What Does a Vendor’s Lawyer Do in a Property Sale?

When selling a property in Malaysia, a vendor may assume that appointing a lawyer is unnecessary because the purchaser already has a lawyer handling the Sale and Purchase Agreement.

However, the purchaser’s lawyer represents the purchaser, not the vendor. The purchaser’s lawyer is responsible for protecting the purchaser’s interests and cannot be expected to advise the vendor on whether the terms of the transaction are fair or sufficiently protective.

The vendor’s lawyer performs a separate and important role. This includes advising the vendor, negotiating the Sale and Purchase Agreement, handling the redemption of any existing loan, attending to Real Property Gains Tax requirements, obtaining the necessary consent and ensuring that the balance purchase price is properly released to the vendor.

Should a Vendor Appoint a Separate Lawyer?

A solicitor handling a sale and purchase transaction acts only for either:

• the vendor or transferor; or
• the purchaser or transferee.

Each party should ideally have separate legal representation so that their respective interests are properly protected.

If the vendor does not appoint a lawyer, the vendor may have to review and understand the Sale and Purchase Agreement without independent legal advice. Although the purchaser’s lawyer may assist with certain administrative matters to facilitate completion, this does not necessarily mean that the purchaser’s lawyer represents the vendor in the sale.

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

What Does a Vendor’s Lawyer Do Before the SPA Is Signed?

A vendor’s lawyer should preferably be appointed before the vendor signs an offer to purchase, booking form or other document containing legally significant terms.

At the preliminary stage, the vendor’s lawyer may perform the following work.

1. Review the Offer to Purchase

The vendor’s lawyer may review the offer to purchase or earnest deposit agreement to identify important terms such as:

• the purchase price;
• the amount of the earnest deposit;
• the deadline for signing the Sale and Purchase Agreement;
• the balance deposit payable upon signing;
• whether the purchase is subject to the purchaser obtaining a loan;
• whether vacant possession or possession subject to a tenancy will be delivered;
• the proposed completion period;
• the consequences if either party fails to proceed;
• responsibility for obtaining the necessary consent;
• whether fixtures, fittings or furniture are included; and
• any special conditions agreed between the parties.

It is important to review these matters before the offer is accepted. By the time the Sale and Purchase Agreement is prepared, the vendor may already be bound by the commercial terms stated in the accepted offer.

2. Review the Property Documents

The vendor’s lawyer may request and review documents relating to the property, including:

• the title or strata title;
• the vendor’s previous Sale and Purchase Agreement;
• the deed of assignment;
• the current loan or financing documents;
• quit rent receipts;
• assessment receipts;
• maintenance and sinking fund statements;
• the tenancy agreement, if the property is tenanted;
• letters of consent or approval;
• the developer’s confirmation;
• the vendor’s identity documents; and
• documents showing the vendor’s legal or beneficial ownership.

This allows the lawyer to identify possible issues before the Sale and Purchase Agreement is finalised.

3. Check the Ownership and Title Status

The lawyer may conduct the relevant searches to verify matters such as:

• the registered owner of the property;
• the correct title particulars;
• any registered charge;
• any private caveat;
• any restriction in interest;
• whether the title is subject to a lease;
• the tenure of the property;
• whether an individual or strata title has been issued; and
• whether the property is affected by any endorsement or encumbrance.

If the title contains a restriction in interest, consent from the State Authority or another relevant authority may be required before the property can be transferred.

What Does the Vendor’s Lawyer Do When Preparing the SPA?

For a typical subsale transaction, the vendor’s lawyer will usually prepare the first draft of the Sale and Purchase Agreement, unless the parties agree otherwise.

The lawyer’s role is not merely to insert names and figures into a standard document. The lawyer must ensure that the agreement reflects the property, the parties’ arrangement and any risks identified from the supporting documents.

