Hi, Im seeking for opinions.

As stated in S&P agreement, all payment of outgoings must be settled by seller including sinking fund prior to vc.
The purchaser will pay apportioned as at the date of delivery of possession.

Therefore, do buyer need to refund to seller for unutilized sinking fund for the past few years? As this cost were incurred prior to vacant possession and falls under payment of outgoings, and therefore apportioned as to the date of vc; which is for the latest month only.

Looking forward for your opinions and experiences..

Reference :
Malaysian Bar

YP Cheong Advocates & Solicitors

Propertyguru

This post has been edited by animegod: Jul 26 2018, 08:19 AM

no need to refund 'unutilized' sinking fund.

further, trying to identify the quantum of unutilized sinking fund for one parcel of unit within a strata development is a whole level of challenge right there.

It is required under the law that the unutilized sinking fund has to be refunded to the vendor - so its not a matter of "need " ..

Based on my experience the purchaser's lawyer writes to the JMB/MC and request for the amount of unutilized sinking fund to be
calculated and then the amount is refunded by the purchaser at VP.

Hi, can please forward me the clause from any acts or regulations which stated this? I need this for reference and to contribute to HBA if they needed this info because it has not been documented anywhere.

This post has been edited by animegod: Jul 24 2018, 08:25 AM

Yup.. that is the common understanding.

But somehow there are lawyers that include the clause for refund of unutilized sinking funds incurred by seller for a few years prior to vc. It is up to the buyer's lawyer competancy to dispute such clause, while some just proceeded blindly.

not required to refund.

if vendor paid excess sinking fund in advance then that portion have to return.

not for the amounts that been paid and 'unused' throughout the vendor's period of ownership

After gathering much info, here is the conclusion.


Selller's lawyer writes to the JMB/MC and request for the amount of unutilized sinking fund. However, this has nothing to do with refund by JMB or buyer.
However, seller's lawyer could add the unutilized sinking fund into the payment of apportionment table, asking for a refund. There is nothing wrong with that, however buyer has no obligation to pay the amount. It just takes a simple letter from buyer's lawyer to revoke the undertaking as there is no provision in the S&P or housing development act & Regulations for the refund of outgoings incurred by the seller. Instead, there is a clear clause on seller's obligation to pay his or her own outgoings in full prior to posession by buyer, while the buyer takes over the obligation starting on the date of possesion or earlier depending on their agreements.

Hope this helps for buyers of subsale property.

Thank you for sharing..
I stand corrected if I got my facts wrong..

Sinking fund could fall under the interpretation of "outgoings" by seller which include assessment fee, fire insurance, quit rent etc..

In some SPA, it would be stated clearly what constitute "outgoings" and if sinking fund is mentioned and the agreement is effected as such, then
the buyer would be required to pay for the unutilized sinking fund. However if it is not stated, then its a point of contention. For me I prefer this outgoings
to be specified in the SPA so its clear for both parties.

Terms in the SPA in the subsale/secondary market is essentially not governed by any Act but based on agreement between both parties following "market practice as far as I can understand but any clauses must not contravene existing laws for eg..agreement not to pay deduct rpgt ..

Mostly, for ordinary people when mentioning the sinking fund, they are referring to the sinking fund that paid together with maintenance fee to the JMB/MC, which is normally won't be refundable by JMB/MC.

Yes, it is pretty common those assessment fee, quit rent, insurance being apportion to be paid by the buyer, as those considered being paid "advance".

Actually we were referring to the refund of unutilized sinking fund paid by seller at the time when he sells the property...

It is not a refund by JMB/MC but actually a reimbursement of unutilized sinking fund by BUYER..

I only found out about this when my fren sold her property and the buyer's lawyer ( she was not represented)
refunded her the sinking fund (not specified in the SPA) under apportionment of expenses... It was not much less than 2k for a
3 yr old prop

Many people are not even aware that this is even possible..

Miss read your previous post about the outgoing issue on sinking fund.

Ya, the outgoing which included sinking fund (except those being paid in advanced) can be subjected to contention.
As sinking fund generally is paid monthly together with maintenance fee.
We know unutilised maintenance fee paid (or surplus in management account of JMB/MC) generally is not considered outgoing item.

So it is down to mutual agreement, and better list out one by one, instead just put the word "outgoing".

Scenario 1
lets say seller owned the property in 2010 and sells in 2018.

over the course of 8 years he has paid sinking fund to management in total of RM20k.

when he sold the property, he/management calculates that his portion of 'unutilized' sinking fund amounts to rm5k.

