In this series, Adha Selvi will be building on our previous articles relating to Sales and Purchase Agreements. We will be providing some real life examples (names and places changed to provide anonymity) and showcasing why certain steps are very important in a Sales and Purchase Agreement

No Man’s Land

Mr. Lee is a real estate agent in the Setapak area. He was contacted by a Mr. Ahmad, an older gentleman, who saw Mr. Lee’s advertisement in the area. Mr. Ahmad said his wife had passed on and was now looking to move to a smaller apartment. Mr. Lee happily obliged, arranging visits and contacting potential sellers.

During this period, Mr. Ahmad said he was experiencing some cash flow problems. With the funeral expenses and medical bills, he needed to sell his house first and only then could he afford the apartment. Mr. Lee volunteered to find a purchaser. Mr. Ahmad’s address was in a more affluent area and he was willing to sell for cheap.

Luckily for both of them, there was a willing buyer. The Letter of Offer was signed and accepted and parties were discussing about which solicitor to appoint for the Sales and Purchase Agreement. Just as they were about to reach consensus, disaster struck. Mr. Ahmad was admitted for COVID. 

Mr. Ahmad reached out to Mr. Lee and asked if he could use the 3% earnest deposit to help pay for his medical bills. Mr. Ahmad stated he would write in his will that his Setapak house would be sold to the buyer as per the Letter of Offer. The deal would go through, just perhaps without him if he didn’t get better.

Mr. Lee contacted the buyer and asked if he could release the 3% to Mr. Ahmad. The buyer said okay, on the condition that the sale would go through and that Mr. Ahmad wrote that will. The will was signed and the money transferred and all was well.

About a month later, Mr. Lee tried to contact Mr. Ahmad but the line was cut. When he called at the address of the Setapak house, he found an Indian couple living there. The couple claimed to be renting the house from a Malay lady. They were not informed the house was being sold.

Mr. Lee was very confused. He went to his lawyer and asked what he could do. The lawyers did a preliminary check on the property. To Mr. Lee’s surprise, the property was registered in the name of a Malay lady, and not under Mr. Ahmad. Mr. Lee and the buyer had been scammed.

It is unfortunate but this is not an uncommon situation in Malaysia. To avoid such nasty surprises, we always advise that potential purchasers and agents always to do a land search on the property followed up with a bankruptcy search to ensure that the person selling the property is the rightful owner of the Property and/or has the authority to do so via a legal Power of Attorney.  

If you have any questions or queries on Sales and Purchase Agreements, feel free to contact us at asa@adhaselvi.com.my