4. Draft and Negotiate the Sale and Purchase Agreement

The vendor’s lawyer may draft and negotiate provisions relating to:

• payment of the deposit;
• the completion period;
• any agreed extension of time;
• late payment interest;
• the purchaser’s financing arrangements;
• redemption of the vendor’s existing loan;
• delivery of vacant possession;
• sale subject to an existing tenancy;
• apportionment of quit rent, assessment, maintenance charges and rental;
• discharge of existing encumbrances;
• applications for consent;
• the condition of the property;
• fixtures and fittings included in the sale;
• the purchaser’s default;
• the vendor’s default;
• termination rights;
• forfeiture or refund of the deposit;
• delivery of title and completion documents; and
• other special conditions applicable to the transaction.

The vendor’s lawyer will review amendments proposed by the purchaser’s lawyer and advise whether those amendments should be accepted, rejected or revised.

5. Explain the Vendor’s Obligations

Before the vendor signs the Sale and Purchase Agreement, the lawyer should explain the material terms and the vendor’s obligations.

For example, the vendor may be required to:

• redeem the existing loan;
• discharge the bank’s charge or security;
• obtain consent to transfer;
• settle outstanding maintenance charges and other outgoings;
• provide specific documents within an agreed period;
• deliver vacant possession upon completion;
• remove an existing tenant or occupant;
• repair an agreed defect;
• withdraw a private caveat; or
• procure the cooperation of a developer or management body.

The vendor should understand these obligations before entering into the agreement.

What Happens If the Property Is Still Under a Bank Loan?

A property may be sold even if the vendor has not fully repaid the housing loan. However, the existing bank’s security must usually be discharged or reassigned as part of the transaction.

6. Obtain the Redemption Statement

The vendor’s lawyer will normally write to the vendor’s bank or the bank’s appointed lawyer to request a redemption statement.

The redemption statement specifies the amount required to settle the outstanding loan and the deadline by which the amount must be paid.

The vendor may be required to sign documents authorising the bank to disclose the loan and redemption information to the appointed lawyer.

7. Coordinate Payment of the Redemption Sum

Part of the purchase price may be paid directly to the vendor’s bank to redeem the property.

The vendor’s lawyer may coordinate with:

• the purchaser’s lawyer;
• the purchaser’s financier;
• the vendor’s financier; and
• the respective banks’ lawyers.

This process is important because the purchaser will expect the property to be transferred free from the vendor’s existing security.

8. Attend to the Discharge or Reassignment

Once the loan has been redeemed, the existing security must be released.

Depending on the title status and the form of the bank’s security, this may involve:

• a discharge of charge;
• a deed of receipt and reassignment;
• a revocation of power of attorney;
• the release of the original title; or
• the release of the original Sale and Purchase Agreement and other security documents.

The legal fees for a discharge of charge or deed of reassignment are charged separately from the main sale and purchase legal fee.

What Does the Vendor’s Lawyer Do for Real Property Gains Tax?

A disposal of real property may give rise to obligations under the Real Property Gains Tax Act 1976.

9. Prepare or Submit the Vendor’s RPGT Forms

The vendor’s lawyer may assist with preparing and submitting the relevant Real Property Gains Tax forms through the electronic filing system.

The vendor may need to provide information and documents concerning:

• the date of acquisition;
• the original acquisition price;
• the disposal price;
• legal fees and other permitted incidental costs;
• capital improvement expenses;
• estate agency fees;
• the vendor’s citizenship or tax status;
• previous exemptions claimed; and
• any exemption or relief being relied upon.

The lawyer may assist with the filing process, but the vendor remains responsible for ensuring that the information supplied is accurate and complete.

10. Deal With the Statutory Retention Sum

Depending on the applicable law and the vendor’s circumstances, the purchaser may be required to retain part of the purchase price and remit it to the Inland Revenue Board.

The vendor’s lawyer may advise the vendor regarding:

• the applicable retention requirement;
• the documents required for the submission;
• whether an exemption from retention may apply;
• the time limit for submission; and
• how the retained amount will be treated when the final tax liability is determined.

The retention sum is not necessarily the vendor’s final Real Property Gains Tax liability. The final liability will depend on the gain, allowable expenses, available exemptions and applicable tax rate.

What If Consent Is Required to Sell the Property?

Some properties cannot be transferred without prior consent from the State Authority, developer or another relevant body.

