Sales and Purchase Agreement (Sub Sale) in Malaysia Guide


What is a Sales and Purchase Agreement?

A Sales and Purchase Agreement (SPA) is a contract between a buyer(s)/purchaser(s) and a seller(s)/vendor(s) that contains all the agreed terms and conditions that binds both parties during a property transaction. The completion of a SPA typically occurs when the vacant possession of the property is successfully and wholly passed from the seller(s)/vendor(s) to the buyer(s)/purchaser(s).

Generally with sub sale agreements (i.e. where the property is question is transacted from the secondary market and/or where the seller(s)/vendor(s) is not the developer of the property),no law or statute provides for a prescribed form of the SPA. As such, the terms and conditions of a sub sale agreements are purely commercial and are drafted to reflect the agreed negotiated terms of the transacting parties.

This contrasts sharply for new properties purchased from the primary market (i.e. directly from the developer as the law (the National Land Code) provides for a statutory from of SPA that parties need to adopt. Notwithstanding a form for SPA is not prescribed for transactions of the secondary market, today’s marketplace nonetheless adopts a large extent of the prescribed statutory SPA in the National Land Code albeit with the necessary amendments to cater the SPA for their specific transaction.

Terms and Conditions stated in the SPA

The terms and conditions of  a SPA must include the details of the property, details of all parties involved in the transaction (such as, where relevant, details of the seller(s)/vendor(s), the buyer(s)/purchaser(s), solicitors and financiers), type of loan/financing (if any), mode and timing for of delivery of vacant possession of the property and other negotiated and mutually agreed arrangements, terms and conditions throughout the tenure of the transaction.

For transactions of property in the secondary market, additional emphasis should be paid on specifically negotiated and agreed terms and conditions that are not found in the prescribed statutory SPA in the National Land Code. These specifically negotiated and agreed terms and conditions may include details pertaining to any imposition of time frames and milestones for the transaction, special and/or additional conditions precedents required on or before vacant possession of the property is delivered, any obligations of the parties, calculation, timing and payment of taxes and other, outgoings, as well as any negotiated termination clauses.

 The buyer(s)/purchaser(s) must be aware of and be proactive in preparing all the necessary documents needed at each milestone for a timely progression of the transaction as well as the due date for payment of any outgoings. Conversely, the seller(s)/vendor(s) must ensure the timely delivery of the vacant possession of the property unit within an agreed stipulated time once all condition precedents are satisfied by the buyer(s)/purchaser(s).

Process of the SPA

1) Booking Form

This is a letter stating you that the buyer(s)/purchaser(s) intents to purchase the property and can be prepared by the buyer(s)/purchaser(s)’s agent or lawyer. Typically, a deposit payment of between 2% to 3% is paid when this letter is signed and dated. This letter (typically referred to as a booking form) is not a legal requirement but can nonetheless be used if the transacting parties decide to do so.

After the booking form is signed and dated, the buyer(s)/purchaser(s) will have to secure any relevant financing it requires. The buyer(s)/purchaser(s) typically has 2 weeks from the date of the booking form to secure this financing – this timeline of 2 weeks can be negotiated by the parties before signing the booking form.

If the buyer(s)/purchaser(s) is unsuccessful in securing the required financing for the purchase of the property, the deposit paid can be refunded to the buyer(s)/purchaser(s) provided that such an option to refund has been negotiated, agreed and recorded into the booking form prior to signing of the same.

In addition to securing the necessary financing (if needed), both the buyer(s)/purchaser(s) and the seller(s)/vendor(s) would also need to appoint their solicitors who would be representing and advising them this point on with regards the negotiating and drafting of the SPA. There may be up to four (4) solicitors for a transaction, they are (i) the buyer(s)/purchaser(s)’s solicitor; (ii) the buyer(s)/purchaser(s)’s financier’s solicitor; (iii) the seller(s)/vendor(s)’s solicitor; and (iv) the seller(s)/vendor(s)’s financier’s solicitor.

Parties are typically advised to refrain from signing any form of SPA until (i) the necessary financing has been secured; and (ii) solicitors have been retained and mandated for each of the transacting parties.

2) Signing the SPA

Once all terms and conditions of the transaction have been negotiated, agreed by all parties, built into the SPA and the SPA is signed, all parties must adhere to and fulfill the terms and conditions contained in the SPA. A further payment of between 7% to 8% of the property price is typically paid at the point the SPA is signed and dated. Failure to fulfil terms and conditions of the SPA may result in the forfeiture of the deposit as well as any legal fees paid and/or due.

3) Completion of SPA

Upon signing of the SPA and paying for the 10% deposit, The remaining 90% of the agreed price must be paid within 3 months from the date of signing.

If the buyer(s)/purchaser(s) fails to pay the remaining funds within the ‘completion date’ or the ‘balance sum’ stipulated in the agreement, there will usually be a 1 month extension to settle it. As a penalty an interest will be charged until the full receipt of payment.

If the buyer fails to settle the balance within the completion date or the extension date, the 10% deposit will be available for forfeiture to the seller as liquidation damages. Any additional money paid in excess of the deposit is normally refunded back to the buyer(s)/purchaser(s).

Cancellation or Termination of an agreement.

An agreement can be cancelled at any time, but normally 10% of the purchase price will be charged under the termination and indemnity clause. However, if there is a specific performance clause that binds the vendor(s) or buyer(s) to be fulfilled, there may be a legal case involved to enforce the terms resulting from the breach of agreement.

Additional Information

When buying a sub sale property, you will need to submit the 14A form alongside the sales and purchase agreement. The form 14A is a memorandum of transfer, which transfers the interest of the owner to an assignee specifically on strata and individual title properties. Furthermore, you will need to submit the stamp duty form with both of the above documents.

If you have assigned an agent, it is normally advisable to pay only after the entire process has been completed.


The S&P agreement can be a secured and enforceable document to smoothen the property transaction, provided that the terms are clear and the deal doesn’t work against you. As mentioned earlier, with Sub sale properties there are no compulsory terms needed to be adopted. You can mutually agree on any terms negotiated with the other party.

Ensure that all your intentions and requirements are communicated to lawyers of both parties and stated within the agreement itself before signing it.

We hope that this guide will provide a general overview of the sales and purchase used when dealing with sub sale properties in Malaysia. If you have any questions or looking to share your opinion, feel free to send us an email at or leave a comment below.

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