Dear dariofoo,

I would like to ask your opinion on an issue I am facing with a developer regarding State Authority consent to transfer title. The story goes like this:

I signed a SPA with a developer to buy a leasehold property in Sept 2010 and obtained a bank loan to finance 90% of the purchase price. Recently, the developer/bank's lawyer (same lawyer used) informed me that State Authority consent still has not been obtained and requested me to sign a Letter of Indemnity in order to give consent to the bank to release progress payments to the developer where the bank will lodge a private caveat pending consent to transfer and charge from Land Office, against the property. The Letter of Indemnity serves to indemnify the bank against any losses or damages from my instruction to the bank to release the payments. I am made to understand that State Authority consent is needed before the bank can release any payment to the developer.

It was also made known to me that the developer is facing problems in obtaining State Authority consent because of their refusal to build low cost houses in their development, which I believe is a policy requirement by the State. Looking at this aspect, I believe that this State Authority consent may not be obtained in the near future and could be a long running issue.

I haven't signed the Letter of Indemnity yet as I need a second opinion as I'm worried about the implications later. Viewing the situation too, I'm worried that when the house is completed (by January 2012 according to the developer) I still have no title to the house and cannot live there or sell it or transfer it to others.

I would greatly appreciate your views on the following questions:

1. Should I sign the Letter of Indemnity to the bank and what are the implications if I do so?
2. With the State Authority consent looking like a long running issue, I feel like cancelling the SPA with the developer as I believe that since it is the developer's responsibility to obtain State Authority consent (as contained in the SPA) their failure to do so would constitute a fundamental breach of the contract. Any way as a buyer, I feel that it is my right to obtain title to the property. Can I take steps to cancel the SPA and what are the implications of doing so?

Thanks very much for your precious views and advice on the issues which I am facing. I really appreciate it.

Dear dariofoo,

I would like to seek your advice on the issue of RPGT for the sale of my wife's house.

We (my wife and I) bought a terraced house in October 1999 for RM 156k, with both our names as joint owners in the SPA and in the land title. The housing loan was fully settled in 2006 and subsequently, in June 2007, I transferred my share of the house to my wife making her the sole owner and this was recorded in the land title. The transfer was done on a "dasar kasih sayang" (love and care basis) with no monetary transaction.

As we will be moving to another house middle of this year, she is selling her house and have secured a buyer for RM 260k. The buyer's lawyer is preparing the SPA and I estimate that it can be signed latest by end of March 2011.

Will the sale of my wife's house be subject to RPGT since she took full ownership of it in June 2007, which is less than 5 years but it was transferred to her without any monetary consideration on the basis of love and care?

Really appreciate your advice here and a thousand thanks for your valuable time in replying.

Hi bro dariofoo, thanks a million for your valuable advice.

Option 2 looks less tedious i.e. less forms and documents to fill and submit (and exempted from RPGT). Maybe my wife will consider this option further. Any way, she'll be submitting the CKHT forms through the buyer's lawyer and we'll see what he has to say.

Again, really appreciate your advice...thank you, have a nice day and wish you a blessed life.