the practice area checklist series ii … · first published dec 2006. 1st update 15 may 2008. ......

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Bar Council Malaysia © 2008 All Rights Reserved. Copyright remains with the author. FIRST PUBLISHED DEC 2006. 1ST UPDATE 15 MAY 2008.

INTRODUCTIONPurpose of Checklist. This Checklist may be used where you are representing the Purchaser in a sub-sale of propertywith title.

CONTENTS1. Initial Contact and Preliminaries

2. Preparation of the Sale and Purchase Agreement

3. Execution of the Sale and Purchase Agreement

4. Memorandum of Transfer (MOT)

5. Private Caveat

6. Conditions Precedent, If Any

7. Purchase Price

8. Settlement of Purchase Price

8.1 Preliminaries

8.2 Where property is not charged and Purchaser is not obtaining a loan to complete purchase

8.3 Where property is charged and Purchaser not obtaining a loan to complete the purchase

8.4 Where property is charged/not charged and Purchaser is obtaining a loan to complete the purchase

8.5 Late Payment Interest

9. Taking Possession

10. Apportionment of Outgoings

11. Termination

GUIDE TO CHECKLISTThis Checklist is intended to be a guide and you should consult the relevant provisions of all relevant legislation, guidelinesand case law.

1. If there are subsequent amendments to the law or procedures, ensure the changes are taken into account.

2. It is critical that every step of the transaction is diligently monitored for deadlines/time frames for the performance ofobligations.

3. It is suggested that upon execution of the Sale and Purchase Agreement, a review of this Checklist be undertaken toflag key dates and deadlines to be observed and assign, so far, as is possible at that stage, KIV dates as areappropriate to the relevant deadlines in each circumstance.

4. It is also advisable to review this Checklist at each KIV date for any deadlines, which have not been flagged, and toupdate the same accordingly.

DISCLAIMERThis Checklist is only intended to provide a general overview of the matters that should be considered in managing yourtransaction. The information provided in this Checklist is not intended to be legal advice. Many factors may affect theapplicability of any steps or procedures set out here and consequently you should apply your own discretion or seekappropriate advice (where applicable) before relying on those procedures.

THE PRACTICE AREA CHECKLIST SERIES IICONVEYANCING CHECKLISTSub-Sale of Property With Title – Purchaser


The Practice Area Checklist Series II

Conveyancing: Sub-Sale of Property With Title - Purchaser 2

DATEDUE

DATEDONE REMARKS

1. INITIAL CONTACT AND PRELIMINARIES

1.1 Ensure there is no conflict of interest or potential conflict of interest.

[Note: The firm must not act or purport to act for both the Vendorand the Purchaser in the same transaction.]

1.2 Initial instructions:1.2.1 To ascertain if a letter of offer has been executed by the

parties.

If yes, to obtain a copy and to ascertain deadline forexecution of the Sale and Purchase Agreement, if any.

[Note deadline for execution of Sale and PurchaseAgreement.]

1.2.2 To obtain instructions as regards the transaction includingnames of parties, property details, payment terms,particulars of any tenancies in respect of the property and ifso, whether property sold with vacant possession or subjectto existing tenancy, name and contact particulars ofVendor’s solicitors, if any and any other salient/principleterms.

1.2.3 To obtain, if available, a copy of the following documents:(a) For individuals, identity card (or passport, if foreigner) of

Vendor and Purchaser.

(b) For companies, certified true copy of the Memorandumand articles of association, latest Forms 49, 44 and allForms 24, and the Board of Directors’ and members’ (ifapplicable) resolutions authorising the entry into the Saleand Purchase and execution of the Sale and PurchaseAgreement and associated documents. (Note: ThePurchaser’s Board of Directors’ resolutionshould state clearly the authorisation to aff ixthe common seal on the Memorandum ofTransfer (MOT)).

(c) Issue document of title.(d) Current quit rent receipt and assessment receipt.

[Note: If not available immediately, to ensure thatthese are all obtained upon signing of the Saleand Purchase Agreement. ( See Section 3 below )].

1.2.4 If the property is charged, to ascertain from the Vendor thatthe redemption sum does not exceed purchase price.Request and obtain, if possible, from the Vendor a copy ofthe latest loan statement.




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1.2.5 Advise client of your charges. [Note the provisions of the Solicitors’ RemunerationOrder 2005 in respect of the mandatory scale ofrates for the conduct of sale and purchasetransactions and related matters thereto].