11. Apply for Consent to Transfer

Consent may be required where:

• the title contains a restriction in interest;
• the property is leasehold;
• the property is subject to bumiputera restrictions;
• the purchaser is a foreigner;
• the property is classified as low-cost or affordable housing;
• the developer’s consent is contractually required; or
• approval from another authority is necessary.

The vendor’s lawyer may prepare the application, collect the supporting documents, pay the prescribed fees from funds provided and follow up with the relevant authority.

The Sale and Purchase Agreement should clearly state:

• which party is responsible for applying;
• who must provide the supporting documents;
• who bears the application and administrative fees;
• the time allowed to obtain consent; and
• what happens if consent is refused or delayed.

What Does the Vendor’s Lawyer Do During the Completion Period?

After the Sale and Purchase Agreement is signed, the transaction enters the completion stage.

12. Monitor the Completion Timeline

The vendor’s lawyer will monitor important deadlines, including:

• payment of the balance deposit;
• delivery of the completion documents;
• submission of consent applications;
• payment of the redemption sum;
• payment of the balance purchase price;
• the expiry of the completion period; and
• any extended completion period.

If the purchaser fails to pay within the agreed period, the vendor’s lawyer may calculate the applicable late payment interest and advise the vendor on the contractual remedies available.

13. Provide the Completion Documents

The vendor may be required to deposit documents with the vendor’s lawyer for eventual delivery to the purchaser or registration of the transfer.

Depending on the transaction, these may include:

• the original title;
• a duly executed Memorandum of Transfer;
• the original Sale and Purchase Agreement;
• a duly executed deed of assignment;
• the discharge of charge;
• the deed of receipt and reassignment;
• the consent to transfer;
• quit rent and assessment receipts;
• maintenance payment receipts;
• keys and access cards; and
• other documents specified in the Sale and Purchase Agreement.

The vendor’s lawyer will coordinate the release of these documents in accordance with the agreement and any relevant professional undertakings.

14. Calculate Apportionments

Certain payments may need to be apportioned between the vendor and purchaser as at the agreed date.

These may include:

• quit rent;
• assessment;
• maintenance charges;
• sinking fund contributions;
• rental;
• service charges; and
• other property-related outgoings.

The vendor’s lawyer may prepare or review the apportionment calculation before the purchase price is released.

15. Receive and Account for the Purchase Price

Where authorised under the transaction, the vendor’s lawyer may receive part of the purchase price as stakeholder.

Before releasing the net balance to the vendor, the lawyer may need to account for:

• the redemption sum;
• the RPGT retention sum;
• outstanding quit rent or assessment;
• maintenance and sinking fund arrears;
• agreed apportionments;
• legal fees and disbursements;
• the estate agent’s commission, where authorised; and
• any other payment required under the Sale and Purchase Agreement.

The lawyer should provide the vendor with a completion account showing the relevant receipts and deductions.

16. Coordinate Delivery of Vacant Possession

If the property is sold with vacant possession, the vendor’s lawyer may coordinate the delivery of:

• vacant possession;
• keys;
• access cards;
• remote controls;
• parking access devices; and
• other items relating to the property.

The date for delivery of vacant possession should follow the Sale and Purchase Agreement. The vendor should not hand over possession prematurely unless properly advised, particularly if the balance purchase price has not been received.

What If the Property Is Tenanted?

If the property is sold subject to an existing tenancy, the vendor’s lawyer may review the tenancy agreement and ensure that the Sale and Purchase Agreement properly addresses:

• whether the tenancy will continue after completion;
• transfer of the tenancy deposit;
• apportionment of rental;
• notification to the tenant;
• existing rental arrears;
• the purchaser’s assumption of the landlord’s obligations; and
• delivery of the tenancy agreement and related records.

If the purchaser requires vacant possession, the vendor should confirm whether the tenancy can lawfully be terminated within the required time. The vendor should not promise vacant possession without first checking the tenancy terms.

Does the Purchaser’s Lawyer Protect the Vendor?

No. The purchaser’s lawyer is appointed to protect the purchaser’s interests.

