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If you're an aspiring homebuyer, you've probably heard about how tedious it is to sign a Sales and Purchase Agreement (SPA)
In fact, homeowners or property agents may sometimes tell you, "It's okay lah, so many pages, don't need to read everything. It's just standard stuff."
An SPA is basically a legally binding contract between a buyer and a seller that outlines the terms and conditions of a sale.
But before you go ahead and sign or initial your name on those 50-plus pages, take a closer look. Those few minutes you save skimming through the document could cost you more later if something important slips through.
That's because once it's signed, backing out isn't simple.
Here's a list of what you need to check carefully:
1. Start with the most basic details
Before diving into the legal clauses, check the simplest things first like your personal details.
Make sure the address details are accurate, your full name matches your IC/passport exactly, and also whether your identification numbers are correct.
It sounds minor, but errors about your details can delay loan disbursement, title transfer, or even cause issues when selling the property later.
2. Check the property details and full purchase price carefully
Once your personal info is correct, move on to the property you're buying and how much you're paying for it.
Your SPA should clearly state:
- Property details (address, title, size, unit type)
- Total purchase price
- Payment schedule (especially for properties still under construction)
Instead of assuming how the deposit is structured, focus on whether the numbers match what you agreed to. This includes any rebates, discounts, or adjustments.
If something looks different from your booking form, clarify it before signing.
3. Watch out for recurring costs that were not mentioned upfront
Your financial commitment doesn't just stop at the purchase price.
Be on the lookout for maintenance fees, sinking funds (typically 10% of service charges), legal fees, and stamp duties (SPA copies are usually RM10, but other documents vary).
These recurring costs can significantly affect the affordability of the property.
4. Understand late payment interest
If you're paying a mortgage loan for your house, it's important to know how much the bank charges you if you're late for a payment so you don't get caught off guard.
Most SPAs will specify around a 10% to 18% per annum interest charge for late payments. Some will also charge you monthly.
5. Make sure everything you were promised is written into the SPA
Your SPA should include anything you were promised to get, such as:
- Fixtures and finishes (flooring, built-ins)
- Appliances or furnishings
- Cashback, rebates, or freebies
- Rental guarantees or special schemes
In simpler terms, if it's not stated in the SPA, you're not getting it.
6. If you're buying a property that hasn't been built yet, understand the completion timeline
Completion timelines aren't fixed; they depend on what's written in your SPA.
For landed units, completion timelines range from 24 to 36 months, and for strata properties, it ranges from 36 to 48 months.
The completion timeline is an important factor when you're signing an SPA because it determines the compensation that you'll get if the project gets delayed.
7. Check the Liquidated Ascertained Damages (LAD) clause
If the developer misses the completion deadline, this clause determines how much they must compensate you.
A LAD clause is a pre-agreed compensation amount stated in your SPA. This means that the payout is already fixed in the contract.
For residential properties protected under the Housing Development (Control and Licensing) Act 1966, the standard compensation is 10% per annum of the purchase price that is calculated daily from the completion deadline until you get your property.
You can read this article to learn more about what you can do if the developer fails to deliver your property on time.
8. Ensure the SPA follows the Housing Development (Control and Licensing) Act 1966 standard formats
Most residential SPAs will follow prescribed formats under the Housing Development (Control and Licensing) Act 1966.
If you notice anything unusual, clarify it immediately with your lawyer.
Remember, taking some extra time to review your SPA now can save you from expensive mistakes later
For more #lifestyle stories:
- Freehold Vs Leasehold: What's The Difference And How It Affects You As A Homebuyer
- How To Change Utility Bill Names After Moving Into A New Home In Malaysia
- What Happens If A Developer Fails To Deliver Your Property On Time In Malaysia?
- Can Your Landlord Raise The Rent Without Notice In Malaysia? Here's The Law