1.3 Conduct search on the land title.

(a) Date search requested:

(b) Date search results received:

1.4 Review results of land search:(a) Take note of any encumbrances on the property including

charges or caveats, restrictions in interest and express conditions.

(b) Highlight results to client if the search discloses anything differentor more than what your client may have been informed by theVendor or believes to be the case.

2. PREPARATION OF THE SALE AND PURCHASE AGREEMENT

2.1 Where the Vendor has appointed a solicitor, contact the Vendor’ssolicitor to agree as to who will prepare the Sale and PurchaseAgreement. In the absence of any agreement to the contrary, it is theVendor’s solicitors who should prepare the draft Sale and PurchaseAgreement.

2.2 Conduct bankruptcy/winding up/NRIC/company searches on Vendorand Purchaser:

You may l ist the names and identity card/company no. ofthe Vendors and Purchasers here:(a) Vendor(s) :

(i) Name:

NRIC No/Company No:

Type of search and date requested:

Search result obtained:



(ii) Name:

NRIC No/Company No:








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(b) Purchaser(s) :

(i) Name:

NRIC No/Company No:





(ii) Name:

NRIC No/Company No:





2.3 Draft Sale and Purchase Agreement/review draft Sale and PurchaseAgreement prepared by the Vendor’s solicitors and forward to clientfor comments/instructions.

2.4 Finalise draft Sale and Purchase Agreement with client and theVendor/ Vendor’s solicitors. This may comprise several rounds ofnegotiations and/or several exchanges of the draft Sale and PurchaseAgreement between the parties. At al l times, be mindful of thedeadline to execute the Sale and Purchase Agreement ( SeeSection 1.2 .1 above ). It may be necessary to seek an extension ofthe deadline for executing the Sale and Purchase Agreement if it isapparent that the deadline may not be achievable.

3. EXECUTION OF THE SALE AND PURCHASE AGREEMENT

3.1 Execution of Sale and Purchase Agreement, MOT and stampingproforma by the Purchaser and issuance to the Vendor/Vendor’ssolicitors, as the case may be, of the payment of the deposit, if any,towards the purchase price by the Purchaser.

3.2 Execution of Sale and Purchase Agreement, MOT and stampingproforma by the Vendor and receipt of the deposit, if any, towardsthe purchase price by the Vendor/Vendor’s solicitors, as the case maybe.

3.3 Receive duly executed Sale and Purchase Agreement, MOT andstamping proforma from the Vendor/Vendor’s solicitors.

3.4 Stamp the Sale and Purchase Agreement.




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3.5 Forward stamped original Sale and Purchase Agreement and astamped copy of the Sale and Purchase Agreement to client.

3.6 Forward stamped copy(ies) of the Sale and Purchase Agreement tothe Vendor’s solicitors.

3.7 Where Sale and Purchase Agreement provides for the deposit of theoriginal title or any other documents with Vendor’s solicitors asstakeholders pending completion, seek written confirmation fromVendor’s solicitors that the relevant documents have been dulydeposited with them. If the Vendor is not represented and the Saleand Purchase Agreement provides for the Vendor to deposit theoriginal title or any other documents with the Purchaser’s solicitors asstakeholder, obtain such documents from the Vendor and retainaccordingly.

3.8 Raise bill for provisional disbursements for the transaction for client’simmediate settlement. This should include estimated stamp dutypayable on the MOT and the registration fees for the MOT, lodgmentof a private caveat and the withdrawal of the private caveat.

3.9 To ensure that the documents listed in Section 1.2.3 have beenobtained.

4. MEMORANDUM OF TRANSFER (MOT)

4.1 Submit the MOT for adjudication of stamp duty payable.

4.2 KIV for the issuance of the Notice of Assessment of stamp dutypayable.

4.3 Once the Notice of Assessment is received, note deadline forpayment of the stamp duty assessed as payable (30 days from thedate of the Notice of Assessment). Ensure payment of thestamp duty assessed as payable within the deadline so as to avoidpenalties for late payment.

4.4 Extract the adjudicated and stamped MOT.

4.5 KIV for presentation of the MOT. Note that there is a penaltyimposed if the MOT is presented for registration after the expiry ofthree (3) months of the date of the MOT. As far as possible, try toensure that presentation is done within the said three (3) months.




