Procedure to Enter into Sale and Purchase of New Developed Landed Property.

The purchase of property directly from the developer, also known as primary market, involves a contract of sale between a developer and a purchaser, or between a developer, a proprietor, and a purchaser.

Generally buying from new developer is much simpler than buying from individual owner as the property is usually free from any encumbrances (caveat, charge, bankruptcy). The only problem usually arises from buying from new developer is the delay in delivering vacant possession and defect in the house. A reputable developer may not pose much problem in legal aspect compared to the individually owned developer in the reality.

                In entering sale and purchase of newly developed residential house that is still under construction (the norm of developers in Malaysia), it would be governed by the Housing Development (Control and Licensing) Act 1966 (HDA) and Housing Development (Control and Licensing) Regulation 1989. The purchase from developer here will be using the SPA as provided in the HDA to safeguard the interest of the purchasers. Every SPA shall be in the form prescribed in Schedule G of HDA. While SPA for building or land (such as condominiums, apartments, landed property in gated community) intended for subdivision into parcels shall be as prescribed in Schedule H. The difference is that Schedule G expected time of delivery of vacant possession (VP) is 24 months from the date of SPA and 36 months for their counterpart. The VP period is also subject to HDR where Ministry of Housing may extend the VP period on special circumstances. Both schedule provide for the defect liability period to be 18 months from the date of delivery of VP and the vendor shall repair the defects within 30days at his own cost. If the defects had not been made good, the purchaser can request for costs to repair the property after giving him another chance to repair within 14days. In the worst case scenario where the developer refuses to remedy the defect, purchaser may opt for Housing Tribunal claim that is less than RM50, 000. The lawyer should advice the purchaser that he ought to accept the delivery of VP within 30 days of notice to take possession by developer, otherwise it would be deemed to be. The purchaser must ensure that the VP shall be supported by the certificate of fitness (CF) and make any complaint before taking the keys as a sign of protest in case of future dispute.

                As for purchasing a completed residential property from developer, a private contract of sale and purchase agreement can be used as provided in Regulation 11 (1B) of HDR. If individual title or strata title has been issued to the property, memorandum of transfer must be prepared to be executed by purchaser and developer together with the execution of the SPA. If the title are only issued after completion of construction and completion of purchase from developer, MOT can only be prepared after getting notification from developer followed by execution by both parties.

                For commercial property under or after construction are governed by private contract of sale and purchase agreement between purchaser and developer as commercial developer are not governed by HDA and HDR.

                Other notable procedure to be taken are loan charge s242, fit registration s301, and MOT form14A in the NLC.