The Differences between Developer Sales and Sub-Sales in Malaysia
In the Malaysian real estate market, there are two (2) common types of property transactions, which are stated below:-
- Developer Sales:
- Developer Sales are the purchase of properties directly from the Developer. These properties are usually brand new or under construction, whereby the buyers are the first owners.
- Sub-Sales, also called secondary sales. Sub-Sales are purchased of properties from the current owner instead of directly purchasing the Property from the Developer. These properties normally have been stayed or used by the previous owner and usually are “as is where is basis”.
The Differences of Developer Sales and Sub-Sales
|1.||Information and documents of the Property||Easy access to the Property’s information. All the information on the Property can be obtained from the Developer.||More difficult to look for potential Property and the owner might take a longer time to retrieve the documents for the Property.|
|2.||Property Price||Fixed Price but there might be rebate or incentives from the Developer.||Negotiable between the parties but requires more effort and time to get the right deal for a Property.|
|3.||Legal Fees and Stamp Duty
||The Developer might bear the stamp duty and legal fees of the Property for the buyer or the Property might be subject to waiver under the Home Ownership Campaign (HOC).||The Buyer is to self-bear all the costs for legal fees and stamp duty.|
|4.||Property Conditions||Completely brand new Property and typically comes with modern amenities.||Property comes in “as is where is basis” (What you see is what you get) and may have unique characteristics or renovations, depending on the previous owner but the Property might be old and many to be repaired.|
|5.||Legal and Regulatory Protections||Subject to Housing Development Laws with protections to the buyers.||Regulatory Protections may be less comprehensive, and everything shall be subject to the Sale and Purchase Agreement duly agreed upon and executed by both parties.|
|6.||Warranty Period||Usually comes with a defect liability period covered by the Developer and the buyer can claim from the Developer for the defects of the Property.||No Defect Liability Period and everything is on “as is where is basis”. (What you see is what you get)|
|7.||Certificate of Completion and Compliance (“CCC”)||The property comes with a Certificate of Completion and Compliance (“CCC”).||The Property might be sold without a Certificate of Completion and Compliance (“CCC”) and there might be a risk that the owner does not obtain approval for their renovation of the Property during the previous time.|
|8.||Risk||Higher Risk. In view that the Property is still under construction and the buyer is unable to view the Property, there are uncertainties about the quality of the Property. The buyer might bear the risk of the Developer abandoning or delaying the project due to cash flow problems.||No risk of construction delay as the sub-sale Property is completed Property. Able to view and inspect the Property prior to the execution of the Sale and Purchase Agreement.|
|9.||Duration for the delivery of vacant possession||Long waiting period for the delivery of the vacant possession of the Property. (maybe up to 24 months or 36 months or any longer period, depending on the completion of the Property by the Developer)||Immediate occupancy upon the completion of the Sale and Purchase Agreement, an estimate of 2 – 3 months or up to any further period, as the case may be.|
In Malaysia, the choice between Developer Sale and Sub-Sales depends on various factors, including but not limited to the buyer’s budget, preferences, and risk tolerance. Before making the decision, the buyer shall first understand the purpose of the Property, look into the factors for each transaction and do a good amount of research before signing the Sale and Purchase Agreement.
If you have any questions or require any additional information, please contact our lawyer that you usually deal with.
This article is written by
Lai Ying Ying
Senior Associate, Low & Partners
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