How Long Does a Subsale Property Transaction Take in Malaysia?

A straightforward subsale property transaction in Malaysia commonly takes approximately three months from the commencement of the completion period.

However, this does not necessarily mean that the purchaser will receive the keys exactly three months after making an offer or signing the Sale and Purchase Agreement.

The actual timeline depends on factors such as:

  • when the Sale and Purchase Agreement is signed;
  • how the completion period is defined;
  • whether the purchaser requires a bank loan;
  • whether the vendor’s existing loan must be redeemed;
  • whether State Authority or developer’s consent is required;
  • whether an individual or strata title has been issued;
  • whether the property is subject to a private caveat or other encumbrance;
  • how quickly the parties provide the necessary documents; and
  • the processing time of the banks, developer, land authorities and other parties involved.

Some straightforward transactions may be completed within approximately three months. A transaction involving consent, financing, redemption or title complications may take six months or longer.

What Is a Subsale Property?

A subsale property is generally a property purchased from an existing owner rather than directly from a property developer.

Examples include:

  • a completed house sold by its registered owner;
  • a condominium unit purchased from its present owner;
  • a property that is still subject to the vendor’s bank loan;
  • a property held under an individual or strata title;
  • a property that remains under a master title; and
  • a property sold with or without an existing tenancy.

Unlike a purchase from a licensed housing developer, the terms of a subsale transaction are generally negotiated between the vendor and purchaser and recorded in the Sale and Purchase Agreement.

What Does “Three Plus One Months” Mean?

Many subsale Sale and Purchase Agreements provide for:

  • a completion period of three months; and
  • an additional extension period of one month.

This is commonly described as a “three plus one months” or “3+1” completion period.

During the initial three-month period, the purchaser must pay the balance purchase price in accordance with the agreement.

If the purchaser cannot complete payment within that period, the purchaser may be entitled to utilise the additional one-month extension, usually subject to payment of late payment interest on the outstanding balance.

However, the 3+1 arrangement is a matter of contract and not a universal rule that automatically applies to every property transaction.

The parties may agree to:

  • a shorter or longer completion period;
  • an extension of more or less than one month;
  • a different rate of late payment interest;
  • no automatic extension at all; or
  • a completion period that starts only after a specified condition has been fulfilled.

The parties must therefore refer to the actual Sale and Purchase Agreement to determine the applicable deadlines.

When Does the Three-Month Completion Period Start?

The starting date depends on the wording of the Sale and Purchase Agreement.

For a straightforward transaction with no condition precedent, the completion period may commence from:

  • the date of the Sale and Purchase Agreement;
  • the date on which the agreement is signed by the last party;
  • the date of the agreement as stated in the document; or
  • another date expressly agreed between the parties.

Where consent or approval is required, or if the sale and purchase transaction is subject to a condition precedent, the completion period may commence only after:

  • State Authority consent has been obtained;
  • the vendor or purchaser receives notification of the consent;
  • the original consent is received by the relevant lawyer; or
  • another condition precedent specified in the agreement has been fulfilled.

The exact commencement date is important. It determines when the balance purchase price becomes due and when late payment interest may begin to accrue.

Why Can a Subsale Transaction Take Longer Than Three Months?

Common causes of delay include the following.

1. Delay in Obtaining Loan Approval

If the purchaser applies for financing only after signing the SPA, valuable time may be lost. A loan application may also be rejected or approved for less than expected.

Unless the SPA expressly makes the purchase conditional upon financing, failure to obtain a sufficient loan does not necessarily excuse the purchaser from completing the purchase.

2. Delay in Loan Documentation or Disbursement

Even after loan approval, the purchaser must sign the financing documents and satisfy the bank’s disbursement conditions.

3. Delay in Redeeming the Vendor’s Loan

The transaction may be delayed if the vendor’s bank takes time to issue the redemption statement, confirm receipt of payment or release the original security documents.

State Authority, developer or other approvals may take several weeks or months. The processing time differs according to the property, authority and completeness of the application.

5. Missing Property Documents

A lost title, missing original SPA, incomplete deed of assignment or unavailable bank documents may have to be replaced or reconstructed.

6. Private Caveat or Other Encumbrance

A registrar’s caveat, private caveat, prohibitory order or competing claim may prevent or delay registration of the transfer.

7. Outstanding Maintenance or Property Charges

The management body or developer may refuse to issue the required confirmation until outstanding maintenance, sinking fund or administrative charges are settled.

8. Multiple Vendors or Purchasers

Coordinating signatures and documents may take longer where there are multiple parties, particularly if any party resides overseas.

9. Deceased or Bankrupt Owner

If the registered owner has died, a grant of representation and transmission of the property may be required.

If a party is bankrupt, approval or involvement from the relevant insolvency authority may be necessary.

10. Foreign Purchaser Requirements

A foreign purchaser may require State Authority approval and additional bank, immigration, tax or execution documents.

11. Errors in the Title or Documents

Differences in names, identity numbers, property descriptions or title particulars may need to be rectified before registration.

12. Delay by the Parties

The transaction may be delayed if the vendor or purchaser does not promptly:

  • sign documents;
  • provide information;
  • pay the required fees;
  • settle outstanding charges;
  • attend to bank requirements; or
  • respond to the lawyers’ requests.

What Happens If the Purchaser Cannot Complete Within Three Months?

The purchaser’s rights depend on the SPA.

If the agreement provides for an automatic extension period, the purchaser may be allowed additional time subject to late payment interest.

Interest is commonly calculated:

  • on the outstanding balance purchase price;
  • at the contractual rate;
  • on a daily basis; and
  • from the original completion date until actual payment.