The purchaser’s lawyer may prepare documents or assist the vendor with limited matters to facilitate the transaction, particularly where the vendor is unrepresented. However, this does not necessarily create a solicitor-client relationship between the purchaser’s lawyer and the vendor.

For example, the purchaser’s lawyer may assist with:

• obtaining the redemption statement;
• preparing documents for discharge of the vendor’s bank security;
• submitting the vendor’s RPGT forms; or
• applying for consent to transfer.

Such assistance should not be treated as independent advice to the vendor on the terms of the sale.

If a disagreement arises over late payment, vacant possession, forfeiture of the deposit, property defects or termination, the vendor should not assume that the purchaser’s lawyer can advise or act for the vendor.

How Much Are the Vendor’s Legal Fees?

For a normal subsale transaction in Peninsular Malaysia, the vendor’s legal fee is generally calculated according to the scale under the Solicitors’ Remuneration Order 2023:

Consideration or Adjudicated Value	Scale Fee
First RM500,000	1.25%, subject to a minimum fee of RM500
Next RM7,000,000	1%
Amount exceeding RM7,500,000	Negotiable on the excess, but not exceeding 1% of the excess

Separate fees and disbursements are applicable for matters such as:

• service tax;
• discharge of charge;
• deed of receipt and reassignment;
• RPGT forms;
• consent applications;
• private caveat removal;
• statutory declarations;
• additional documents;
• replacement or reconstruction of missing documents; and
• other work outside the normal scope of the transaction.

You may read more about sale and purchase legal fees in Malaysia.

When Should the Vendor Appoint a Lawyer?

The vendor should preferably appoint a lawyer before:

• accepting an offer to purchase;
• signing a booking form;
• receiving the earnest deposit;
• agreeing to special conditions;
• promising vacant possession;
• agreeing to sell subject to a tenancy;
• committing to repair defects;
• agreeing to an unusually short completion period; or
• allowing another party to prepare binding transaction documents.

Early legal advice can help identify issues before they become contractual obligations.

Frequently Asked Questions

Can the vendor use the purchaser’s lawyer?

A solicitor handling the sale and purchase transaction should act only for either the vendor or the purchaser. The purchaser’s lawyer may assist an unrepresented vendor with limited completion matters, but does not thereby become the vendor’s lawyer for the sale. Read more: Should a Vendor Appoint Their Own Lawyer When Selling a Property in Malaysia?

Can a property be sold while it is still under a bank loan?

Yes. Part of the purchase price may be used to redeem the vendor’s outstanding loan. The existing charge or assignment must then be discharged or reassigned in accordance with the transaction.

Does the vendor’s lawyer guarantee that no RPGT is payable?

No. The tax position depends on the vendor’s circumstances, acquisition and disposal dates, allowable expenses, exemptions and the applicable law. The vendor is responsible for providing complete and accurate information.

When will the vendor receive the balance purchase price?

The purchase price will generally be released in accordance with the Sale and Purchase Agreement after the applicable completion requirements have been satisfied. Deductions may be made for redemption, RPGT retention, outstanding outgoings, apportionments and other authorised payments.

What happens if the purchaser pays late?

The consequences depend on the Sale and Purchase Agreement. The purchaser may be required to pay late payment interest during an extended completion period. If the default continues, the vendor may have contractual remedies, including possible termination, subject to the agreement and legal advice.

Conclusion

A vendor’s lawyer does considerably more than prepare the Sale and Purchase Agreement.

The lawyer protects the vendor’s interests throughout the transaction by reviewing the preliminary terms, checking the property documents, negotiating the agreement, redeeming the existing loan, handling RPGT requirements, obtaining consent, monitoring payment deadlines and accounting for the purchase price.

Most importantly, the vendor’s lawyer provides independent advice to the vendor. The purchaser’s lawyer represents the purchaser and should not be relied upon to decide whether the transaction adequately protects the vendor.

A vendor should therefore consider obtaining legal advice before accepting an offer or signing any document relating to the proposed sale.

This article is intended for general information only and does not constitute legal advice. The applicable procedure, fees, taxes and documentation will depend on the facts of each transaction and the laws in force at the relevant time.