The legal binding document we call SPA
If you have bought a home previously or you intend to buy a home soon, you would be familiar with this term called the Sales and Purchase Agreement or often known by its short-term handle – SPA. They often say think thoroughly before you sign on the dotted lines, but do you know exactly what you are signing on?
First, let us look at the definition of what constitutes a SPA.
In simple terms, it is a binding legal contract obligating a buyer to buy and a seller to sell a product or service. The terms and conditions of the agreement is finalized here, of which it is a proof of the agreed terms between the two parties. This is to protect both the seller and buyer in the event a dispute happens.
So, if you are the buyer, the other party would be a property developer or a homeowner. This boils down to whether you are buying a new project or a project in the secondary market. Once you sign on the SPA, it is essentially a done deal. No changes can be made after. Well, what happens in the event that you want to cancel it? Be prepared to fork out a penalty of 10% of the purchase price if that is your intention. If the value of the property is RM1 million, that is equivalent to RM100,000.
So what does the SPA include?
1) Vacant possession
This tells you when you are able to get the physical copy to move into the project. Should the developer fail to deliver the property at the stipulated time, they will have to pay a liquidated damage (LAD) to you. If you are buying a landed property, you should receive your property in 24 months while for stratified properties, it would be 36 months. How does one calculate the LAD if a late delivery happens to you?
Calculating your LAD: (Total no. of delayed days x cost of house x 10%) / 365 days
2) Manner of payment
This is to ensure that a black and white document is recorded as to how payment will be made to the developer or homeowner.
3) Defect/liability period
During the stated period, the developer has to correct any defects in your home when you spot them. Note that, the term used is developer as it is only applicable to projects in the primary market.
4) House plan
The layout, the size, the materials used and the measurement of the rooms are all specified here. When you obtain your keys and find that any of the details mentioned in the SPA is not accurate, you are able to bring this up to the developer.
Do different properties come with different types of SPA?
For individual titled homes, your SPA comes under Schedule G while for strata titled homes, they come under Schedule H. Please read through your SPA thoroughly or consult a legal expert if you are unsure of anything!
[Image source: Photo by Andrea Piacquadio from Pexels]
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