In this times we are living, a property transfer between unmarried couples is quite common.
A couple can avoid such property transfer if the couple understands the process, the cost involved, and the consequences of making a purchase together in the first place.
As humans, we all crave for a perfect relationship, the one Love – but most of the time, it hardly turned out as we want.
Sometimes a relationship can become complicated.
I do have an early understanding of this, maybe because my parents separated since I was eight years old.
When two angry and heartbroken individuals fight, they will show lots of ugly sides, which involved utterly vulgar words and hurting each other mentally and physically.
The situation can continue for months, and if things aren’t fixed, the next thing is separation.
Separation can be good and bad. But, I am glad that it is good for me.
At first, it doesn’t seem like it.
As I grew older, I understand that two unhappy individuals shouldn’t be together; it will do more harm than good to a family.
After separation, my parents started to discuss children and assets.
My sister and I are lucky to be with my father as my mom re-married after a few years.
On asset segregation, it is quite a straightforward decision.
The flat where we’re staying is under my father’s name, so my father took the house. We’re thrilled.
The flat is where I lived through my childhood and learned some of the incredible life lessons. At times, brutal for me. Most time, joyful.
We owned a car, a white Datsun car. The car fills with character. It will break down a couple of times a month. Sometimes, it will bring us to our knees.
And since the car is under my late-mom name, she took the car and exchanged it with a van later.
What happens if the house is co-own with my late mom’s name?
The process my father needs to go through, it’s going to be brutal to him.
He will need more money to complete the transaction, and then he needs to get a new loan for it.
It is not going to be easy for him as we are not rich.
We barely survive.
I’m glad it didn’t happen.
I was in a relationship in my early 20s and had many friends who dive into one, and I have witnessed a wreckage relationship and how it can badly affect oneself.
When I started to understand property ownership’s legality with someone before or after marriage, I decided not to have one before married.
That decision includes co-own a car or applying for a loan. Not a chance. Not even guarantor.
The truth is Love either will become faded or stronger over time.
I’m not taking chances of faded Love.
CO-OWNED A PROPERTY WITH SOMEONE
In this article, I will share some critical pointers I learned over the years.
Bear in mind this is not a relationship related article.
It is an article for you to read if one day you decide to co-own a property with your partner or someone. Or if you have a co-owned one with someone.
Unmarried couple definition can mean a relationship between girlfriend and boyfriend or a couple of same-sex. It does not matter.
Even if you consider a co-own property with someone like your uncle or aunt, this article is still for you.
For a married couple, it will be easier and slightly different. I have many of those articles for you.
You can check out the link to one of the articles below.
TRANSFER PROPERTY TO FAMILY MEMBER ( FROM WIFE TO HUSBAND)
BUYING A HOUSE TOGETHER AS AN UNMARRIED COUPLE
One day, after a long year of togetherness, both of you decide to own a house together.
And maybe this message crosses your mind.
“Maybe we should buy a house together. Start co-own something together. It feels great.”
Once you have this type of thinking, stop there.
And try to think hard, and ask yourself, “Am I ready for this?”
Co-owned property or asset can be tedious, and you need to handle it with care and proper.
Suppose you do feel a strong urge to go ahead with the decision. Then, both of you should explore all the possibilities – The Good, The Reality and The Bad of the decision.
The good is always sweet.
You get to search for the perfect home and the process of finding the HOME. It is so thrilling and full of excitement.
Once you find the house, you will have all kind of imagination of how to renovate and decorate the home.
And how this perfect house is going to fill you with happiness and joys.
Sometimes, it feels like fairy tales.
The reality is buying a house requires a down payment, paying legal fees, stamp duty and many other costs.
According to our rough calculation, you will need about 15-17% of the purchase price to own a house.
So, now these costs can easily be out of reach if the house price is high.
Therefore, look for a more reasonable house, a house that fit your financial appetite.
You can equally divide the cost or cover more than another, which is totally up to your arrangement, but it is wise to find a balance.
Most of the time, if both parties invested in the property – I mean financially. Both will want to co-own the property on the paper.
Nevertheless, you can also explore another option.
You can have one partner buy the house and owned the house on the paper.
The partner to buy the house should have the cash to cover the buying cost and the one that is eligible for the loan.
And another partner can pay some monthly fees to cover the instalment, just like paying for rent.
This way, there will be no conflict later.
Maybe renting a house can be a wise idea too instead of owning one.
The cost of owning a house is enormous. It also comes with a higher monthly instalment.
According to a statistic, monthly house payment usually stands more than 30% for a salary earner.
And not many people tell you this. But owning a house is not as glamourous as it portrays.
It comes with monthly and yearly fees that you have yet known.
