Hi Dario, thanks so much for your explanation, it certainly helps!! The standard clause in our agreement is 14 days for the Vendor to procure the redemption statement.

We chased the Vendor's bank today again and they promised to pass it next week and I hope we can wrap this soon. I can't imagine that printing a redemption statement can be so difficult that it's taken them 3 months to do it but we also suspect the Vendor must have some hesitation in selling or some reason or another.

We 'heard' that the owner had apparently pledged 2 properties (one of them being the one we purchased) to secure one loan and the excuse given earlier was that the bank had difficulty releasing it. My guess is that the difficulty lies with the fact that there is a security/collateral shortfall on the part of the Vendor as borrower and the Financier may have requested him to further top up or pay down the loan, to which he doesn't have the means to unless the sale proceeds of his house comes through.

Hope it gets resolved soon. Thanks so much again!!

Hi,

Can anyone tell me what is the definition of a "caveat"?

I recently came across an auction for a property in an area that I had been having my eye on. After getting the proclamation of sale from the agent, I found out that the property had five separate caveats on it.

The agent also said no point proceeding any further.

What actually is a caveat in the perspective of Malaysia law?

I personally think that it is not the job of the lawyer to call up the mortgage agent. To call up the bank, yes, but not the mortgage agent as you are the direct link to the agent, not the lawyer. There must be some form of chain, for example:

Mortgage agent -> borrower/purchaser (you) -> lawyer -> bank

Of course the bank is linked to the agent and vice versa. However, the gap is there between the lawyer and the agent, and between you and the bank.

As I have advised many times before in this thread, get a copy of the correspondence to locate the source of the delay in the transaction. Don't be hasty and point fingers. If possible, get the lawyer to explain to you the reason for the delay.

It'll be easier once you gather more info to have a better understanding of the situation.

A caveat is lodged upon a title (geran) of a property to lock/block/stop any transfer of the said title to another party. It is an indication of a person claiming a right over the property.

In a normal scenario, a person lodges a caveat when he puts in a deposit [usually 10%] to purchase the property. It may take at least 3 months from the date of the SPA in order for title to be transferred in his favour. In the interim, to stop the vendor from transferring the title to another party and defeat the purchaser's claim, the purchaser will lodge a caveat over the title. With the caveat, it serves two purposes:

1) To stop the registered proprietor of the property from transferring the title to another person; and
2) As a notice to the world at large of the purchaser's beneficial and legal interest in the property (by virtue of him placing the 10% deposit).

A person can only lodge a caveat if he has a caveatable interest over the property. Most of the time this would be like the example given, i.e. it is lodged by the purchaser. A caveat can also be lodged by a person who has obtained judgement against the owner for a certain amount of money. It can be lodged by a financial institution as well.

A person who does not have a caveatable interest over the property but had nonetheless lodged a caveat can be sued by the registered proprietor for unlawful entry of caveat. The caveator would then have to pay damages to the proprietor if he failed to prove the legality of him lodging the caveat.

In your case, there are 5 caveats upon the property. Am sure that one of it is from the owner's financier. The other 4 could be by other creditors. Others have asserted their respective right over the property. It would be the wise thing to back out from it now as it could be problematic to remove the 4 caveats without much hassle and cost, which has to be borne by you, by the way.

I hope the above clarifies things accordingly.



This post has been edited by dariofoo: Nov 26 2011, 12:13 AM

hi Dario

with regards to the caveat - does that mean its only useful to place a caveat only on the prop if the title is already out?

usually the lawyers will not place a caveat unless the client specifically request for it since additional fees are payable?

is it necessary for the purchaser to inform the vendor that he/she has placed a caveat on the prop?

Thank you

Thanks Dario!

So given an example, the mortgage loan of RM100K, and the LPI is calculated on daily basis; the delay is 14 days, so the calculation would be:

(100K x 8%)/365 x 14 days?

Hi,

Just wanna ask, can we sell a house that is under construction? condition: already signed the SPA with developer lawyer's but not apply bank loan yet.

the house is estimate complete within 6 months..

so if somebody want to buy the house, can we sell it?

Hi Jessy,

Yes, it is only needed when title is already out.

If it is still under Master Title, there's no reason to worry as the vendor can't do anything - title is still under the developer or proprietor's name [The proprietor in this case refers to the landowner who enters into a JV with the developer].

Here's the thing - it depends on the lawyer in question. There's no hard and fast rule. It depends on the honesty (or knowledge) of the lawyer and how much they have the best interests of their client at heart.

