell out all the obligations imposed on you as the borrower and it will state in there the monthly installment that you need to pay, the duration of the loan, the interest rates imposed etc. In there it will also state clearly what the financial institution are allowed to do in the event if you fail to service the installment payment.

   The assignment or the charge is a document which you assign all you rights, title and benefits in the property to the financial institution. An assignment is used if the property that you purchased still do not have a title and a charge is used when the property has a title.

   The purpose of these documents is to allow the financial institution to ‘own’ your property until your loan is being paid off. The power of attorney is a document in which you give the financial institution a power to deal with the property in the event if there is any default in payment.

5. What happens if I cannot service my monthly installment?

   This is the time when all the security documents comes into play. The financial institution will first sent you remainder to service the installments. If that is futile, the financial institution will proceed to what is known as a foreclosure proceeding.

   The foreclosure proceeding is a court process whereby the financial institution will apply to the court to auction off the property via a public auction in compliance with the National Land Code 1965. If the auction is successful, the financial institution will use the proceed of the sale as a payment to the loan amount and if there is any shortfall in the auction price and the outstanding loan amount, the financial institution will still be able to apply for various ways of execution to recover them. One of the most popular way of execution is a bankruptcy proceeding.

6. What do I have to look out for when purchasing a property? 

   The most important thing to do before you sign the Sale and Purchase Agreement is to do a title search. The search will let you know who the owner of the property is and whether the property you intent to purchase is free from any form of encumbrances.

   The title search can be done in the respective land office of the states which your intent purchase is located with a nominal fees to be incurred. Your acting solicitor will cover this for you. Also important is to conduct a bankruptcy search against the seller that you intent to purchase the property from. All these searches will be taken care of for you if you were to employ a solicitor to assist in your purchase.