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DATEDONE REMARKS

5. PRIVATE CAVEAT

5.1 Prepare Form 19B (Entry of Private Caveat) and accompanyingstatutory declaration for the entry of a private caveat over the propertypending completion of the sale.

5.2 Prepare Form 19G for the withdrawal of the private caveat.

5.3 Arrange for Form 19B, statutory declaration in support thereof andForm 19G executed by client. [This can all be done simultaneouslywith the client’s execution of the Sale and Purchase Agreement.]

5.4 Lodge the Form 19B and statutory declaration and, retain dulyexecuted Form 19G pending completion of the sale and purchase.

6. CONDITIONS PRECEDENT, IF ANY

6.1 Where the sale and purchase is subject to the fulfillment of anyconditions precedent (e.g. FIC, MITI, State Authority), note thedeadline for the fulfillment of conditions precedent.

(a) Date by which Condition(s) Precedent to be fulfilled:

(b) If applicable, Extended Date by which Condition(s) Precedent tobe fulfilled:

6.2 Note also the conditions precedent to be fulfilled, the partyresponsible for the attendance to each of the conditions precedentand any individual deadlines to be observed in respect of thefulfillment of the individual conditions precedent and/or thesubmission of any relevant application thereto.

You may l ist the conditions precedent here and mark thedeadlines i f any (*strike out as appropriate)

(a) Condition Precedent:

Party responsible for attendance to CP: Vendor/Purchaser *

Date submitted:

Date approval obtained:

(b) Condition Precedent:


Date submitted:





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DATEDONE REMARKS

(c) Condition Precedent:


Date submitted:


7. PURCHASE PRICE

7.1 Relevant details pertaining to purchase price:

(a) Total purchase price: RM

(b) Deposit: RM

(c) Balance purchase price: RM

(d) Rate of late payment interest: % p.a.

(e) If the Purchaser is completing the purchase with the assistance

of a loan, the Loan Sum: RM

(f) If Purchaser has obtained loan, difference between balancepurchase price and the Loan Sum:

RM

7.2 Deadlines for payment of the balance purchase price:

The Sale and Purchase Agreement should stipulate the CompletionDate/Completion Period and Extended Completion Date/ExtendedCompletion Period or the manner of determining the same.

The terms of the Sale and Purchase Agreement may also provide thatany delay on the part of the Vendor in providing any documents (e.g.the chargee’s redemption statement and letter of undertaking) or onthe part of the chargee in providing any documents (e.g. theundertaking to refund or the Discharge of Charge Documents) is to betaken into account in extending the Completion Date/CompletionPeriod.

If this is the case, the Completion Date/Completion Period andExtended Completion Date/Extended Completion Period may have tobe accordingly revised from time to time based on the extra numberof days taken by the relevant party in respect of any applicableevent/action.




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(a) Completion Date/Expiry of Completion Period:

If applicable, Completion Date/Expiry of Completion Period(1st Revision):

If applicable, Completion Date/Expiry of Completion Period (2nd Revision):

Further revisions, if any:

(b) Extended Completion Date/Expiry of Extended CompletionPeriod:

If applicable, Extended Completion Date/Expiry of ExtendedCompletion Period (1st Revision):

If applicable, Extended Completion Date/Expiry of ExtendedCompletion Period (2nd Revision):

Further revisions, if any:

(c) In the course of the transaction, you may wish to keep track ofthe actual events/actions which have resulted in an extension orextensions of Completion Date/Completion Period or ExtendedCompletion Date/Extended Completion Period:

(i) Event:

Number of extra days:

(ii) Event:


(iii) Event:


7.3 Check the Sale and Purchase Agreement to ascertain whether theextension of time to pay the balance of the purchase price (i.e.Extended Completion Date/Period) is automatic or a written request isrequired for the same. If a written request is required, note thetime frame to make such wri tten request.

7.4 To note the party to whom the purchase price/balance purchase priceshould be made payable – Vendor/Vendor’s solicitors as stakeholderor Purchaser’s solicitors as stakeholder. *

(* strike out as appropriate)




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8. SETTLEMENT OF PURCHASE PRICE

8.1 Preliminaries:Note the following:(a) If the property is charged, identify chargee.

Name of chargee:

(b) Ascertain from the client if the client is obtaining a loan to financethe purchase of the property.

• If property is not charged and client is not obtaining a loanto complete purchase, proceed to Section 8.2 below .

