THIS QUESTION IS NOT only asked by the purchaser of a property transaction but is also asked by the seller of the property to get money out of it. Most seller and purchaser expect a property transaction to be completed within a month or two. This is not the case as there are various factors to be taken into consideration and various parties involved other than the seller and the purchaser.
A lawyer is involved in a property transaction as a facilitator. A lawyer manages the various parties involved in the property transaction which include:
1. the seller;
3. the lawyer representing the seller (if the lawyer is acting for the purchaser) and vice versa;
4. the housing developer (which can be the seller or is involved in the transaction as the property is not issued with an individual title yet);
5. the land office (where the property is registered as proof of ownership);
6.the state authority (which is actually represented by the land office but is involved if the property is a property which requires a consent to transfer or consent to charge ─ usually leasehold property);
7. the local authority (to pay for any assessment notice arrears);
The Type of Property Matters
The duration of a property transaction from the time that the Sale & Purchase Agreement is signed to the time the purchaser can say that he is the new owner of the property fluctuates according to the type of property being transacted.
The easiest type of property to transfer will be a piece of land but this type of property also has its pitfalls which can drag the transaction into many months. If the property is a house, the package that it comes in will be the key to the process.
A house can be built on a piece of land and sold as a terrace house, bungalow or semi-D. A house can also be an apartment, a condominium and a penthouse. Agreements governing the sale of the house built on land and the one sold as a strata property are different.
When you buy from a property developer, the sale of a house on land will use the agreement provided for in Schedule G under the Housing Development (Control and Licensing) Act 1966 which is the sale of building and land. The time frame provided for the property to be completely built and delivered to the purchaser is two years. Within the two years, the housing developers at their own pace must build the structure of the house, get all the infrastructures within the housing development ready, deal with authorities and finally deliver the key to the house buyer.
The sale of strata property will use the agreement provided for in Schedule H of the Housing Development (Control and Licensing) Act 1966 which is the sale of building or land which will be subdivided into parcel. As for strata property, the timeframe is increased to three years as there are a lot more complications in building a property with many units within it.
Developers can set their own Schedule
As housing developers have their own capability in building their housing project, you cannot actually say they are not delivering just because you do not see any construction taking place at the place where your new house is supposed to be. As much as housing developers are said to have a reputation as businessmen who don’t deliver what they have promised, they can set the schedule of building the houses according to their own time frame. If they are serious businessmen, they will want more purchasers to purchase their housing project and keep them in business. Only when there are is no progress in the housing development for more than one year should you worry about the fate of your house, if you buy the property from a housing developer.
Quick if not using Housing Loan
However, if you are buying a property from another individual, the timeframe for the completion of the transaction can fluctuate between three months to more than a year (even more), depending on the type of property that you are buying and how you intend to finance your purchase. If the property that you are buying is not charged to any financial institution and the property does not require approval by the state authority to be transferred, whether the property has been issued a title or not, the time for it to be transferred can be a short time of two or three months. This is a very rare occurrence in this day and age as most property is purchased by the vendor in the first instance using a financial institution.
Intricacies of a Housing Loan
If the property is charged to a financial institution, the time for the transfer will be determined by the efficiency of bank which has put a charge on the property before it is sold. The bank will only release the property from its control once it has receives the full amount of payment due from the purchaser’s financier.
Just imagine the intricacies that are involve as your lawyers have to communicate with your financier, with the vendor’s lawyer, with the vendor’s bank and in certain matters, the vendor himself, in trying to get the property unencumbered. Once payment is made, the lawyer who handles the finance side of your purchase will have to secure the interest of the financial institution that you have chosen to finance your property transaction. That will take another duration which will depend on the efficiency of your lawyer and to some extent, your financier.
One of the timeframes which usually delay the completion of a property transaction is when consent to transfer needs to be acquired from the State Authority. “Application for Consent to Transfer” as it is called usually takes between three months or more especially if the transfer is from a Bumiputra seller to a non-Bumiputra purchaser. Surprisingly, once consent to transfer is obtained, a consent to charge will only require a maximum of two weeks to be obtained from the same department.Complications
If the property is still not issued with an individual title, the housing developer which had built the property needs to be involved in the equation. Although Section 22D of the Housing Development (Control and Licensing) Act 1966 has specifically stated a housing developer should not withhold confirmation of any arrears and can only charge RM50-00 for issuing an undertaking to the lawyer(s) handling the transaction, things get complicated if there are arrears, if Joint Management Body decides to be tough and if the property is under receivership, to quote a few ‘complications’. Add between two weeks to three months for your lawyer to resolve this.
Another delay will usually happen when the property needs to be redeemed from the seller’s financier. As the seller’s financier is in the process of losing a customer, the department that handles the issuance of redemption statement and handling the redemption itself usually takes time to do as such. Another factor is the security documents are usually kept by a storage company and takes some reasonable time to be located. Add in another one or two month to the equation.
These are just some examples which can crop up when a property transaction is being conducted by your lawyer. A good advice for novice or even seasoned property sellers or purchasers is to closely follow your lawyer who is conducting your property transaction and help them facilitate the transaction wherever you can.
Khairul Anuar Shaharudin, lawyer, is the author of Ask the Lawyer series including 40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia and books under Fixi, Pinjam and Pentas (writing as Anuar Shah). Follow Khairul on Twitter @kruel74 and his blog Legal Cat-asthrophe