24 April 2012

Sub-Sale : The Term & The Procedures

A fictitious conversation over a cup of coffee between a potential purchaser of a property and the friend who is a lawyer

What is this thing phrased as “sub-sale”? 

Why do I continue to hear that phrase if I talk to a lawyer or a friend who happens to be a lawyer? 

I asked my friend who happens to be a lawyer, what is “sub-sale”?

My friend answered, “sub-sale” is a phrase that most lawyers who are involved in the transaction of buying and selling property from persons or company who are not the developer. 

So, what’s the difference with the normal sales with developers, I asked. 

My friend said, it is a transaction where at most of the time, the buyer, or in this case called “Purchaser”, is actually not the first-purchaser of the property. Parties would involve seller, who is called “Vendor”, who would most likely, but not always, the first purchaser. This Vendor would be selling his/her/their property to the Purchaser, who is eager to purchase the Property. Interesting, I thought. 

So, what would be the procedures to buy from a person who is most likely the first purchaser of a property? 

This was when my friend cringe. My friend answered, it depends on what you are intending to purchase. Most of the time, it would depend on the property that you intend to purchase. These properties are those which the Certificate of Fitness/Certificate of Occupation, has been issued. This certificate is important to prove that the property is already fit for human occupation, i.e. completed construction. 

What about those without the Certificate of Fitness/Certificate of Occupation? I asked. 

That property is normally the ones you are intending to buy from developer and it doesn’t fall into this category of “sub-sale”, my friend answered. 

Again, I had to ask my friend, what are the procedures throughout sub-sale transactions? It couldn’t be that difficult. I was pretty sure a person who is NOT a lawyer could understand the procedures and handles the transaction themselves. 

My friend sighs. 

The procedure depends on the property you are intending to buy. Whether it is a landed property, i.e. terrace, bungalows, semi-d or ones of “on air”, i.e. flats, apartments, condominiums? Whether the property has restriction or not? Whether the property is held under master title or individual title? Whether the property is assigned to banks or charged or free from any encumbrances? Whether you have to deal with the land office? Or do you have to deal with the developer in cases where the property is held under master title? Or would there be any liquidator involved due to the developer being wound up? This is just a few of “whether” situations that can be highlighted to you. 

There’s plenty more, said my friend. 

My friend continued on, “Generally, in any purchasing of property, you would need to deal with either the land office or the developer. In some cases, you would need to deal with the liquidator, for cases where the developer is wound up. If the property is one that is held under individual or strata title, you would need to deal with the land office. You would be signing a transfer form called Borang 14A. As for deals with the developer, this would mean that the property is still under master title. In this case, whoever you are buying the property from has only beneficial ownership of the property. The real owner of the property would still be the developer. This would mean that you would not be signing any Borang 14A for transfer of ownership. Instead, you would be signing another document called “Deed of Assignment. This serves to assign whatever beneficial interest from the seller to you.” 

I had listened to my friend going on and on and I was getting a spinning sensation in my head. In my head I was telling myself, "OMG! All that just to buy one property??" 

One day, I will learn them all from my friend and apply them to my situation. 

We sipped our last drop of coffee and bid farewell. 

At least now I know what are “sub-sale” and the general procedures that entails. Baby steps, I said to myself. Maybe my friend would go on further in details of the form and deed the next time we meet up for coffee.

By : SK aka the potential buyer

20 April 2012