A subsale transaction is largely governed by the terms negotiated and agreed between the purchaser and the vendor in the Sale and Purchase Agreement (“SPA”). As such, timelines, payment obligations and consequences of delay may differ from one transaction to another.

The explanations below are based on general conveyancing market practice in Malaysia, particularly in Penang. They are intended to provide a practical overview and should not be taken as legal advice for any specific transaction.

What Is a Subsale (Secondary Market) Transaction?

A subsale (also known as a secondary market transaction) refers to the purchase of a property from an existing owner, rather than directly from a developer.

In a subsale transaction:

• The property has already been sold at least once
• Ownership is transferred from the current registered proprietor to a new purchaser
• The transaction is documented by a Sale and Purchase Agreement between buyer and seller. 

Subsale transactions commonly involve residential, commercial and industrial properties.

How Long Does Subsale Conveyancing Take in Penang?

The overall timeline for a subsale transaction can generally be divided into two main stages.

1. Negotiation Stage  

This stage typically takes 1 to 2 months, depending on:

• Price and term negotiations
• Loan application and approval
• Preliminary checks and documentation

2. Completion Stage After SPA 

Once the Sale and Purchase Agreement is signed, the standard contractual completion period is usually 3 months, subject to the agreed terms.

However, this period may be affected if the transaction is subject to conditions precedent (CP).

Common Conditions Precedent include:

• State consent
• Foreign purchaser consent
• Housing authority consent
• Developer’s consent or confirmation
• Developer’s execution of the Memorandum of Transfer (MOT)
• Court order for sale (where applicable)

Where conditions precedent apply, the 3-month completion period usually commences only after all CPs have been fulfilled, which may extend the overall timeline.

What Are the Payment Terms in a Subsale Transaction?

Payment terms in a subsale transaction are subject to the SPA, but generally follow market practice.

1.Typical Payment Structure

• 1% to 3% earnest deposit upon acceptance of the offer
• Balance to make up 10% deposit payable upon signing of the SPA
• Remaining 90% balance purchase price payable within:
  • 3 months from the SPA date; or
  • 3 months from fulfilment of conditions precedent (if applicable)

2.Method of Payment

• Single lump-sum payment, where the property has a clean title and no existing charge; or
• Payment by tranches, commonly where redemption of an existing bank loan is involved

What Can Cause Delay in a Subsale Transaction?

Delays in subsale conveyancing are not uncommon and may arise from either party.

1.Vendor-Related Delays

• Delay by Vendor’s financier in providing redemption statement
• Delay by Vendor’s financier in execution of redemption documents
• Delay in obtaining developer’s confirmation or consent
• Delay in developer’s execution of the Memorandum of Transfer
• Defects or issues in title documentation

2.Purchaser-Related Delays

• Delay in bank loan approval
• Delay in execution of loan documentation
• Issues arising from valuation reports
• Issuance of supplemental letters of offer
• Registration or administrative issues at the Land Office

Early preparation and clear communication can help minimise delays.

Is Interest Payable if a Subsale Transaction Is Delayed?

In many subsale agreements, late payment interest is chargeable if the purchaser fails to complete the transaction within the contractual completion period.

• Commonly fixed at 6% to 8% per annum
• Calculated on a daily rest basis
• Charged on the outstanding balance purchase price

Interest is often imposed for an initial extension period of up to one month, subject to the SPA.

Extension of Time & Termination

1.Extension of Time

• Vendors may grant an extension of time to complete the transaction
• Extensions are usually subject to payment of interest

2.Termination

• If delay persists beyond the permitted extension period (usually one (1) month), vendors may have the right to terminate the SPA
• Where delay is caused by the vendor, purchasers may be entitled to extensions or remedies, subject to contractual terms

Whether interest applies or termination is justified depends on:

• The SPA terms
• The party at fault
• The surrounding circumstances

Can I Change My Lawyer for a Subsale Transaction?

Yes. Purchasers and sellers generally have the right to appoint their own conveyancing lawyer, even if a booking fee has been paid or another lawyer was initially suggested.

However, practical considerations such as costs, timing and transfer of documents should be assessed before making a change.

Why Is It Important to Engage an Experienced Conveyancing Lawyer?

Subsale conveyancing involves multiple legal and procedural steps, including:

• Title searches
• Loan documentation
• Stakeholder arrangements
• Redemption procedures
• Completion and registration formalities

Engaging an experienced conveyancing lawyer helps to:

• Reduce risk of delay or dispute
• Ensure compliance with legal requirements
• Protect your interests throughout the transaction

Need Advice on a Subsale Transaction in Penang?

Every subsale transaction is different. Timelines, payment obligations and risks depend on the property, financing structure and contractual terms involved.

If you require clarification or assistance with a subsale transaction in Penang, it is advisable to seek professional legal advice early.

About C K LIM & PARTNERS

C K LIM & PARTNERS is a Penang-based law firm with extensive experience in subsale conveyancing, refinancing and property-related legal matters, in particular for foreigners, first time buyers, individuals and companies. Our conveyancing team regularly assists purchasers and sellers in navigating the subsale process smoothly and efficiently.

Disclaimer

This article is for general informational purposes only and does not constitute legal advice. Readers are encouraged to consult a qualified lawyer for personalized guidance tailored to their specific circumstances.