Conveyancing chp 2 - Lecture notes lecture 2 PDF

Preview

Summary

CONVEYANCING CHAPTER 2 SALE OF RESIDENTIAL PROPERTY A DEVELOPER. LEARNING OUTCOME: Comprehend the general conduct of a conveyancing transaction. Cognitive: Level 2 1 Introduction 2 The Housing Development (Control Licensing) Act 1966 (HDA) The Housing (Control and Licensing) Amendment Regulations 20...

Description

CONVEYANCING CHAPTER 2 SALE OF RESIDENTIA RESIDENTIAL L PROPER PROPERT TY BY A DEVEL DEVELOPER. OPER.

LEARNING OUTCOME: Comprehend the general conduct of a conveyancing transaction. Cognitive: Level 2

1.0 Introduction

2



The Housing Development (Control & Licensing) Act 1966 (HDA)



The Housing Developer’s (Control and Licensing) Amendment Regulations 2002 • The Regulations set down the mandatory terms for a sale and provide a standard Sale & Purchase Agreement (S&PA) under Schedules G & I for properties consisting of land and building(s).



Schedule H & J provides for multistorey residential premises. The format of the S&P cannot be varied or modified by either the Developer or the Purchaser.

 

Any variation of the terms may be declared void – Sykt. Chang Cheng (M) S/B [1996] The Act and Regulations only apply to residential properties purchased directly from a Developer. For example:

 

Direct sale: Developer ----------- P1 Sub-sale: Developer ----------- P1 -------------P2



Generally, the sale from P1 to P2 will not be governed by the HDA or Regulations. It can be subject to contractual negotiation. However, in certain circumstances eg. Subsale takes place before handing over of vacant possession by developer, then the P2 will enjoy the protection of the HDA and Regulations.



R 11 (4) HD(C&L)R 1989 A Purchaser’s Solicitor is entitled to a complete set of the contract of sale including its original and duplicate copies and all annexures free of any fees, subject to the undertaking to return the same intact in the event that the S&PA is not executed within the stipulated 14 days.



R 11(2) No housing developer shall collect any payment other than that stipulated in the S&P .



R 11A(2) no fee shall be chargeable by a developer for giving his consent to a purchaser to assign or charge his rights and benefits under the S&PA to a financial

institution for the purpose of obtaining a loan to purchase the property. 

Differences between Private Sale & Sale under HAD

1. Contract subject to negotiations between parties. 2. Terms and conditions not governed by statute. 1. Statutorily set terms and conditions. 2. Format of contract given in Schedule 3. Strict adherence. No contracting out. 4. Progress payments are paid according to an agreed schedule. 5. 5% of the final Purchase price will be retained by stakeholders pending the expiry of the defect liability period.



For example: 1. On the date the Purchaser takes vacant possession of the said Building as in item 3 and to be held by the Developer's solicitor as stakeholder for payment to the Developer as follows: 2. two point five per centum (2.5%) at the expiry of eight (8) months after the date the Purchaser takes vacant possession of the said Building; and 3. two point five per centum (2.5%) at the expiry of twenty-four (24) months after the date the Purchaser takes vacant possession of the said Building.

Booking fee?

3



Collection of Payment Outside a Sale and Purchase Agreement? • Previously only developers were prohibited to collect any payment such as ‘booking fees’ or ‘earnest deposit’ before signing of a sale and purchase agreement.



To further protect purchasers, the amended Regulation 11(2), HDR 1989 expressly expands this prohibition on stakeholders:



“No person including parties acting as stakeholders shall collect any payment whatever name called except as prescribed by the contract of sale”

2.0 Procedure 

i. ii. iii.

iv.

4

individual subdivided title, master title pending issue of subdivided title, with and without encumbrances; Purchaser may be buying by way of cash purchase or more commonly applying for a loan – government loan, bank loan – conventional home loan or / Islamic home loan Whether Purchaser is a Malaysian or a non- Malaysian citizen - foreign national.



If the property is with individual title and without encumbranceDeveloper’s solicitors will prepare the S&PA, Purchaser’s Solicitors will attend to: purchaser’s execution of the S&PA, prepare the MOT - Form 14A, stamp proformas and CKHT forms.



if the property is without individual title and unencumbered – the Developer’s solicitor will prepare: the S&PA, the Purchaser’s Solicitors have to attend to purchaser’s execution of the S&PA and prepare the CKHT forms.

i. ii. iii. iv.

i. ii.

