Loan Without Title Subsale Tutorial Discussion

THE SALE & FINANCING OF PROPERTY WITHOUT TITLE
Please refer to the handout ( Nos. 1-7).
We have now established that P has signed the Sale and Purchase Agreement and is buying a property
without title from the V. P has taken up a loan with Public Bank Berhad (PB) (P is now a Borrower)
and you are now appointed by PB to prepare the Loan Documentation.
Question:-
a) Please guide the group the Items 1-7 in the handout
I. SALE
1. Upon stamping of SPA, Purchaser usually has secured his loan.
 Once SPA is stamped, notify developer that vendor is selling property. (Purchaser’s
solicitor stamps SPA and the SPA must be given to vendor’s solicitor together with
cheque for 8% purchase price)
 Request for developer’s undertaking to get state consent to transfer to the purchaser
when title is issued.
 Upon receiving developer’s undertaking or state consent, serve on purchaser’s solicitor.
 Then, purchaser applies for loan.
 Purchaser’s financier will ask for redemption statement and vendor’s undertaking. In
this case, the purchaser’s financier is Public Bank.
 On receiving redemption statement, give it to Public Bank together with vendor’s
undertaking and confirmation of difference between purchase price and loan sum
paid.
II. LOAN
1. Purchaser applies to Bank – PB for a 90% loan. PB processes the application and issues a
Letter of Offer to Purchaser with copies to PS and PB’s Solicitors (PBS).
 Upon selecting the bank which provides the best offer, the borrower will then
need to sign the Letter of Offer.
 The details that a Letter of Offer will provide are as below:
 Legal names of vendor and buyer
 Price agreed upon
 Amount of deposit
 Any items included in the sale
2. Purchaser signs and accepts the offer.
3. PB instructs PBS to prepare the loan documentation. Proceed to prepare the Loan
Agreement, Deed of Assignment (Security) with the Power of Attorney for the execution
of the Purchaser and PB
 A Loan Agreement – contains the terms and conditions of the loan – will be
provided by the lender – buy a set of the loan documents from the lender – some
banks do not allow the cost of buying the documents to be charged to the
borrower – must fill in the schedule of the documents with particulars stated in the
Letter of Offer of the loan to the borrower – description of the master title upon
which the parcel or the subdivided building is constructed has to be included.
 A Deed of Assignment – assigns all the borrower’s rights, title and interest arising
from the property to the lender by way of security – If the vendor has an existing
loan that has not been redeemed, then the vendor has no capacity to assign the
parcel to the purchaser until the vendor’s loan is redeemed and the vendor’s
financier has signed a Deed of Receipt and Reassignment (DRR) to surrender the
rights to the parcel back to the vendor.
 A Power of Attorney – grants power to the lender to sell or deal with the property
in the event of a default of the borrower, usually when the borrower fails to pay
the repayment instalments – Section 4 of the Powers of Attorney Act 1949
requires that all Powers of Attorney be registered with the High Court so as to be
effective – Needs to be signed by the borrower only being the donor of the power
– Bank does not have to sign – But, some banks may insist that the Power of
Attorney be sent to them for checking when the other documents are sent to them
for signing.
4. PBS then write to Purchaser requesting him to attend at their office bringing along with
him:-
 Original SPA
 Copy of his NRIC (kad pengenalan)
 Settlement of their professional fees and disbursements as per their enclosed Bill.
5. Meanwhile they also conduct a search on the Master Title, and bankruptcy/ winding up
searches.
 Land search on Master Title is to ensure that the developer is the registered proprietor
of the land.
 Bankruptcy search will be conducted on the purchaser, to ensure that the purchaser is
not adjudicated bankrupt and will be able to repay the loan once it is due.
 Simultaneously, Statutory Declaration shall be prepared by the PS and signed
by the purchaser, acknowledging the purchaser’s current occupation or business, also
to ensure that the purchaser is fit to repay the loan
To conduct a land search on the Master Title, the lawyer has to fill up a form known as
Private Land Search Form (Borang Permohonan Carian Persendirian) (Appendix 2).
Submission is made at the Kuala Lumpur Land Registry with payment of a prescribed fee of
RM 30 per title search.
Bankruptcy Search is conducted at the Insolvency Department of Malaysia (Jabatan

Insolvensi
Malaysia) to determine the legal status of both Purchaser and Vendor.
• The search is conducted online with a prescribed fee of RM 12 per name search.
• If Vendor is a bankrupt, the sale transaction requires the Official Assignee’s approval.
• If Purchaser is a bankrupt, he is prohibited by law from entering into a contract of sale and
thus cannot purchase any property.
6. PBS will write to VS requesting: -
 The Redemption Statement cum Letter of Undertaking from the VB for their onward
transmission to the PB
 That upon the release of the Redemption Sum (This total remaining amount to be paid
is known as the ‘redemption sum’) their undertaking to forward the Redemption
Statement cum Letter of Undertaking from the VB to deliver all the original
documents and duly executed Letter of Release and Disclaimer.
 To refund the redemption sum in the event the Receipt of the Redemption cannot be
perfected.
 To forward VB’s undertaking to exclude the said Parcel from any foreclosure
proceedings upon receipt of the full redemption sum for the said Parcel.
 To forward V’s undertaking to refund the full amount of the loan sum in the event the
sale of the property in favour of the Purchaser cannot be perfected.
 Confirmation that differential sum has been settled
The Letter of Undertaking that PBS have to obtain from the VB, whereby the bank requests
for redemption statement for the property and undertakes to exclude the property from any
foreclosure proceeding against the developer. It should be noted that the letter issued by VB
is known as Letter of Disclaimer. In the letter of disclaimer VB undertakes to exclude the
property from foreclosure proceedings as stated before, to refund monies payable as
redemption amount in the event that the discharge of charge cannot be registered, to release
the property from any claim to enable VB to register a certificate of sale.
7. PBS will write to PS requesting: -
• That DOA (by way of transfer) has been signed.

• Undertaking from PS to forward duly stamped DOA
Purpose:
Proof of ownership : all the original Deed of Assignments made previously are the evidence
to trace the beneficial owner.

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THE SALE & FINANCING OF PROPERTY WITHOUT TITLE

Please refer to the handout ( Nos. 1-7).

1. Upon stamping of SPA, Purchaser usually has secured his loan.

Bankruptcy Search is conducted at the Insolvency Department of Malaysia (Jabatan

7. PBS will write to PS requesting: -

• That DOA (by way of transfer) has been signed.

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