Buying from a Developer
Reviewing the developer sale and purchase agreement and booking form, the progressive payment schedule, delivery of vacant possession, and the defect liability period.
For a purchase from a developer the sale and purchase agreement uses a prescribed schedule form under housing development regulations, so the core terms are standard. What deserves attention is the date from which the delivery period runs, the progressive payment schedule, and the defect liability period after vacant possession.
Buying from a developer differs from a subsale because the property does not fully exist yet, or does not yet have its own title. You are buying the right to receive a property that will be completed to a specification within a period set out in the agreement.
The booking form is the first document, not a minor one
Many buyers sign a booking form at the show unit on the same day they visit. That document often contains terms about refund of the booking fee, the period within which the sale and purchase agreement must be signed, and the consequences if the buyer does not do so.
If you have not signed it yet, send it to us to review first. If you have, we will check where you stand and what options exist.
Schedule agreements and additional terms
The sale and purchase agreement for a housing development uses a prescribed schedule form, so the core terms are standard across developers. What differs is the particulars filled in, and occasionally additional terms inserted.
The term that matters most is the date from which the delivery period runs, because it determines when the right to liquidated damages begins.
Title comes later
For most projects the individual or strata title issues several years after vacant possession. At that point the transfer has to be perfected so that your name is registered as owner. That is a separate matter known as perfection of transfer.
Estimated fees by property price
The table below shows an estimate for a purchase with a bank loan at 90% margin, property in Selangor, citizen buyer. Legal fees are calculated under Solicitors Remuneration Order 2023, in force from 15 July 2023.
| Property price | Legal fees | Stamp duty | Estimated total |
|---|---|---|---|
| RM250,000 | RM6,413 | RM5,125 | RM13,538 |
| RM500,000 | RM12,825 | RM11,250 | RM26,075 |
| RM750,000 | RM18,090 | RM19,875 | RM39,965 |
| RM1,000,000 | RM23,220 | RM28,500 | RM53,720 |
| RM1,500,000 | RM33,480 | RM50,750 | RM86,230 |
What your lawyer handles
- Reviewing the booking form before you sign it, including the terms on refund of the booking fee
- Checking that the developer licence and advertising and sale permit are current
- Reviewing the schedule sale and purchase agreement and identifying any additional terms inserted by the developer
- Confirming the date from which the delivery period runs, since it determines when liquidated damages begin
- Coordinating the release of progressive payments with the bank against architect certified stages
- Monitoring the defect liability period and advising on defect claims
- Attending to the transfer and perfection of title once the individual or strata title issues
Timeline
Documents you need to prepare
- Copy of the identity card of the buyer and spouse if buying jointly
- Booking form and receipt for the booking fee
- Project brochure, floor plan and specification list given by the developer
- Letter of offer from the bank
- Salary slips or proof of income for the bank
Costs people often overlook
- Legal fees for the sale and purchase agreement and the loan documentation
- Transfer stamp duty, which for developer purchases is usually paid later when title is perfected
- Loan agreement stamp duty at 0.5% of the loan amount
- Maintenance charges and sinking fund contributions for strata property, normally payable at handover
- Utility deposits and connection costs
When to stop and get advice first
- The developer asks for a booking fee before showing a current developer licence and sale permit
- The booking form states the booking fee is non refundable in all circumstances
- Additional terms have been inserted into the schedule agreement that change the buyer's position
- The date from which the delivery period runs is not clearly stated
- Payments are requested directly to the developer rather than into the project housing development account
Frequently asked questions
Can I get my booking fee back if I change my mind?
It depends on the terms of the booking form and the regulations that apply. This is why the booking form should be reviewed before signing rather than after.
What is the delivery period?
The period the developer has to complete and deliver the property, running from a date stated in the agreement. Delay beyond that period can entitle the buyer to liquidated damages.
What is the defect liability period?
The period after vacant possession during which the developer is responsible for rectifying defects reported to it. Reports must be made in writing within that period.
Why has the title not issued although the building is finished?
Individual or strata titles are issued by the land office after subdivision is completed. This can take years after vacant possession.
When do I pay transfer stamp duty?
For a developer purchase it is usually paid at the perfection stage, when the individual title issues and the transfer is registered.
Can I use my own lawyer even though the developer has panel solicitors?
The developer's solicitors act for the developer. You may appoint your own solicitors to review the documents for you.
Ready to start your property matter?
An initial consultation with no obligation. Tell us about your matter and we will explain what is involved and what it is likely to cost.
No. 4, Jalan Setia Impian U13/3D, Setia Impian 3, Seksyen U13, Setia Alam, 40170 Shah Alam, Selangor
014-9723468 · 014-4004293 · Monday to Friday, 9:00am to 6:00pm