Purchase of Land and building with IDT from Developer – Schedule G. There could be different scenarios:

 i. ii.

If the property has title but it has been charged to a financial institution – the Developer’s Solicitors have to prepare: A discharge of charge upon the balance of purchase price being paid unless otherwise agreed by the parties.

Developer – Sunshine Developers S/B Property- freehold with IDT i.e. subdivided title issued Encumbrances- charge. Outstanding loan RM50,000/ Individual subdivided lot with residential building on it Price – RM100,000/ Purchaser – Malaysian Pays 10 % deposit Applies for 90% loan to finance balance of purchase price.

 STEPS 1. The Developer’s Solicitors shall prepare the S&PA stating particulars of – (i) the developer’s name, address of registered office, license no. details of the property as required under Schedule G, (ii) Schedules 1- layout plan of project, (iii) Schedule 2 - approved building plan, (iv) Schedule 3 – schedule of payment of purchase price (v) Schedule 4 – building description 2. The Developer will write to the Purchaser’s Solicitor forwarding 5 sets of the S&PAs for completion of particulars – name, NRIC, address of Purchaser and execution by the Purchaser. 3. Purchaser’s Solicitor will – • Vet the S&PAs, write to the Purchaser requesting the Purchaser’s particulars: • his NRIC, • income tax no. and address of the branch office , • 10% deposit to execute the S&PA and also

5

• forward a copy of his bill for fees. • make a 1st. title search and a company’s winding-up search on the vendor • Prepare 2 sets of Memorandum of Transfer (MOT) Form 14A • 5 sets of stamping Proformas • CKHT forms for Purchaser if requested • Entry and removal of caveat. 4. If everything is in order the Purchaser then executes the above mentioned documents pays the balance of 1st. 10% of the purchase price and settles his Solicitor’s bill. 5.

The Purchaser’s Solicitors then forward the duly executed documents and the 10% of the purchase price to the Developer for their execution.

6.

The Developer will only execute the MOT upon confirmation from the Purchaser’s financier that they will pay the balance of the purchase price as per the schedule in the S&PA.

7. The Purchaser’s Solicitor then stamps the S&P and gives each party a set. 8. Purchaser’s Solicitor prepares a private caveat and lodges at the relevant land office upon payment of the requisite fees pending completion of the sale and purchase.



9. The Purchaser has normally 3 months from the execution of the S&PA within which to finalise his loan. LO Exercise 1 o Purchaser enters into a simple private SPA with Vendor which the Vendor has drafted without the assistance of any lawyers. Purchaser obtains an offer of a loan from B Bank subject to the SPA being prepared and attested by an Advocate & Solicitor. o Is the simple SPA valid? How can there be a valid and enforceable contract? What are the B Bank’s concerns? o If the simple SPA is void how could it be resolved?

6

o Purchaser had met with an industrial accident whereby both his hands had to be amputated. How can he execute the necessary documents?

o Upon Approval of Purchaser’s Loan o Upon approval of the Purchaser’s loan the Purchaser’s Bank (P Bank) will send him a Letter of Offer or Facility Agreement with instructions to meet their Solicitors. o The P Bank’s Solicitors (PBS) will write to the Purchaser requesting o Original S&PA o Copy of his NRIC (any other documents to establish identity) o Forward their Bill for fees & disbursement for preparation and registration of the charge. o P Bank’s Solicitors will also write to the Purchaser’s Solicitors informing them of the loan approval and seek confirmation that ( Letter of Enquiry) – o The MOT has been executed by the Developer/ Vendor & the Purchaser o The MOT has been presented for adjudication • They will further seek an undertaking from the Purchaser’s Solicitors to forward to them o A valid and registrable MOT in favour of the Purchaser o Quit rent and assessment receipt for the current year • Any other documents necessary to register the transfer free from encumbrance o Further the P Bank’s Solicitors will also write to the Vendor/ Developer enquiring o Whether the differential sum i.e. difference between the loan sum and the purchase price has been settled by the Purchaser o The name and address of the bank to which the property is currently charged by the Vendor o To forward from the Chargee Bank (Vendor’s bank) the Redemption Statement cum Letter of Undertaking to deliver the: a. original title deed, b. duplicate registered charge, ( original at land office, Bank will retain a copy) c. duly executed discharge of charge and

