S&P Agreement: What It’s Process In Malaysia?

Every house buyers should understand what is the meaning of S&P Agreement, and how its so important during property purchase. If you don’t know it, do read our previous article: What Is S&P Agreement. Besides, if you never buy a house before or plan to buy a house in Malaysia, then this article you should not miss as we will telling you what its process during property purchase;


The first thing you need to do is Get A Solicitor, you can choose, either

  • Buyer and seller use the same solicitor
  • Buyer and seller hire different solicitor

Let’s talk about how if the buyer and seller use the same solicitor;

The buyer is being protected while the seller isn’t which means that the solicitor will focus on the buyer’s perspective and charge the sellers for basic processing fee. In such case, the processing fee will be very minimum, i.e.g ~ 80% which is lesser.

On the other hand, should the buyer and seller hire different solicitor, both parties will be protected by their own solicitor. That means the process will take a little bit longer as it will take a lot of back and forth official communication to make sure both parties interest are protected. For example, seller’s solicitor drafts the S&P Agreement and the buyer’s solicitor will check on it. If there is some terms are incorrect, the buyer’s solicitor will return its agreement to seller’s solicitor for amendment.

I believe that you’re wondering which one is better. However, it is more on the seller’s choice while the buyer is more or less the same. In brief, you can choose the first one should you trust the solicitor (the solicitor could be side with the seller and din’t explain the agreements to you clearly) or you want to save cost.


The Process of S&P Agreement

Ⓐ Letter Option to Purchase (prepare a 2% deposit )

This is a letter from seller to buyer. The buyer will need to pay a 2% deposit of the property purchase price (its decide by seller) upon signing this letter. You can either pay check or cash to the seller. Besides, should you have a property agent, the agent will drafts this letter for you. If you don’t, get a solicitor to drafts this letter for you.

After you have signed this letter, the S&P Agreement must be signed within 14 days. Within this period, the buyer usually will apply bank loan. Should the bank rejected buyer’s loan application, then the buyer can void this letter and get back the 2% deposit.

Ⓑ Signing S&P Agreement (prepare a 8% deposit)

After the letter option to purchase is signed, within 14 days, you will need to pay the remaining 8% to the seller;s solicitor upon signing this agreement. In some cases that the buyer reject to sign this agreement, the seller can take the deposit and looking for other buyer.

When the seller’s solicitor receive the remaining 8% deposit, they usually will withhold a 2% for Real Property Gains Tax (generally knows as RPGT) which is requirement by the law and pass the remaining 6% to the seller. From seller’s perspective, you will get a 8% (i.e. 2% + 6%) of the total property purchase price. The solicitor will in-charge the seller’s RPGT matters with the income tax office.

Ⓒ Completion of S&P Agreement (prepare remaining 90%)

After the the above 2 processes are completed, the buyer usually has 3 months period to pay the remaining 90% of the property purchase price to the seller. Should the seller has any loan, then the buyer must settle the loan on behalf of the seller within this 3 months, and these process will gone through the solicitor. But, should the buyer failed to pay the remaining 90% after 3 months, the seller have the rights to charge the buyer a 6% of interest.

In conclusion, should you have a property agent you will then need to pay for agent fee. It is depends on your agreement with your agent regarding how much you need to pay or follow the standard cost in the state (cost is different by state). In some cases, the agent would ask you to pay the agent fee upon signing the S&P Agreement. However, it is advisable to only pay them until whole process is completed which is after 3.5 months. You may negotiate this matter with your agent.

Last but not least, there is not compulsory to have an agent to in-charge over buy or sell matters, but you must hire a solicitor that you can trust on as well as able to protect your interest. Let us know should you have any questions. Good Luck.


If you want to learn more about property investment, click the following link: PropertySeminar.com.my

How to use creative strategy to own a property in Malaysia? Click the following link to learn more: PropertyMillionaireIntensive.com