Why Every Property Buyer in Malaysia Should Understand the Sales and Purchase Agreement?

What is a Sale and Purchase Agreement (SPA)?

The Sale and Purchase Agreement (SPA) is a legally binding document between a property buyer and seller. It sets out all the essential terms of the transaction, including the purchase price, payment schedule, deadlines, and the responsibilities of both parties.

In Malaysia, the SPA is not just a formality — it is your main protection against disputes. Whether you are purchasing a new development from a developer or a sub-sale property from an individual seller, the SPA will determine exactly how the sale will proceed.

Why the SPA Matters

For many Malaysians, buying property is one of the biggest financial decisions they’ll ever make. Signing an SPA without fully understanding its terms can lead to:

• Delays in getting vacant possession

• Unexpected additional costs

• Disputes over defects or outstanding payments

• Loss of booking fees if conditions are not met

A well-drafted SPA ensures that:

• The seller must deliver the property free from encumbrances (no hidden charges or debts).

• The buyer’s rights to the property are secured once all conditions are met.

• All payment terms are transparent and agreed upon upfront.

Key Clauses You Should Know

1. Completion Period

   This is the deadline by which the buyer must pay the balance purchase price. In sub-sale transactions, the completion period is typically 90 days from the date of the SPA, with an option to extend (often with interest).

2. Vacant Possession

   This clause specifies when the buyer can take possession of the property. It should also clarify the condition of the property upon handover.

3. Defect Liability Period (for new properties)

   For new developments, this is usually 24 months after vacant possession. During this time, the developer must repair any defects reported by the buyer.

4. Late Payment or Late Delivery Clauses

   These clauses outline penalties payable if either party delays — for example, late payment by the buyer or late delivery by the seller/developer.

5. Special Conditions

   For example, conditions relating to renovations, fixtures, or appliances that are part of the sale.

Common Mistakes Buyers Make

• Not engaging a lawyer early — Many buyers only consult a lawyer after signing the SPA, missing the chance to negotiate or clarify terms.

• Assuming all SPAs are standard — While developer SPAs follow a standard format (Schedule H or G under the Housing Development Act), sub-sale SPAs vary widely.

• Ignoring financing timelines — If your loan approval or bank disbursement is delayed, you may incur late payment interest.

• Overlooking hidden costs — Stamp duty, legal fees, and other charges should be budgeted for early.

How a Lawyer Helps You in the SPA Process

A property lawyer:

• Reviews the SPA to ensure it is fair and protects your interests.

• Advises you on payment timelines and negotiates extensions if necessary.

• Checks for caveats, liens, or other legal issues on the property title.

• Coordinates with your bank and the seller’s lawyer to ensure smooth disbursement of funds.

• Ensures the property is transferred to your name with all necessary registrations done.

  
  

Final Advice for Property Buyers

Never rush into signing your SPA, no matter how eager you are to secure the property. Take the time to:

• Read every clause carefully.

• Clarify anything you don’t understand with your lawyer.

• Confirm all agreed conditions are clearly written into the document.

Buying property is a major milestone — understanding your SPA is the key to making it a safe and successful investment.

Disclaimer: This article is for general informational purposes only and does not constitute legal, financial, or real estate advice. While we strive for accuracy, laws and regulations may change, and information may not be applicable to your specific situation. Always consult a qualified professional before making any legal or financial decisions.