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Vendor's protection in sub-sale transaction

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Joined: 11 Jun 2009
Posts: 606

PostPosted: Mon Feb 01, 2010 9:54 pm    Post subject: Vendor's protection in sub-sale transaction Reply with quote

I am also a houseowner. Apparently, there is a suggestion for a 14 days of a so called time stopping clause which the buyer will take to his/her advantage to seek the return of deposit, especially if the bank is not giving the margin of maximum loan according to the purchaser's best favour.

Here are 12 important questions which hopefully can be answered.

1. Appreciate if someone could indicate whether the 14 days is the
maximum time allocated for the purchaser to seek the bank's loan
and yet what protection is available to the vendor if the purchaser
requests for extension of the 14 days?

2. How to best protect the interest of the vendor should the purchaser be
unsuccessful and are there any safeguards to ensure the vendor will
be free to negotiate the deal again just as soon as the purchaser says
he is not able to get a bank loan at his best favour ?

3. Is the time stoppng clause an interests stopping clause as well since
time stops to run and the vendor may literally be prejudiced to suffer
with an unsuccessful deal and yet he cannot 'shake off' the deal until
the purchaser says he wants the return of his deposit ?

4. How would this affect the prospect of pricing since the vendor is
literally capped to reduce the purchase price just because of one
miserable experience with such a purchaser within this interim period
and what assurance that this purchaser would not continue to repeat
his 'trick' with other vendors at other places in future ?

5. Would there be so type of blacklisting of loan if this purchaser
happens to repeat the same 'trick' in future ?

6. What happens if the 14 days is rejected by the vendor because the
purchaser happens to be a businessman of a failing business and the
vendor decides not to sign the agreement after discovering this within
the 14 days ?

7. The purchaser may not be a bankrupt within this 14 days but let's
assume, the vendor has discover this and decides to return the
deposit to the purchaser but the purchaser requests for the extension
of another 14 days. How to protect the interests of the vendor
because apparently, there is some kind of thinking that the purchaser
gets the advantage when it comes to sub-sale namely, being the so
called purchaser's market.

8. Is amendment of the 14 days possible after the agreement is signed ?

9. What are effects upon the validity of the agreement if the amendment
is not legally possible ?

10. Can the vendor terminate the agreement just upon discovery of
circumstances rendering his strong suspicion out of his discovery of
the possibility that the purchaser may be failing in his business and
hence, the domino effect on this sub-sale transaction without being
sued for breach of contract ?

11. What are the chances of the vendor's claim that he is doing so to
protect his interests against the claim for relief of specific
performance and damages from the purchaser in the event the
purchaser sues for breach of contract ?

12. Can the vendor insists to abide by the usual way of sub-sale
by disregarding the 14 days time stopping clause and terminate the
agreement because the purchaser delays the loan although
technically, the fault of delay may be coincidental ? Ex. what is
maximum loan to a purchaser may not be taken to be so by the

Hope a good person with a good eye for details can share some points here.
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Joined: 11 Jun 2009
Posts: 606

PostPosted: Tue Feb 02, 2010 8:07 am    Post subject: Reply with quote

These are the realities, should such a clause be allowed to task the speculative function of an agreement when the purchase is final and the demand for maximum loan margin has never being an issue included in an agreement but is now somehow, made into a type of "condition precedent" as put by one forumer.

The maximum loan margin is not what the Sale & Purchase Agreement is meant to include since the bank is not party to the contract.

The vendor should be protected against such speculative issues since this will tantamount to cause more uncertainties with the purchaser not having to commit to buy even after signing the agreement.

Don't forget, the vendor is the proprietor and it is not pre-determined that the pricing fluctuates according to maximum loan margin from the banking sector since the law do not require prices to fluctuate at the whimps and fancies of bank before granting maximum loan support.

Therefore, the freedom of bargain is in favour of denying, removing and stopping such time stopping clauses in all circumstances simply because it does not work at all. Makes EPF redundant and is a 'trick of the trade' and you don't need statistics to prove.
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Joined: 08 Jun 2011
Posts: 1

PostPosted: Fri Jun 24, 2011 9:25 am    Post subject: Vendor Cost Incurred Reply with quote



I am new comer and had read through the forum and found very informative and wish some suggestion/advice can be provided from you.

Recently i had sold my hse with unrepresented by any lawyer as my friend as a lawyer will help me to go through the SPA to save some legal fee. Do I need to bear any cost if I do that and what are the documentations or procedures I shall provide to the Buyer Lawyer and relevant authority?

Another question regarding the direct transfer, since the developer yet to transfer the title to my name, the buyer lawyer has wrote them the letter to request for direct transfer to new buyer but i have inform by the developer that I need to pay for the fee of RM500, shall i bear this cost and can I ask buyer to bear it? When the title transfer will be execute and when they will ask me for the fee of RM500? And why can the buyer lawyer request the title transfer and I have to bear it?

Urgently need your advice before signning SPA.
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Joined: 11 Jun 2009
Posts: 606

PostPosted: Wed Jun 29, 2011 12:00 pm    Post subject: issue of direct transfer from developer Reply with quote

Good question.

Actually, your solicitor should have made a land title search to confirm sub-division of Master title into individual title is already completed and re-confirm with the developer which is supposed to be holding the original title.

Then, obtain a copy for your safekeeping.

For direct transfer, the purchaser should sign on the MOT, the ONLY instrument of transfer recognised for land dealing under s.5 NLC 1965.

Your solicitor should seek the original deed of assignment ( retained by the bank) together with the purchaser;s financier's legal charge documents and annexures for presentation of registration.

The process may seem simple but it is tedious. For example, checks to determine if the could be arrears in any stmap duties and adjudication fees paid prior to this is important. Of course, if the purchaser happens to make the purchase during the exemption from RPGT in year 2008-2010 (or even before 2008), then, this is not an issue.

As for the RM500, technically, there is no longer a requirement for developer's consent since s.22D do away with the Developer's consent for transfer. However, in reality, when blanket consent is applied and that includes both the consent to transfer from the developer and also the consent to charge, it is undeniable that, defrayment of some costs will be incurred. However, strctly, under s.22D Housing Devleopment Act, there is no mention of cost for either one even if, technically, this is essential to secure property free from encumbrances for the purchaser and also towards the financier's legal charge as security.

Therefore, it is most likely a subjective matter and in my opinion, quite shrouded in secrecy of some sort until today. Maybe the relevant authorities can come up with some guidelines on this important area of housing matters based on locality. The purchasers are after all, the end consumers of 'a consumer home concept' with huge investment in property over time.
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