5 Common SPA Mistakes Malaysian Property Buyers Make, and How to Avoid Them

Most property problems we handle didn't start at completion. They started weeks earlier, when a buyer signed something without fully understanding it. We summarised the mistakes we often see below. Each one is easy to avoid if you know about it before you sign.

1. Paying the earnest deposit before reading what you're agreeing to

In a subsale transaction, buyers usually pay an earnest deposit of 2% to 3% with the offer to purchase letter, often to the agent and often on the same day they view the property. That letter can bind you. If you change your mind or can't proceed, the deposit is usually forfeited.

What to do: Read the offer letter before you pay. Check what happens to your deposit if your loan is rejected, and when the SPA must be signed. If anything is unclear, send it to a lawyer first. 

2. Signing the SPA before your loan is secured

A typical subsale SPA requires 10% on signing and the balance within three months, often with a one-month extension that carries interest. If your bank approves less than you expected, or rejects the application, you still have to pay the balance.

What to do: Apply for your loan early, ideally with a letter of offer in hand before you sign. If that isn't possible, make sure the SPA says what happens to your deposit if financing fails.

3. Not understanding what's on the title

Before we draft the SPA, we conduct a title search to uncover any legal restrictions, encumbrances or issues that could significantly affect the transaction.

• Restrictions in interest, such as state consent being required to transfer, or the land being reserved for Bumiputera ownership.
• Leasehold tenure with only a short remaining lease, which can limit how much a bank will lend and affect resale value.
• Existing charges or private caveats, meaning a bank or someone else has a registered interest that must be dealt with before you can take a clean title.

What to do: Ask your lawyer to explain the land search results in plain language before you sign, not after.

4. Underestimating the total cost

The price on the SPA is not what you'll pay in the end. On top of the purchase price, buyers pay:

• Stamp duty on the transfer (MOT), on a scale: 1% on the first RM100,000, 2% on the next RM400,000, 3% on the next RM500,000, and 4% on anything above RM1 million.
• Stamp duty on the loan agreement, generally 0.5% of the loan amount.
• Legal fees for the SPA and the loan documentation, set by scale under the Solicitors' Remuneration Order, plus disbursements.

First-time homebuyers may qualify for stamp duty exemptions, subject to conditions.

What to do: Work out your total cost before you commit. Our stamp duty calculator gives you a quick estimate.

5. Buying from a developer without knowing your rights on late delivery and defects

For housing developments covered by the Housing Development Act, the statutory SPA sets the delivery period: generally 24 months for landed property and 36 months for strata property. If the developer delivers late, you are entitled to liquidated ascertained damages (LAD), calculated at 10% per year of the purchase price.

The Federal Court in PJD Regency Sdn Bhd v Tribunal Tuntutan Pembeli Rumah (2021) held that the delivery period runs from the date you paid the booking fee, not from the date you signed the SPA. That can make a real difference to the amount you can claim.

After handover, the developer must also repair defects reported within the 24-month defect liability period.

What to do: Keep your booking fee receipt. Note your vacant possession date, and put any defects in writing within the defect liability period.

The bottom line

Every one of these mistakes can be avoided with the right advice at the right time, which is before you sign. That's why we walk every client through the key clauses of their SPA in plain language, in English, Bahasa Malaysia, Mandarin or Cantonese, before anything is signed.

Buying a property? WhatsApp us or book a consultation before you sign.

This article is general information only and is not legal advice. Every transaction is different. Please speak to a lawyer about your specific situation.