Perfection of Transfer (POT) and Perfection of Charge (POC) is one of the important legal documents when purchasing a property. However, not many understand what POT and POC are and how important they are in proving the buyer’s property ownership.
The issuance of POT only happens when you are buying a new launch property from a developer, because it is a process to register a property title under the name of the purchaser before an individual or strata title is issued by the land office yet, which typically happens only when the property is completed and handed over to the purchaser. Therefore, the POT is an important document to prove that you are the owner of the property before your name gets registered officially with the land office on the individual or strata title document.
Meanwhile, the POC is a complementary process of the POT, which serves as a charge or security to the bank’s loan before the borrower fully repaid the mortgage loan. Should the borrower fail to make the repayment, under the protection of the POC, the bank will have an automatic right to sell the property to recoup the mortgage repayments.
Now that you understand what is POT and POC, below are five important points you need to know before putting your signature on POT and POC.
- POT is a necessary process to register a property title under the name of purchase because, during the construction of a project, the developer is the holder of the master title until the development is completed and the individual or strata title of each unit was issued by the land office, which will revoke the previous master title and will allow the purchasers to register their names on the title.
- Without POT or individual/strata title, selling your property will be a long process because technically, your name is not registered as the owner of your property. In this situation, you will need to request the developer to transfer the property to the new buyer on behalf of you. Furthermore, you may have to bear additional costs when executing a Memorandum of Transfer (MOT) due to the POT being used as an instrument of charge to banks for loans.
- POT is related to MOT as MOT is the legal process to enable a purchaser to have his or her name registered on the land title upon the completion of the project. The MOT document allows the owner to transfer the property legally without going through the property developer.
- POT and POC happen together as a pair – POT is needed to take ownership of a property from a developer and POC is required to transfer that ownership to the bank before the loan is fully paid off by the borrower. Therefore, the bank is the one appointed to do POC because it is responsible to ensure the ownership is transferred to the bank as the security measure for the loan.
- You only pay the stamp duty once during a property purchase. If you had paid the stamp duty during the signing of the Sales and Purchase Agreement, you will not be charged for the stamp duty of POT. By the way, the property’s stamp duty is calculated based on the Sales and Purchase Agreement price at the time of signing, but not the current property market value.
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