- Azizi Zulhilmi
Buying or selling a property is a major decision. For many people, it is one of the biggest financial commitments they will ever make. If you are buying a property from an existing owner rather than directly from a developer, the transaction is known as a sub-sale.
Although sub-sale transactions are very common in Malaysia, the process can be confusing for first-time buyers and sellers. There are legal documents to sign, deadlines to meet, bank loans to arrange, and approvals to obtain. Without proper guidance, the transaction may be delayed or become more complicated than expected.
This article explains everything you need to know about sub-sale property transactions in simple and easy-to-understand language.
What Is a Sub-Sale Property Transaction?
A sub-sale transaction refers to the sale and purchase of a completed property from its current owner. In other words, the property has already been built and is being sold in the secondary market.
Common examples of sub-sale properties include:
- Houses
- Apartments and condominiums
- Shop lots
- Office units
Unlike buying directly from a developer, the terms of a sub-sale transaction are negotiated between the buyer and the seller.
How Is a Sub-Sale Different from Buying from a Developer?
When you buy directly from a developer, the Sale and Purchase Agreement (SPA) usually follows a standard format prescribed by law.
In a sub-sale transaction, there is no fixed standard agreement. The SPA is prepared specifically for the transaction and may include terms that are unique to the buyer, seller, and property.
This makes the role of a conveyancing lawyer especially important, as the agreement must clearly protect the interests of both parties.
How Does the Sub-Sale Process Work?
The process usually begins when the buyer pays a booking fee and signs a letter of offer or booking form. The buyer then applies for a housing loan if financing is required.
Once the basic terms are agreed, the lawyers prepare the SPA. After both parties sign the agreement, the buyer pays the remaining balance of the deposit, usually making up 10% of the purchase price.
The buyer’s bank and the seller’s bank will then work together to settle any existing loan on the property. If the property requires state consent, such as in the case of leasehold properties or properties with restrictions in title, the necessary application will be submitted.
When all conditions have been fulfilled and the purchase price has been fully paid, the ownership transfer documents are registered at the Land Office, and the buyer receives the keys to the property.
How Long Does a Sub-Sale Transaction Take?
A straightforward sub-sale transaction generally takes between three to six months to complete.
The process may take longer if:
- State authority consent is required;
- The seller has an existing bank loan to redeem;
- There are title issues;
- Loan approval or disbursement is delayed; or
- The property is part of a deceased estate.
What Documents Are Involved?
Several important documents are involved in a sub-sale transaction, including:
- Sale and Purchase Agreement (SPA);
- Loan Agreement;
- Memorandum of Transfer (MOT);
- Redemption Statement;
- Consent applications; and
- Stamp duty forms.
Each document serves a different legal purpose, and all must be prepared and handled correctly.
Is the Property Sold “As Is Where Is”?
Most sub-sale properties are sold on an “as is where is” basis.
This means the buyer agrees to purchase the property in its current condition. Unless specifically agreed otherwise, the seller is generally not required to repair defects.
For this reason, buyers should inspect the property carefully before signing the SPA and ensure that any promises made by the seller are recorded in writing.
What About Furniture and Fixtures?
Disputes often arise over whether certain items are included in the sale, such as air conditioners, kitchen cabinets, water heaters, curtains, or built-in wardrobes.
To avoid misunderstandings, the SPA should clearly list all items that are to remain with the property.
Common Problems in Sub-Sale Transactions
Sub-sale transactions can encounter various issues, including:
- Delay in obtaining a housing loan;
- Outstanding bank loan on the property;
- Private caveats;
- Unpaid quit rent or assessment;
- Delay in obtaining state consent;
- Bankruptcy of the buyer or seller; and
- Fraud or forged documents.
An experienced lawyer will conduct the necessary searches and checks to identify and resolve these issues.
Why You Need a Conveyancing Lawyer
A conveyancing lawyer plays a key role in ensuring the transaction is legally sound and completed smoothly.
The lawyer will:
- Draft and review the SPA;
- Conduct title and bankruptcy searches;
- Liaise with banks and government authorities;
- Prepare transfer documents;
- Monitor important deadlines; and
- Protect your legal interests throughout the transaction.
Conclusion
A sub-sale property transaction involves much more than simply signing a Sale and Purchase Agreement. It is a legal process that requires careful planning, proper documentation, and close coordination between the buyer, seller, banks, and government authorities.
Whether you are purchasing your first home or selling an investment property, understanding the process will help you avoid unnecessary delays and costly mistakes.
If you are buying or selling a sub-sale property in Malaysia, our firm is ready to provide practical legal advice and guide you through every step of the conveyancing process.
Corporate and Conveyancing Division
This article is prepared and published by
Messrs. Ben Lee & Sharen
Advocates & Solicitors