If the purchaser still fails to complete by the end of the extended completion period, the vendor may have contractual remedies, potentially including:

  • issuing a notice of default;
  • terminating the SPA;
  • forfeiting the deposit to the extent permitted by the agreement and law;
  • claiming late payment interest;
  • claiming damages; or
  • pursuing another remedy available under the SPA.

The vendor should obtain legal advice before terminating the agreement or treating the deposit as forfeited.

What If the Delay Was Caused by the Vendor?

A properly drafted SPA may provide that the completion period is suspended or extended where the vendor fails to provide a required document or perform an obligation necessary for completion.

Examples include delay in:

  • providing the original title;
  • obtaining the redemption statement;
  • supplying discharge documents;
  • obtaining consent;
  • removing a registrar’s caveat or a private caveat;
  • settling outstanding charges;
  • delivering the signed transfer; or
  • providing documents required by the purchaser’s financier.

The purchaser should not automatically be charged late payment interest for a period of delay attributable to the vendor, subject to the wording of the SPA.

Can a Subsale Transaction Be Completed Faster?

Possibly. A transaction may be completed more quickly where:

  • the purchaser is paying in cash;
  • the property is free from any bank charge;
  • no consent is required;
  • the title has been issued;
  • all original documents are available;
  • there is no private caveat or encumbrance;
  • both parties appoint lawyers promptly;
  • the SPA terms are agreed without substantial negotiation; and
  • both parties promptly sign documents and make the required payments.

Even in a cash purchase, sufficient time is still required for due diligence, stamping, preparation of transfer documents and satisfaction of the SPA requirements.

A shorter deadline should not be agreed merely because the purchaser is paying cash. The lawyers should first assess whether the transaction can realistically be completed within the proposed period.

How Can the Parties Avoid Unnecessary Delays?

For the vendor

The vendor should:

  • appoint a lawyer before accepting the offer;
  • locate the title and previous purchase documents;
  • provide the existing loan details promptly;
  • settle outstanding quit rent, assessment and maintenance charges;
  • disclose any tenancy, caveat or ownership issue;
  • sign the SPA and completion documents promptly; and
  • provide complete RPGT information.

For the purchaser

The purchaser should:

  • obtain an initial financing assessment before signing the offer;
  • submit the loan application immediately;
  • appoint a lawyer promptly;
  • disclose any foreign purchaser or company requirements;
  • sign the SPA and loan documents without delay;
  • keep sufficient funds for the deposit, legal fees and stamp duty; and
  • respond promptly to the bank’s and lawyer’s requests.

For both parties

The parties should ensure that the offer to purchase and SPA contain realistic deadlines that account for:

  • financing;
  • redemption;
  • consent;
  • overseas execution;
  • existing tenancies;
  • title status; and
  • other special circumstances.

Frequently Asked Questions

Does every subsale transaction take three months?

No. Three months is a commonly agreed completion period, but the actual period depends on the SPA. The overall transaction may take longer where consent, redemption, financing or other conditions are involved.

Does the timeline start when the earnest deposit is paid?

Not necessarily. Payment of the earnest deposit does not automatically start the SPA completion period. The commencement date depends on the wording of the offer and SPA.

Is the additional one-month extension automatic?

Only if the SPA provides for it. The extension may also be subject to late payment interest and other contractual conditions.

How long does a cash purchase take?

A straightforward cash purchase may be completed more quickly because there is no purchaser’s loan disbursement. However, due diligence, redemption, consent, stamping and registration may still affect the timeline.

How long does a leasehold subsale take?

It depends on whether State Authority consent or another approval is required. Where consent is required, the overall transaction may take several additional months.

Can the purchaser move in before completion?

Only if the vendor agrees and the arrangement is properly documented. The parties should address occupation charges (e.g.: rental), outgoings, insurance, risk, repairs and what happens if the sale does not complete.

When does the purchaser receive the keys?

The keys are usually delivered according to the vacant possession provision in the SPA, commonly upon or shortly after completion. The precise timing depends on the agreement.

Can the vendor receive the sale proceeds before the transfer is registered?

This depends on the SPA, the title status, the financing arrangements and the undertakings between the lawyers and banks. The vendor may first receive only the amount remaining after redemption, RPGT retention and other authorised deductions.

What happens if the bank causes the delay?

The purchaser remains responsible for completing within the contractual period unless the SPA provides otherwise. A delay by the purchaser’s bank may still result in late payment interest being payable by the purchaser.

Conclusion

A straightforward subsale property transaction commonly has a three-month completion period, often followed by a one-month extension with late payment interest.

However, “three months” should not be treated as a guaranteed timeframe from the date the offer is accepted.

The overall transaction may include:

  • negotiation and signing of the SPA;
  • the purchaser’s loan application and documentation;
  • redemption of the vendor’s existing loan;
  • State Authority or developer’s consent;
  • RPGT compliance;
  • stamp duty assessment;
  • registration of the transfer;
  • release of the purchase price; and
  • delivery of vacant possession.

Each of these stages can affect the completion date. Before committing to a deadline, both vendor and purchaser should disclose the relevant circumstances and obtain advice on whether the proposed timeline is realistic.

Our firm handles conveyancing matters, including the Sale and Purchase Agreement, discharge of charge, foreigner’s consent, leasehold consent, as well as stamp duty and RPGT related matters.

This article is intended for general information only and does not constitute legal advice. The applicable timeline, rights and obligations depend on the terms of the Sale and Purchase Agreement and the circumstances of each transaction.

Read more:

Offer to Purchase in Malaysia: What You Should Know Before Signing

Should a Vendor Appoint Their Own Lawyer When Selling a Property in Malaysia?

How Much Are the Legal Fees for a Sale and Purchase Transaction in Malaysia?

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