Yes, they would know.

Standard SPA usually have a clause somewhere like "Default by Purchaser" which usually also covers the event where purchaser fails to meet their financial obligations to their creditors and/or bankruptcy while property is still under progressive payment.

Developer can annul the sale of the parcel (read: treat purchase as cancelled) and terminate the SPA with the buyer if they consider breach of contract due to failure to make loan payments. They may also demand money owed from buyer due to the penalty of agreement cancellation.

This post has been edited by DragonReine: Nov 14 2023, 04:29 PM

Oh no no NO, if there is default on payments of interest the property gets marked for auctioning if the buyer fails to clear their debt owed to the bank before VP.

The clause in SPA in practice simply means that the original buyer no longer has any right to claim that they "own" the property.

The developer will still claim from the bank the progressive payments and the bank will simply release the money as claimed by developer from proof of completion of the property's stages as per SPA.

This is when you see auction immediately roll around soon after VP, from defaulters on interest/progressive payments. Because if they're tied to loan it's considered an asset of the bank, and the bank needs to recover THEIR lost money (from the loan disbursement) first.

This post has been edited by DragonReine: Nov 14 2023, 10:42 PM

Banks have their own limits and policies, cap is typically internal.

For Islamic: https://www.bnm.gov.my/-/resolutions-of-sha...negara-malaysia