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Steps - Flowchart of Subsale with Title (Redemption)

Professional Practice 1A (“Conveyancing”) (Universiti Kebangsaan Malaysia)

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SOLICITORS’ CHECKLIST – STEP BY STEP PROCEDURES

(may vary following different scenarios)

Scenario: SUB-SALE of Property With Individual Title (where Property is charged to a

Financial Institution and the Purchaser is obtaining a Loan)

FIRST: Pre-Conditions prior to the formation of a Sale and Purchase Agreement

a) Ensure there is no conflict of interest or potential conflict of interest.

[Note: Solicitors must not act or purport to act for both the Vendor and the Purchaser in the
same transaction].
**Solicitors’ firm can only act for one party in the transaction however the Solicitor may
prepare/witness the execution of the documents by the Vendor.

b) To ascertain if a letter of offer i.e. offer to purchase has been executed by the parties.
If yes, to obtain a copy and to ascertain deadline for execution of the Sale and Purchase
Agreement, if any.
[Note the deadline for execution of Sale and Purchase Agreement].
** Solicitor should ascertain the amount and method of earnest deposit and deposit to be paid
by the Purchaser to the Vendor prior and/or upon execution of the Sale and Purchase
Agreement.

c) To obtain instructions as regards to the transaction including names of parties, property details,
payment terms, particulars of any tenancies in respect of the property and if so, whether
property sold with vacant possession or subject to existing tenancy, name and contact,
particulars of the Vendor’s Solicitors, if any and any other salient/principle terms.

d) To obtain, if available, a copy of the following documents:

i. For individuals, identity card (or passport, if foreigner) of the Vendor and Purchaser.
ii. For companies, certified true copy of the Memorandum and articles of association, latest
Forms 49, 44 and all Forms 24, and the Board of Directors’ and members’ (if applicable)
resolutions authorising the entry into the Sale and Purchase and execution of the Sale
and Purchase Agreement and associated documents.
[Note: The Purchaser’s Board of Directors’ resolution should state clearly the
authorisation to affix the common seal on the Memorandum of Transfer (MOT)].
iii. Issue Document of Title.
iv. Principal Sale and Purchase Agreement between the Vendor and previous
owner/Developer.
v. Principal Loan Agreements between the Vendor and the Chargee/Assignee Bank (if the
Property is still subject to charge).
vi. Current quit rent receipt and assessment receipt.
[Note: If not available immediately, to ensure that these are all obtained upon signing of
the Sale and Purchase Agreement].
vii. Electricity bill, Water bill and Indah Water Konsortium bill.
[Note: If not available immediately, to ensure that these are all obtained prior to the
delivery of vacant possession to the Purchaser]

e) To obtain details of Vendor’s loan account, Chargee Bank’s reference no., details of Chargee Bank
such as Name of the Bank and full address.

f) Advise client of your charges.

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[Note the provisions of the Solicitors’ Remuneration Order 2006 in respect of the mandatory
scale of rates for the conduct of sale and purchase transactions and related matters thereto].

f) Conduct OA/ bankruptcy search on the parties.

SECOND: Conduct search on the land title.

a) Take note of any encumbrances on the property including charges or caveats, restrictions in
interest, express conditions or land acquisition by the government.
b) Highlight results to client if the search discloses anything different or more than what your
client may have been informed by the Vendor or believes to be the case.

THIRD: Drafting and Preparation of Documents

a) Sale and Purchase Agreement

b) Memorandum of Transfer
c) Letter of Appointment of Solicitors
d) Vendor’s Letter of Undertaking to Refund addressed to the Purchaser’s Financier
e) Vendor’s Letter of Authorisation addressed to the Chargee Bank authorising the Solicitors to
attend to the redemption of Property on behalf of the Vendor
f) Statutory Declaration of Non-Bankruptcy
g) Vendor’s Confirmation and Acknowledgement of Deposit
h) CKHT Forms (Form 1A, 2A, 3 or Annexure 6 or 502 as and where applicable)
i) Statutory Declaration on Remittance of Stamp Duty (as and where applicable)
j) Invoice being the charges to the Purchaser (should include estimated stamp duty chargeable on
the MOT, registration fees on MOT etc)
k) Invoice being the charges to the Vendor (should include registration fees on Discharge of Charge
or Deed of Receipt and Reassignment, where applicable etc]

FOURTH: Execution of Documents and Settlement of Legal Fees and Disbursements by Respective
Party(ies)

a) Before the execution of the Sale and Purchase Agreement, Solicitors to ensure that the parties
have legal capacity to contract and that the Vendor has a good and valid title to the Property and
documents.
b) Solicitor to witness/attest the Sale and Purchase Agreement, Memorandum of Transfer (Form
14A), Vendor’s Letter of Undertaking to Refund and Vendor’s Letter of Authorisation for the
redemption of Property.
c) Solicitor to issue an Official Receipt for the payment of the Legal Fees and Disbursement by
Respective Party(ies).