A few scenarios as example to illustrate my point:

1) Property under Master Title

SPA lawyer - no question - no need to lodge caveat.
Loan lawyer - the lawyer can request the bank to waive the requirement to lodge a private caveat over the master title as it is not really needful, as long as the developer (and end-financier-if Master Title still encumbered) gives the relevant undertakings and disclaimers.

2) Property under Individual/Strata Title - property still encumbered by way of Charge created in favour of Vendor's Financier (VF)

SPA lawyer - can advise the client to waive lodgement of caveat as property still encumbered in favout of VF. As such, the vendor can't do anything funny in the interim. However, there are lawyers who just bill the client for it and just lodges the caveat nonetheless.

Loan lawyer - bank would require caveat to be lodged to protect bank's interest. No choice there.

* Imagine if same lawyer for SPA and loan - two caveats lodged and both costs and fees are borne by the purchaser. First one is not really needed, more so if the loan is approved fast, so the bank's caveat is lodged very soon after the SPA is executed. One caveat is all it takes.

3) Property under Individual/Strata Title - property not encumbered

SPA lawyer - should advise client to lodge caveat as property not encumbered.

Loan lawyer - bank would require caveat to be lodged to protect bank's interest. No choice there again. [same as scenario (2)]

* In this case, it would be prudent to lodge a caveat at the first opportunity as the property is unencumbered. However, there can still be a situation like scenario (2), i.e. the bank's caveat can go in early, and thus, saves the purchaser a bit in costs and fees to avoid duplicity of caveats.

Just an idea as to costs of entry/withdrawal of caveat:

Legal fees (fixed):
Entry of caveat - RM200
Withdrawal of caveat - RM150

Disbursements (varies and depends on land office)
Entry of caveat - RM300
Notice - RM20
Withdrawal - RM70
Misc - RM50-100

TOTAL: approx RM800

No, not at all. In some SPAs a clause is inserted whereby the vendor consents to the lodgement of a private caveat. However, even if the clause is not inserted, it is understood and is common practice that the purchaser has a caveatable interest once he pays the 10% downpayment upon execution of SPA.

Your calculation is correct if assuming that the RM100K loan goes straight to the vendor and there is no redemption sum to be paid out to the vendor's financier beforehand.

If there is a redemption sum to be paid, that sum must be deducted from the loan sum of RM100K. So let's say the redemption sum is RM60K - the balance purchase price is only RM40K. So the LPI is calculated on RM40K.

The SPA is subject to approval of loan and subsequent disbursement of the loan by your financier. Only then can you claim a legal status as purchaser.

So technically you can't sell it - but you can inform the developer that you want to back out and perhaps they can cancel your SPA and proceed with a new one with the new purchaser with minimal fuss and some processing/admin fees to be borne by you.

many thanks Dario..

Dario :i have one more query

for application for State consent to charge - this is what i got from my lawyer (SPA& Loan ). Is this reasonable please?

Legal fee - RM300
Service tax of 6% - 18

Disbursements
CTC title - RM50
Processing fee for state consent - 50
registration fee for consent to charge - 50
travelling - 50 (this is on top of the RM200 travelling fee for loan doc + 50 for miscl + and RM200 for travelling fee again for SPA + 50 for miscl ..again)
Attestation fee - 10

total 528

sigh..my lawyer really sucks big time..! so am going over all her charges with a fine tooth comb...as i see a pattern of overcharging and
unnecessary charges ..seems like i am an ATM to her..!

This post has been edited by jessy123: Nov 27 2011, 11:28 AM

jessy123:


Why are you paying for all this? It's supposed to be borne by vendor. It's the vendor's duty to obtain consent.

OMG..now i am going to take her head off!

This post has been edited by jessy123: Nov 27 2011, 03:49 PM

please take note... consent to transfer is apply by the seller/vendor...

but consent to charge (charge to purchaser's financier) is apply by the purchaser/borrower...

dont confuse this 2 different consents

You're absolutely right. Thanks.

I misread jessy's post. For some reason I did not see the consent to charge part. Silly me.

This post has been edited by dariofoo: Nov 27 2011, 06:01 PM

My mistake. Take my head off instead!

ke ke..no prob lah..! we need your head intact so you are around to give us more legal advice..

haha.. i know coz being same thing happened to me before and get to know little bit la... keep our head on neck lol

Thanks again for the timely intervention

hi dario,

would like to check regarding the "registration fee for MOT"

bought a double storey terrace house (rm 370k) and i have
already signed SPA (developer's lawyer)...

but i was charged > rm 8k (excluding lawyer fee which borned by dev)..

stamp duty for MOT -> 6400 (standard charge)
registration for MOT -> 1500 (overcharge??)
disbursement -> ~500

fyi, the properties is located at Johor...

thanks