7

d. to refund the redemption sum in the event the discharge of charge cannot be registered. o To forward the Vendor’s undertaking to “refund the full loan sum of RM90,000/- in the event that the MOT cannot be registered.” o To forward upon receipt from the Chargee Bank: a. the duly executed discharge of charge, a. duplicate registered charge and b. the original title deed. o To forward the current quit rent and assessment receipt. o To forward the registration fee for the registration of the Discharge of Charge – Form 16N LO Exercise 2 Comment on the following egs. of undertakings: 1. “ The legal documentation is in order and is complete and should the Bank suffer any loss or damage by reason of the security documents not being registered for reasons attributable to or acts of negligence, error, mistake or omission and /or by reason of the aforesaid security documentation not being in order, we as Solicitors responsible for the preparation of the said legal documentation shall be responsible to make good to the Bank in full all such loss and damage” 2. “We undertake to refund to you the Facilities in the event the charge is not or cannot be registered or if any of the security documents are not perfected or not enforceable for any reasons whatsoever and we shall make good to the Bank in full such loss and damages” Answers o Purchaser’s solicitors will upon the receipt of the letter send the MOT for adjudication and reply to the PBank’s Solicitors that – o The MOT has been duly executed by the Vendor and Purchaser o The MOT has been presented for adjudication o Shall forward the valid and registrable MOT in favour of the Purchaser Shall forward the current year’s quit rent and assessment receipts upon receipt from the Vendors Solicitors. o Any other necessary documents. o The Vendor/ Developer upon receipt of the letter from the P Bank’s Solicitors will write to the Chargee Bank if any,

8

informing them of the requirements of the PBank’s Solicitors and requesting the same. o The Vendor/ Developer will also reply to the P Bank’s Solicitor stating that – o The Differential sum (difference between the loan sum and the purchase price) has been fully settled by the Purchaser o Provide the address of the Chargee Bank o That they have written to the Chargee Bank requesting the Redemption Sum cum Letter of Undertaking o They shall forward the same upon receipt , they shall forward the Vendor’s undertaking addressed to the Purchaser to: a. “ refund the loan sum in the event the MOT cannot be registered.” b. To forward the duly executed and stamped discharge of charge and the original issue document of title upon receipt from the Chargee Bank c. To forward the current quit rent and assessment receipt d. To forward the registration fee for the discharge of charge – Form 16N o The Chargee Bank will then reply to the Vendor forwarding the requirements in slides no. 23. o The Vendor will then forward to the P Bank’s Solicitors o The original redemption statement cum Letter of Undertaking from the Chargee Bank addressed to the P Bank Letter of Undertaking from the Vendor addressed directly to the P Bank o The P Bank’s Solicitors will then forward the same to the P Bank which will thereupon release redemption sum to its Solicitors who will then forward it to the Vendor/Developer for their onward transmission to the Chargee Bank to obtain the – a. stamped Discharge of Charge and details of the Chargee Bank’s Power of Attorney, b. registration fee for discharge of charge, c. duplicate registered Charge, d. original title deed and e. copy of current quit rent and assessment receipt. o The P Bank’s Solicitors will then forward the same to the P Bank which will thereupon release redemption sum to its Solicitors who will then forward it to the Vendor/Developer for their onward transmission to the Chargee Bank to obtain the –

9

a. stamped Discharge of Charge and details of the Chargee Bank’s Power of Attorney, b. registration fee for discharge of charge, c. duplicate registered Charge, d. original title deed and e. copy of current quit rent and assessment receipt. o o o o o

Meanwhile the Purchaser’s Solicitors will also forward to the PBank’s Solicitors – The duly adjudicated and stamped MOT 2 copies of the withdrawal of private caveat lodged by the Purchaser pending completion Registration fees for withdrawal of the private caveat Registration fee for transfer

o The PBank’s Solicitors will then present at the Land Office – a) Stamped Discharge of Charge of the Chargee Bank b) Withdrawal of Private Caveat c) Stamped MOT and Charge to PBank d) Current year’s quit rent and assessment receipts e) Memorandum & Articles of Association ( Constitution) of the Developer (Sunshine Developers Sdn. Bhd.) f) Company Resolutions approving sale Forms under s. 223 CA2016. o Upon receipt of the original title from the Land Office the PBank’s Solicitor will send a photocopy of the title deed to the Purchaser’s Solicitor showing the Purchaser as the registered owner and the PBank as the new chargee. o The PBank will thereafter pay the progress payments to the Vendor as per the Schedule. o Upon completion of the project and issuance of the Certificate of Practical Completion & Compliance, (CCC) the keys will be handed over to the Purchaser’s Solicitor.

10...