MASTERING THE LEGAL ASPECTS OF BUYING PROPERTY: The past 2 years have been phenomenon years for property prices in Malaysia. Many people call this period the “Property Boom”. Property value, especially in the prime areas, has been soaring. Property investors, new graduates who have just found jobs, bankers, businessmen, and even the Government are discussing the massive increase in property prices.
I have a client who bought a piece of vacant bungalow land in Shah Alam at RM550,000 in 2005 and sold it at RM910,000 in 2009 – a whopping 65% capital appreciation in 4 years. This same piece of land was sold in 2011 at RM1,815,000 recording a capital appreciation of almost 100% in 2 years. How can the price of the same piece of vacant land with no building erected on it increase from RM550,000 to RM1,815,000 in a span of about 6 years?
I have another client who bought a shop lot in Kota Damansara at RM2.7 million in 2007 and sold it for RM4.5 million in 2009. The asking price for the same property in 2011 is RM6.0 million. How can the price of the same shop lot increase from RM2.7 million to RM6.0 million in a span of about 5 years?
The answer is – why not?
Land is a scarcity. The supply decreases as few plots of land are available for development, whilst the demand increases exponentially along with our increasing population.
It is no secret that many people put their money into real estate as one of their investment portfolios. Property investment is viewed as a safer and more stable type of investment which is always preferred by long-term investors as compared to short-term investments, such as shares and commodities.
However, many people buy and sell properties without understanding the legal aspects of the property game. Can someone do that and yet make money from property? The answer is obviously – yes! But wouldn’t you want to be in a better position to play the game by knowing what the rules of the game are?
Playing the property game without understanding the legal aspect is like playing football without understanding the rules. You can simply aim at the goal and kick the ball towards that direction. If you’re lucky, you score. If you’re unlucky, you may have violated some of the rules, making the goal an invalid one. So, would you want to play a game without having a clue as to what the rules are at all? I guess not.
On the other hand, if you know the rules and learn the skills well enough, you will score – not because you are lucky, but because you know how to play the game and win it!
The same goes to the property game when you buy and/or sell properties. If you are lucky, the transaction goes smoothly. But if you aren’t lucky, you may face legal issues, some of which may be extremely unfair to you.
This book serves as a basic manual for housing property buyers and sellers concerning the legal aspects of property transaction.
Besides acquiring knowledge on what the best properties are to buy, it is extremely important that you equip yourself with the basic legal knowledge of property transactions. You can leave the more technical and complicated matters to your property lawyer.
PART A provides you with an essential guide on buying property from a housing developer. You will know what to expect from the day you decide to buy your property until the day when all legal papers are signed.
PART B delves into the salient aspects of sub-sale transactions. Buying a sub-sale property is not always a standard process, due to the different nature or types of property, for example Freehold/ Leasehold, Master Title/ Individual Title etc.
PART C deals with Money! It discusses the financing aspect of buying a piece of property. You may finance your purchase by your fund or obtain a bank loan to part-finance the purchase. This Part deals mainly with the bank financing of your purchase of property.
PART D explains one of the most commonly used terms in property transactions – Undertaking.
PART E provides you with some samples of practical documents, such as the Sale and Purchase Agreement, the Title, the land search report, etc.
It is my sincere hope that through this book, you will gain some basic knowledge on buying a residential property.
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