Insights
Buying a property is one of the largest financial commitments most people will make, and in Malaysia the Sale and Purchase Agreement (SPA) sits at the centre of that transaction. Yet many buyers sign it having only skimmed the document. This article walks through what the SPA actually covers, and what to look out for before you sign.
What Is a Sale and Purchase Agreement?
The SPA is the legally binding contract between a buyer and a seller (or developer) that sets out the terms of a property sale — the price, the payment schedule, the condition of the property, and the obligations of each party. Once signed, it is enforceable in court, so its terms deserve careful attention before, not after, signing.
For sub-sale properties (an existing property bought from its current owner) and for new developer properties, the structure of the SPA differs in important ways.
Sub-Sale Properties
In a sub-sale, the SPA is typically preceded by an Offer to Purchase or a booking form, followed by the main SPA once due diligence is complete. Key items to check include:
- The completion period — commonly 3 months from signing, extendable by a further 1 month subject to late payment interest
- Vacant possession requirements and any tenancy affecting the property
- Whether the property is freehold or leasehold, and if leasehold, the remaining lease term
- Outstanding quit rent, assessment, or maintenance fees
Developer Properties
For new developments, the SPA follows a statutory format prescribed under the Housing Development (Control and Licensing) Act 1966, which offers buyers a layer of standard protection — including a fixed schedule of progressive payments tied to construction stages, and a mandatory defects liability period (typically 24 months) during which the developer must rectify defects at no cost to the buyer.
Key Clauses Buyers Should Read Carefully
A signed SPA is difficult to unwind. The right time to raise questions is before signing, not after.
1. The payment schedule. Confirm the deposit amount, the timing of each instalment, and what happens if a payment is late.
2. Default and remedies. Understand what constitutes a default by either party, and the consequences — including forfeiture of deposit for buyer default, or the compensation payable for seller/developer default.
3. Vacant possession and defects liability. For developer purchases, check the date vacant possession is due and the length of the defects liability period.
4. Loan documentation. If you are financing the purchase with a bank loan, the SPA should align with your Letter of Offer, and any discrepancy between the two should be raised with your solicitor immediately.
Common Pitfalls
- Signing the Offer to Purchase before legal review, which can lock in unfavourable terms before the main SPA is even drafted
- Overlooking outstanding charges, caveats, or tenancies affecting the property
- Missing the stamping deadline, which can trigger penalties
- Assuming verbal promises from an agent or developer are enforceable if they do not appear in the SPA itself
When to Involve a Solicitor
Engaging a solicitor before signing — not after — allows genuine room to negotiate terms, query anything unclear, and conduct proper due diligence on the title and any encumbrances. This is standard practice for both sub-sale and developer purchases, and the modest cost is generally well justified against the size of the transaction.
This article is intended to provide general information only and does not constitute legal advice. Every transaction has its own facts and circumstances, and you should seek advice specific to your situation before acting on any of the above. For assistance with a property purchase in Malaysia, please contact Cindy Ng & Co. — we would be glad to assist.