What is perfection of transfer and charge?
So, you have just received a letter from the developer informing you that your strata title has been issued. You are asked to contact a lawyer to perfect your title and charge. In this article, we will answer some questions that you always wanted to ask a lawyer but never had the chance.
Your question: I have signed a sale and purchase agreement before this. You mean I didn’t have a strata title to my property all this while?
If you receive such a letter from the developer, it is likely that individual strata title has not been issued when you signed your sale and purchase agreement. This letter also means that the developer’s master title has now been subdivided into individual strata titles for you and other buyers.
For further information, please contact:
Teh Guat Hong
Partner
guathong.teh@lochambers.com
Jes Pua
Associate
jinhooi.pua@lochambers.com
Your question: Can I ignore the notification from the developer?
The short answer is you shouldn’t. If you have a loan, your bank will also likely be notified of the issuance of the strata title and may exercise its power of attorney to perfect the transfer and charge if you fail to do so. Delays may also result in storage and other charges being imposed upon you by the developer before the strata title is released. In addition, it will complicate matters for you if the developer is wound up or if you would like to sell your property. Other unforeseeable events such as death or other changes in your circumstances will further result in unnecessary and additional costs.
Your question: What then is involved in the perfection of transfer and charge?
When the strata title is first issued, it will be in the name of the developer even though the property has been sold to you. The process of ensuring that your name appears in the strata title is legally known as perfecting the transfer/title to you. Simultaneously with this, your bank will also register its charge to secure the loan given to you. This latter process is known as perfecting the bank’s charge.
Money matters
Now that we have established that you shouldn’t ignore nor can you avoid this process, we are sure you will ask the following further questions.
Your question: How much do I need to pay?
As there will be legal work involved, you need to engage a lawyer to assist you. There will be professional fees, stamp duty, registration fees, bank execution charges, and other disbursements payable to various parties such as the land office and stamp office.
Your question: What is the stamp duty payable?
Commonly, stamp duty would be payable on the memorandum of transfer (MOT), and the rate depends on the purchase price and the date of your sale and purchase agreement with the developer.
With effect from 1 January 2019, stamp duty on the MOT is calculated as follows:
| Purchase Price | Rate |
|---|---|
| First RM100,000 | 1% |
| First RM400,000 | 2% |
| First RM500,000 | 3% |
| First RM1,000,000 | 4% |
Your question: Can I get a discount on the stamp duty?
From time to time the Government of Malaysia announces certain reductions/exemptions in stamp duty. Therefore, it is worthwhile and important to enquire with a lawyer on your eligibility.
Your question: But I remember having paid stamp duty when I bought the property previously. Are you sure I still need to pay for this?
If you did not purchase your property from the developer, then it is likely that you would have paid stamp duty on a document known as a deed of assignment. In that case, the MOT will be stamped at only RM10.
Your question: Will there also be stamp duty payable for the charge?
Yes, and this will be at RM10/copy. Most banks will require 4 copies of the charge to be executed.
Next steps
Your question: Who shall I engage as my lawyer?
This is a personal choice. You should choose a lawyer whom you think can do the job for you at a fee you are comfortable to pay. There is also no harm to ask for a few fee quotes prior to committing yourself. For a quote, provide the purchase price, loan amount, the name of your bank, and whether your property is freehold or leasehold.
Your question: Am I bound to engage the original sale and purchase and loan lawyers?
No. You are not bound to engage the original sale and purchase or loan lawyers, or anyone recommended by a third party such as the developer, your joint management body, or even your bank. Appointment of your lawyer is up to you.