Besides, it is a tenant market now, and with rental amount had fallen since last year, many rental properties are up for grab.
Let said, after deep consideration, both of you still decided to go ahead co-own a property.
So, what can be so bad about it?
It’s not all bad. It can be nice to co-own something with someone you love.
However, things can quickly turn sour when Love fade and lead to separation.
What can you do to your co-owned property?
Well. The easy way is to sell it.
You can sell the property and divide the profit or losses.
But you must continue paying the instalment until the selling process comes to an end.
If you do not continue paying the bank, the bank has a right to auction the properties after a few months of non-payment.
Hence, your CCRIS can look pretty poor, and it will affect your credit score.
TRANSFER PROPERTY TO ANOTHER PARTNER
If one of the partners shows interest to take over the property, the other party can transfer the property to the interested partner.
And the interested partner needs to take a new refinancing loan under his/her name only.
The existing loan will be ceased and replaced by the new refinancing loan since the ownership has changed.
There are not many banks that accept such transactions; you will have to consult us for more.
You can call us at 012-6946746, to enquire more.
Most banks rarely accept a property transfer like this. Typically, the bank’s prefer involvement of the Sale and Purchase Agreement (SPA).
SPA will be a disadvantage to the new owner as she/he will need to pay a full amount of stamp duty.
The new owner only needs to pay half of the stamp duty by using a memorandum of transfer (MOT), which is much cheaper!
Whether you are doing it by way of a Memorandum of transfer (property transfer) or by way of SPA, both come with a cost.
Let’s look at the cost involved below.
a. Property Transfer fees ( Memorandum Of Transfer)
Property transfer fees will include legal fees, stamp duty, disbursement fees and service tax.
The market value of the property determines the property transfer fees.
The final market value will still need to come from the Inland Revenue Board of Malaysia.
If you want to know the estimated property transfer fees, you can fill-up the form below this article and request a quotation.
b. Loan Agreement & Valuation Fees
If the property is still under a bank loan, you will need to apply for a new refinancing loan.
The refinancing loan will require a lawyer to prepare the loan agreement.
The Loan agreement fees will include legal fees, stamp duty, disbursement fees and service tax.
A valuation fee usually is the cost of preparing a valuation report for the bank.
The total Loan Agreement & Valuation Fee cost is usually about 2-3% of the loan amount.
Sometimes, the bank loan can finance the Loan Agreement and Valuation fees together.
AUCTION BY BANK
I hope you wouldn’t choose this.
I remembered years ago, I consulted a client, and the client shared her story with me.
The client had a bad relationship with her ex. The relationship ends badly.
It ended with the house loan wasn’t paid. Both parties are too angry with each other even to bother.
They thought the worst of all, the bank will auction the house, and they can put everything behind them.
Well, they are so wrong. Things are worst after that.
One day, the bank auctioned off the house. But with a lower price.
The auction price was not sufficient to cover the entire outstanding loan and other auction fees.
There was a shortfall of a few thousand ringgit.
The bank notifies them, and as usual, both reluctant to pay.
When they refuse to pay the bank, their names will end up in the CTOS system.
CTOS keep information for a client with outstanding payment or with a summons.
When you are in CTOS, guess what?
You can’t get any loans from any financial institution for a long time. That includes a credit card.
That’s mean your chances to get another loan for buying a house or car or any loans are unlikely.
Sometimes things can get even worst than this.
What if the amount owned is enormous, like RM100,000 or more?
Then, quickly both can be declared bankrupt. It could be even a tragic story.
You embarked on a journey to find Love and ended getting doomed financially.
I, for once, do not hope it to happen to anyone.
I hope my sharing today will help you make a wise decision in the future.
- You can co-own a property with someone, but it is crucial to understand the consequences of the action.
- You can explore renting a place with someone before co-own a property. It is much cheaper cost and less tedious legally.
- Suppose you like a house and want to buy it. The better choice is using one partner name in the property ownership and loan. This way, you can avoid complicating things.
- Worst-case scenario, sell the house. Do not let the bank auction it.
- Suppose one of the partners interested in owning the property, and another partner agrees to let go. In that case, you should do property transfer through the Memorandum of Transfer and NOT Sale and Purchase Agreement (SPA).
- The partner taking the property will need to apply for a new refinancing loan.
- It will cost some money – Transfer fees, Loan agreement fees and valuation fees. Understand the cost before going ahead with the property transfer.
Please fill-up the form below this article if you want to get a quotation for the Property transfer fees or Loan Agreement Fees.
We hope you enjoy these few tips about property transfer between an unmarried couple, and let us know if you have any questions!
You can reach us at +6012-6946746 (David).
I see you in my next post.
Before you go, check out this article. You might enjoy reading this.