FIFTH: Stamping of Sale and Purchase Agreement

a) Solicitor to date and stamp the Sale and Purchase Agreement.

b) Solicitor to forward Original and another stamped copy of Sale and Purchase Agreement to
Purchaser.
c) Solicitor to forward stamped copy of Sale and Purchase Agreement to Vendor.
d) Solicitor to submit to LHDN the CKHT forms on behalf of the Vendor and Purchaser within 60
days from the date of the Sale and Purchase Agreement.

SIXTH: Request Redemption Statement and Letter of Undertaking from the Chargee Bank
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a) Upon receipt of the letter from the Purchaser’s Financier’s Solicitors informing that the
Financier has granted a loan facility to the Purchaser, Solicitor to issue a written request to the
Chargee Bank addressed to the Purchaser’s Financier together with the Vendor’s Letter of
Authorisation for a Redemption Statement cum Letter of Undertaking where the Chargee Bank
undertakes to:-
(i) deliver the Original Issue Document of Title, Duplicate Charge, duly executed Discharge
of Charge and any other Original documents (“Discharge Documents”) held in the Bank’s
custody; and
(ii) to refund the Redemption sum in the event that the Discharge of Charge cannot be
registered for any reason whatsoever.
b) Solicitors to forward written undertaking to Purchaser’s Financier’s Solicitors and attend to the
requirements of the Financier accordingly for the release of the loan facility including the
Confirmation on the Differential sum settled and delivery of the Vendor’s Undertaking to Refund
if the Memorandum of Transfer cannot be registered for any reason whatsoever.
c) Upon receipt of the Chargee Bank’s Redemption Statement cum Letter of Undertaking aforesaid,
Solicitor to forward the Original Redemption Statement, Vendor’s Undertaking to Refund,
Vendor’s Statutory Declaration of Non-Bankruptcy, certified true copies of Assessment and Quit
Rent receipts together with certified true copies of the Vendor’s identity card/passport to the
Purchaser’s Financier’s Solicitors and KIV for partial disbursement of the loan towards
settlement of the redemption sum and balance of the purchase price by the Completion Date or
the Extended Completion Date, as the case may be.
[Note if there is a validity period prescribed for the redemption statement and KIV accordingly.]
d) Upon receipt of such of the loan sum as is required to settle the Redemption sum payable to the
Chargee Bank, Solicitor to forward the Redemption Cheque to the Chargee Bank together with
the Discharge of Charge (Form 16N) for execution by the Chargee.
[Note if there is any time frame prescribed in the Sale and Purchase Agreement for the delivery
of the Discharge of Charge Documents to the Purchaser’s Financier’s Solicitors and KIV
accordingly.]
e) Once the Discharge of Charge Documents are received from the Chargee Bank, Solicitor to stamp
the Discharge of Charge.

SEVENTH: Adjudication of Memorandum of Transfer

a) Solicitor to submit Memorandum of Transfer for adjudication of stamp duty payable by

Purchaser at LHDN via STAMPS,
b) KIV for the issuance of Notice of Assessment of Stamp Duty chargeable.
c) Once Notice of Assessment is issued by the LHDN, Solicitor to ensure a deadline for payment of
stamp duty assessed within 30 days from the date of the Notice to avoid penalty on late
payment.

EIGHT: Delivery of Documents for Registration

a) Solicitor to forward to the Purchaser’s Financier’s Solicitors the Original Issue Document of Title,
duly adjudicated stamped and valid Memorandum of Transfer together with Stamp Certificate,
Duplicate Charge, duly executed, stamped and valid Discharge of Charge and the registration fee for
Memorandum of Transfer and the Discharge of Charge.
b) KIV for release of balance of the loan settlement of the balance of the purchase price by the
Completion Date or the Extended Completion Date, as the case may be.

NINTH: Registration of Memorandum of Transfer and Discharge of Charge

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a) Purchaser’s Financier’s Solicitors to present the duly adjudicated and stamped Memorandum of
Transfer, Original Issue Document of Title, Duplicate Charge, Discharge of Charge, duly paid Quit
Rent and Assessment receipt for the current year, NRIC of Purchaser and Vendor together with
requisite registration fees on Memorandum of Transfer at the relevant Land Office.
b) Purchaser’s Financier’s Solicitors to issue written advise to the Financier in accordance with
the requirements of the Financier accordingly for the release of the balance of the loan facility to
the Solicitors as stakeholders on behalf of the Vendor.

TENTH: Release of Balance Purchase Price to Vendor and Delivery of Vacant Possession by the
Vendor

a) Upon registration, Solicitor to ensure the release of the Balance Purchase Price to the Vendor.
b) Solicitor to ascertain the time frame for the Vendor to deliver the vacant possession of the
Property to the Purchaser.
c) Vacant possession to the Purchaser.

ELEVENTH: Change of Name in Billings (TNB, SYABAS, Indah Water, Assessment and Quit Rent)

a) Solicitors are not obliged to notify the relevant authorities of change of name in billings.
b) Solicitors shall remind the Purchaser and Vendor to inform all the relevant authorities of the
change of ownership of the Property upon the completion of the sale and the purchase and to
pay all costs and expenses arising there from or in connection therewith.

CLOSE FILE
This Checklist is intended to be a guide and you should consult the relevant provisions of all
relevant legislation, guidelines and case law.

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

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