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What is a Sale and Purchase Agreement (SPA) in Malaysia?

From preparation to document signing, here's everything you need to know about a Malaysian Sale and Purchase Agreement (SPA).

If you're new to the real estate market and looking for your dream home, you'll eventually have to learn about the nitty-gritty of actually closing the deal, particularly about documentation. The SPA is arguably the most important document for a prospective buyer and seller, aside from loan-related documents.

As a beginner, you may be overwhelmed by the amount of documentation available to you. To alleviate any concerns you may have, we have compiled a list of frequently asked questions and answers (Q&As) about SPA for prospective home buyers. Hopefully, this will put you on the right track to finding your dream home.

What is SPA?

The SPA is a comprehensive legal document that contains information about the buyer and seller's property transaction. When you sign the SPA, you essentially start the process of closing the deal. If you want to see how it looks and what is included in the agreement, there are many SPA Malaysia samples available online.

What role does the Sales and Purchase Agreement play?

The SPA is one of the most important aspects of your home-buying experience. This agreement finalises legally binding terms and conditions in the home buying process and protects the interests of both home buyers and developers.

Who prepares the SPA?

The buyer and seller will typically hire a professional conveyance lawyer who specialises in real estate to prepare the SPA. Even if you are well-versed in the law, it is prudent to avoid any unnecessary technical delays or errors by either party, which could prove costly. Normally, the seller appoints the lawyer, but this must be mutually agreed upon by both parties. Try searching for Malaysia sale and purchase agreement sample.

What is included in the SPA?

The key terms of the Sale and Purchase Agreement are comprehensive details of the contract between buyer and seller. These are some examples:

  • Purchase price

  • Precedents and conditions

  • Payment terms

  • Loan details

  • Delivery of vacant possession

  • Defect liability period and other pertinent property information

It will also state what will happen if either party fails to meet the SPA's requirements, such as the deadline for the buyer to receive keys to the property.

What are the various types of SPAs?

There are different sale and purchase agreements depending on whether the property is purchased on the primary or secondary market.

SPAs for residential property are classified into two types.

Primary property

Primary property is purchased directly from developers. SPAs for the primary property are largely fixed and skewed in favour of the developer. A sample Malaysian sale and purchase agreement for Schedule G can be found here, courtesy of the law firm Halim, Hong & Quek.

Secondary property

A secondary property is one purchased on the secondary market. Secondary property SPAs allow for some negotiation between buyer and seller.

There are also various sale and purchase agreements depending on whether the property being purchased has an individual title or a strata title. The Housing Development (Control and Licensing) Regulations of 1989 specify the SPA templates for each. These are the two templates in particular:

  • Schedule G – Landed Individual Title

This SPA template is designed for landed individual properties such as terraced and semi-detached homes.

  • Schedule H - Strata Title

This SPA is intended for strata-titled residential properties such as flats and condo units. As it involves homes in developments with common properties such as corridors, lifts, parking spaces, and swimming pools, as well as other amenities and facilities, this type of SPA contains more details and provisions.

Is an SPA legally enforceable?

Yes, the SPA is a legally binding contract that can be enforced in court. No further negotiations are usually permitted once you have signed the SPA. This protects both the buyer's and seller's interests. Before signing that document, you must be absolutely certain.

Malaysian Sale and Purchase Agreement Procedure

Purchasing a property in Malaysia is a simple process, but you may want to hire a real estate solicitor to ensure a smooth transaction and to avoid stumbling blocks.

The SPA procedure consists of several steps:

Step 1: Select the dream home you've always wanted to own, and then sign the Letter of Acceptance/Offer Letter to pay a 3% deposit on the total property price.

Step 2: After signing the Letter of Acceptance, the buyer will sign the agreement and pay a 7% deposit within 14 days. Following that, the buyer has three (3) months to complete the sale and pay in full.

Step 3: To become a valid legal document, the SPA must be stamped by Lembaga Hasil Dalam Negeri Malaysia (LHDN) or the Inland Revenue Board of Malaysia (IRB).

The stamp duty payment, registration at the Land Office Registry, and the title deed will be transferred to the buyer's name only after the valuation department has completed the property examination.

If, on the other hand, you are purchasing a new home and the seller/developer does not yet have full title to the property, this must be stated in the SPA and transferred as soon as possible.

Is it possible to terminate the SPA?

Yes, if the terms and conditions of the agreement allow it, either party may cancel the SPA. Depending on the circumstances, the SPA may include clauses that penalise either the buyer or the seller. The SPA may include a specific performance clause, such as delivery of vacant possession or payment for a specified period of time. If these clauses are not followed, the SPA may be terminated.

However, keep in mind that breaking the agreement carries penalties for the party who violated it. For example, every standard SPA includes a clause stating that the party who cancels the deal will be charged a 10% penalty based on the selling price of the property. So, if the house costs RM700,000, the party who terminated the contract must pay the other party RM70,000.

The SPA also includes penalties if the seller or developer cancels the transaction; however, if they breach the contract, they can be sued in court.

Termination of a Sales and Purchase Agreement in Malaysia

The Housing Development (Control and Licensing) Act of 1966 defines and protects buyers' and developers' rights. The cancellation of the SPA is described in Section 8 of the HDA (Control and Licensing) Act 1966. Among the conditions under this act that allow for the cancellation of SPA are:

  • Termination of SPA is done through the Ministry of Housing and is approved by them.

  • The SPA is cancelled within 6 months of signing it.

  • At least 75% of homebuyers agree to the SPA's termination.

What is the difference between a SPA and a sale deed?

Here are some distinctions between the SPA and the sale deed.

  • SPA

The SPA is a contract to buy or sell a property at a later date. Typically, there is a waiting period before transferring property to a new owner.

  • Deed of sale

A sale deed is a legally binding document that proves the seller has given the buyer absolute ownership of the property. The new owner acquires the property's rights and interests through the sale deed. Unlike the SPA, the property is immediately transferred.

A sale deed usually includes the following information:

  • The buyer and seller

  • Property description

  • Selling price

  • Mode of payment

  • The time frame for property title transfer

  • Delivery of possession

  • Indemnity clause

Is the SPA valid after-sale deed?

A sale deed transfers a party's property rights to another party. All of the terms and conditions in the SPA are usually incorporated into the sale agreement.

How much does SPA and stamp duty cost?

The cost of SPA and stamp duty may vary depending on the value of the property. It goes like this:

  • Stamp duty fees for SPA

The stamp duty for the instrument of transfer is determined by the tier of house price.

Property price


First RM100,000


RM100,001 – RM500,000


RM500,001 – RM1,000,000


Above RM1,000,001


  • Legal fees

Legal fees, like stamp duty, are calculated based on the purchase price of the property.

Property price


First RM500,000


RM500,001 – RM1,000,000


RM1,000,001 – RM3,000,000


RM3,000,001 – RM5,000,000


What should I charge a lawyer to draught an SPA for me?

If you hired an attorney to draught an SPA for you, as is common when buying a home on the secondary market, the amount you must pay is based on the First Schedule of the Solicitors' Remuneration Order of 1991:

Aside from that, keep Section 3 of the Solicitors' Remuneration Order of 1991 in mind, which lists additional legal services or fees that must be paid for:

You can also look up the most recent stamp duty charges, RPGT, legal fees, and four other costs to consider before buying a house to make a rough estimate before embarking on the homeownership journey.

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