• If property is charged and client not obtaining a loan tocomplete the purchase, proceed to Section 8.3 below .

• If property is charged and client is obtaining a loan tocomplete the purchase, proceed to Section 8.4 below .

• If property is not charged and client is obtaining a loan tocomplete the purchase, proceed to Section 8.4 below .

8.2 Property is not charged and client is not obtaining a loan

Where the property is not charged and client is not obtaining a loanto complete purchase:

8.2.1 KIV for no less than three (3) weeks from the due date forthe payment of the balance of the purchase price to remindclient of the deadline for payment of the balance of thepurchase price.

8.2.2 Once the balance of the purchase price is received fromclient, to forward payment to the Vendor/Vendor’s solicitorsin exchange for the original issue document of title and anyother documents (including those held in stake as noted inSection 3.7 above ) required for the registration of theproperty into the name of the Purchaser as provided underthe terms of the Sale and Purchase Agreement.

8.2.3 Conduct title search to ensure that there are noencumbrances or impediments to registration. Present theMOT for registration.

8.2.4 KIV for issuance of title in the name of the Purchaser.

8.2.5 Attendance to the extraction of the issue document of title inthe name of the Purchaser and delivery thereof to thePurchaser.




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DATEDONE REMARKS

8.3 Property is charged and client is not obtaining a loanWhere the property is charged and client is not obtaining a loan tocomplete the purchase:

8.3.1 Request from the Vendor the redemption statement cumletter of undertaking from the chargee to deliver the originalissue document of title, duplicate charge, duly executeddischarge of charge and any other documents required toeffect a discharge of the charge (“the Discharge ofCharge Documents”) and to refund the redemption sumif the discharge of charge cannot be registered for anyreason.

[Note: The redemption statement cum letter of undertaking isto be issued in favour of the Purchaser.]

8.3.2 If the Sale and Purchase Agreement prescribes a time framefor the Vendor to provide the chargee’s redemptionstatement, note the deadline for the same and KIVaccordingly.

8.3.3 Redemption statement received. If, by the terms andconditions of the Sale and Purchase Agreement, any delayfrom the Vendor in this regard is to be taken into account inextending the Completion Date/Completion Period, pleasenote below the extra number of days taken by the Vendor todeliver the redemption statement cum letter of undertaking.

Revise the Completion Date and Extended Completion Datein Section 7.2 .


Also note whether the redemption statement has a validityperiod and KIV accordingly to ensure so far as is possiblethat the payment of the redemption sum from the balance ofthe purchase price is made within the validity period so as toavoid any delays arising from having to request the Vendorto obtain a fresh redemption statement.

8.3.4 KIV for no less than three (3) weeks (and bearing in mindany deadline identified for payment of the redemption sumas per the chargee’s redemption statement as noted inSection 8.3.3 above ) from the due date for the paymentof the balance of the purchase price to remind client of thedeadline for payment of the balance of the purchase price.




DATEDUE

DATEDONE REMARKS

8.3.5 Once the balance of the purchase price is received fromclient, deal with the same as prescribed in the Sale andPurchase Agreement and obtain Discharge of ChargeDocuments and any other documents to be provided by theVendor including those held in stake as noted in Section3.7 above .

8.3.6 Conduct title search to ensure that there are noencumbrances or impediments to registration. Present theMOT for registration.

8.3.7 KIV for issuance of title in the name of the Purchaser.

8.3.8 Attendance to the extraction of the issue document of title inthe name of the Purchaser and delivery thereof to thePurchaser.

8.4 Property is charged/not charged and client is obtaining a loan

Where property is charged and client is obtaining a loan to completethe purchase, OR

Where the property is not charged and client is obtaining a loan tocomplete the purchase:

8.4.1 Ascertain from client as to whether loan has been appliedfor and approved and from whom, i.e. Purchaser’s Financier(PF).

8.4.2 Upon receipt of the PF’s solicitor’s letter advising as to therequirements of the PF in respect of the release of the loan,peruse the same to ascertain whether clarification and/orvariations/amendments are required in respect of any of theterms. Communicate with PF’s solicitors in respect of suchclarification and/or variations/amendments therein andattend to the requirements of the PF accordingly, includingdelivery of the duly stamped and adjudicated MOT andWithdrawal of Caveat (Form 19G).

