If you are buying a property in Malaysia, it is important to know all the documents required, including a Memorandum of Transfer (MoT).
Owning your own home is a significant milestone in almost everyone’s adult life. However, the process can be tedious, especially with the numerous documents and procedures you will have to go through.
In this article, we outline all the necessary information you would need to know about the Memorandum of Transfer, the ownership process and the costs involved in acquiring a Memorandum of Transfer.
What is A Memorandum of Transfer?
When a homeowner buys a new property with a strata or individual title, they must sign a Memorandum of Transfer to transfer the ownership of the property from the developer to them.
In some cases, if a buyer has taken out a bank loan to finance the purchase of the property, the Memorandum of Transfer is prepared and signed together with the Sale and Purchase Agreement and loan documents.
This way, the buyer would not have to keep visiting their lawyer’s office to sign the documents.
Why Do Homebuyers Need A Memorandum of Transfer?
The Memorandum of Transfer is only used when the proprietor, developer or seller transfers land ownership to the homebuyer. It includes the particulars of the seller and buyer and land title details for the knowledge and reference of the land authorities.
A buyer would only be aware that the transfer of ownership has occurred when they receive a letter or phone call informing them that the new title is ready for collection.
In secondary market purchases, the buyer usually receives the keys to their new property along with the new title.
Moreover, it is important to know that the Memorandum of Transfer is also used when transferring ownership of a property between spouses and from parents to children.
In most cases, property transfers between family members do not involve an exchange of money. Therefore, a Sale and Purchase Agreement would not be used in those circumstances.
Read More: Different Types of Properties in Malaysia
The Steps Involved in a Property Transfer in Malaysia
A property transfer begins with the Memorandum of Transfer (or Form 14A). For a Memorandum of Transfer to be legally effective, the document must be stamped and officiated at the Inland Revenue Board and the stamp duty paid.
At the same time, if a bank loan was taken to pay for the property, a Memorandum of Charge (MOC) will be prepared by the borrower or lending bank for the buyer to sign.
The MOC (Form 16A) is used to inform the relevant land authorities that the bank is a ‘beneficial owner’ of the property. This means that should the borrower default on the loan, they are authorised to seize and auction the property to recover the balance of the defaulted loan.
Once the Memorandum of Transfer and MOC have been signed and stamped, a requisite fee payment is made (usually RM100 for each document).
Both documents, along with the current land title, will be registered with the appropriate land authorities. The new title will then be issued, along with the change in ownership and charge listed on the title.
Costs Associated With Acquiring A Memorandum Of Transfer
In addition to the payments required when buying a property, other transactions and financial obligations are involved when acquiring a Memorandum of Transfer. They include:
1. Loan Agreement
A loan agreement is a binding contract between a lender who agrees to provide a loan to the borrower.
Other than repaying the home loan (with interest), you will also need to pay for stamp duty on the loan you applied for.
2. Letter Of Offer
A Letter of Offer is the first document you will be presented with when buying a property. Homebuyers will need to sign this document regardless of whether they are purchasing the property from the previous homeowner or a property developer.
This document indicates the seller is willing to sell their property and that you have agreed to buy it. It includes information about the furnishings to be provided, the property’s agreed selling price, as well as when the Sales and Purchase Agreement should be signed.
During this process, a buyer would have to pay a non-refundable deposit. The deposit amount is typically equivalent to 2% of the value of the property and is also included towards the overall 10% down payment.
3. Sales And Purchase Agreement (SPA)
Signing the SPA is when you would have to begin paying in large amounts. At this point, the full 10% down payment will be required, and any deposit already paid will count towards this total.
When signing the Sale and Purchase Agreement, we recommend having a lawyer present to explain any enquiries you may have about the contract.
They can also:
- Ensure everything runs smoothly and that all documents are stamped
- Keep track of other little miscellaneous things you may have forgotten about
4. Memorandum Of Transfer
Homebuyers in Malaysia are also required to pay stamp duty when acquiring the Memorandum of Transfer.
Read More: Difference between Freehold and Leasehold Property in Malaysia
Easy Renting with Rumah-i
Buying a property in Malaysia may seem difficult when you have to deal with legal documents such as the Memorandum of Transfer and more. However, knowing and understanding the documents involved and how they work will streamline your property-buying journey.
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