He can't claim from the buyer the RM5k as unutilized sinking fund attached to his property, which will be transferred to the account of the new owner

logic of it is the sinking fund is only used when part of the common property required to be replaced. it may be used in the future, as at the time of the subsale transfer, the buyer doesn't get a 'brand new' property & common area. he gets it 'as-is', and it's up to the JMB/MC to decide when to use the sinking fund.

the defects / wear and tear happens through time, thus i'm of the opinion that there's no 'unutilized' sinking fund for cases like this.

Scenario 2
Owner paid whole year sinking fund for 2018.

the completion of his subsale to buyer was in June 2018.

the advance sinking fund paid from july-dec 2018 shall be refunded by the buyer to the seller.

For this scenario, it's perfectly normal.

yes agree - it essentially boils down to mutual agreement between buyer and seller..

we are not talking about right or wrong here or whether it should be or should not be..- as long as both of them agree and sign on it its enforceable..

This post has been edited by nookie188: Jul 26 2018, 01:12 PM

Yup.. voluntary or mutual agreement on the refund of past unutilized sinking fund is fine. But I doubt any buyer would want to pay for that unless he/she is getting a very good deal on the property price.

I've faced this personally where the seller's lawyer included it into the SPA without my acknowledgement, and my lawyer just blindly follow through and told me to settle the payment. After discussion with my lawyer, she finally agree that since I have not agreed to the refund, and it is not my obligation by law to refund, we just fax a letter to the seller's lawyer to strike it off. There is nothing that the purchaser's lawyer can do as it is not required by law, and there is no mutual agreement. In fact the seller was not even aware of it.

So buyers must be aware of this and raise your concerns to your lawyer.

This post has been edited by animegod: Jul 26 2018, 07:26 PM

Hi all, I'd like to seek advice from fellow members. If it is stated in the S&P that any unutilized sinking fund shall be refunded to seller by buyer, do I still need to refund it if I was not made aware of the existance of such clause? I've been informed by my lawyer this is a common practice to include such clause in the S&P. However, after checking with another lawyer friend of mine, this is not the case.

Appreciate if fellow members could shed some light on this matter as I'm feeling taken advantage of. 😔

All outgoings paid prior to VP are considered 'utilised'. Whether money used or otherwise is inmaterial.

All outgoings paid in advance are refundable upon vp date.

Thanks for the reply. If such clause has been added into my S&P, does it mean that I am obligated to refund it back to the seller, and I will face legal action for not doing so? It is stated in the S&P as such. Looking forward to your response.



This post has been edited by zodiacyi: Mar 17 2022, 04:53 PM

In my opinion, the earlier sinking fund is for wear and tear replacement where the seller have 'enjoyed'. If there is no replacement or repair done, it doesnt mean that it wont breakdown. The element of depreciation, wear and tear are there.

The purchase / selling price will have to include all those ... price appreciation / depreciation of the said property and depreciation, wear and tear of the common property facilities.

To avoid further disputes, can both meet half way as a compromise. In worst case, you may want to pay full.

You can say is unfair but I dont see how the problem can be resolved if the agreement is there and if seller refused to compromise unless you go to court for a decision.

In life, we learn from mistakes.

How much is tbe amount ?

This post has been edited by mini orchard: Mar 17 2022, 05:23 PM

Sigh. I have vented out my frustration to my lawyer. He kept on telling me that this is common practice for such clause to be added to the S&P, when this is clearly not the case.

The amount to be paid is around 2k. Will it be possible for me to request for a breakdown of the calculation for utilized sinking fund? Currently the seller's lawyer only forward a copy of letter from management stating the total amount of unutilized sinking fund.

Or any other suggestions that I can do to reduce the amount? I'm a first time home buyer and thus mistakes are inevitable. 😔

Clauses in subsale SnP are negotiable.

It can be common practice but is generally not a fair term. A buyer who knows will not sign the agreement and abort the deal. Similar if both cannot agreed on the price, there is no sale. Who cares what is market price when common practice is to follow market price.

One cannot say that the monthly maintenance collections are used 100% monthly. There is the element of 'over' collection. In the yearly agm when the accounts are tabled, there bound to have excess income over expenditure. Can seller account for that also ?

You dont need to argue with the seller on the reasons as it will only make matter worst. Just ask him whether he can compromise 50% out of goodwill. If he dont agree, you have no choice and to pay.

This post has been edited by mini orchard: Mar 17 2022, 06:36 PM