Buying from a Developer

The buying from a developer process step by step

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 when buying from a developer is not a minor document

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 extra terms when buying from a developer

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 when buying from a developer

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.

What really differs between a developer purchase and a subsale

In a subsale the terms are negotiated between two private parties. When buying from a developer the core terms are fixed by the prescribed schedule form under the housing development regulations. You cannot change those core clauses, and that actually protects the buyer.

What can change are the annexures, side letters and the booking form. That is where the careful reading belongs: the rebate package, the fittings promised, the car park allocated, and the cancellation terms.

Payment differs too. In a subsale you pay a deposit and then the balance in one go. When buying from a developer the bank releases funds in stages against construction progress, which means loan interest starts running well before you get the keys.

The matter does not end at handover

Handover of keys is not the end of the legal work. The individual or strata title is often issued years later. Until then your ownership is held through a deed of assignment rather than by registration in your name.

When the title finally issues, a further step is needed to register your name and to register the bank charge. The developer or the bank will write to you, but that letter is often sent to an old address.

Keep one file with the agreement, the stamp duty receipts and the handover letter. When the time comes to sell, those documents decide whether the matter runs smoothly or stalls for months.

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.

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 usually falls due later, when you perfect the title
• 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

Frequently asked questions about buying from a developer