8.4.3 If the loan sum is insufficient to settle the balance of thepurchase price in full, request from client the differencebetween the balance of the purchase price and the loan sum(“the Dif ferential Sum”) and KIV for payment thereof.Note that the Differential Sum will have to be deposited withthe Vendor at least two (2) weeks before the CompletionDate/expiry of the Completion Period to enable the PF todisburse the loan by the Completion Date/within theCompletion Period.




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8.4.4 Upon receipt of the Differential Sum, forward the same tothe Vendor’s solicitors and provide written confirmation tothe PF’s solicitors that this has been done.

8.4.5 Follow up with the PF’s solicitors as to the progress of thedisbursement of the loan sum bearing in mind theCompletion Date/expiry of the Completion Period andExtended Completion Date/expiry of the ExtendedCompletion Period.

8.4.6 Ensure that by the Completion Date/expiry of theCompletion Period or Extended Completion Date/expiry ofthe Extended Completion Period, the loan sum has beendisbursed to the relevant party identified in the Sale andPurchase Agreement to receive the balance of the purchaseprice such that client has fully discharged his obligations tosettle the purchase price in accordance with the terms of theSale and Purchase Agreement.

8.4.7 If, by the terms of the Sale and Purchase Agreement, anydelay from the Vendor in providing any documents (e.g. thedelivery of redemption statement or undertaking to refund) orthe chargee in providing any documents (e.g. theundertaking to refund or the Discharge of ChargeDocuments) is to be taken into account in extending theCompletion Date, take note of the extra number of daystaken by the relevant party and revise the CompletionDate/Completion Period and Extended CompletionDate/Extended Completion Period in Section 7.2 .

8.5 Late Payment Interest

If settlement of the balance of the purchase price was on the ExtendedCompletion Date, calculate the late payment interest payable andinform client to pay the same accordingly. Once payment received,forward to Vendor/Vendor’s solicitors, as the case may be.

9. TAKING POSSESSION

9.1 Ascertain from the Sale and Purchase Agreement the time frame forthe Vendor to deliver possession of the property to the Purchaser.Note the deadline.

9.2 Ascertain from the Sale and Purchase Agreement whether the Vendoris to deliver vacant possession or possession of the property subject toan existing tenancy or “as is where is”.




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You may make notes on Vendor’s obl igations in relation tothe del ivery of possession here:

9.3 Ascertain any mechanics prescribed in the Sale and PurchaseAgreement as regards the delivery of possession.

9.4 Upon the balance of the purchase price being settled in full and anyother payments required to be made prior to the Vendor deliveringvacant possession (e.g. late payment interest or outgoingsapportioned to the Purchaser), attend to the delivery of possession inaccordance with the relevant terms of the Sale and PurchaseAgreement as ascertained above. [Note: The Sale and PurchaseAgreement may provide that the Purchaser has to settle outgoingsapportioned to him prior to receiving possession of the Property. Ifthat is the case, ensure the Purchaser settles the same accordinglyprior to delivery of possession.]

9.5 If the Purchaser is to take the property subject to a tenancy, ensurethat all deposits, which may have been paid by the tenant to theVendor, are transferred to the Purchaser and the tenancy dulyassigned and/or transferred to the Purchaser.

10. APPORTIONMENT OF OUTGOINGS

10.1 Once Vendor informs of the outgoings apportioned to Purchaser,relay the amount payable to client and request settlement of the sameby client.

10.2 Obtain from the Vendor all current receipts relating to electricity,telephone, water, sewerage and any other outgoings for the property.

11. TERMINATION

11.1 The Sale and Purchase Agreement may in some instances not becompleted but instead be terminated. Termination could beoccasioned by non-fulfillment of conditions precedent, breach by oneparty for which the other party elects to terminate the Agreement,non-registrability of the MOT or by mutual consent of the parties.




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11.2 Where the Sale and Purchase Agreement terminates, ascertain therelevant provision under the Sale and Purchase Agreement pursuantto which termination has occurred and the procedures to be attendedto as a consequence of such termination and the time frame forattendance to such procedures. The termination procedures willcommonly involve any one or more of the following:(a) Refund of monies.

(b) Forfeiture of the deposit (if termination on account of breach bythe Purchaser) or payment of liquidated ascertained damages (iftermination on account of breach by the Vendor).

(c) Return of documents.(d) Removal of any private caveats.(e) Re-delivery of possession, if already delivered.