You have a house. Or your parents have a house, and they want to transfer the house to you or your sibling.
So, how you’re going to do it?
Not many people in the industry have experience in doing it right.
Well, most will take the easy way by suggesting you do a Sale and Purchase Agreement (SPA). (Chuckle. I used to be this person)
There is nothing wrong by doing by way of Sale and Purchase Agreement (SPA); it just will cost you more.
Who wants to spend more when you can spend less right?
Today, we are going to share How To Transfer Property To Family Member the best way.
Engage The Right People.
Get a piece of advice from Experience Mortgage Consultant like us. I’m going to bold Experience because some young and vibrant consultant out there might not have the experience of doing it.
As a Senior mortgage consultant, we will review your case and will provide the most suitable solutions or advice.
Once you get the advice, you can decide to go ahead or to proceed later.
Hook You Up With The Suitable Bankers and Lawyers
If you agree to proceed, we will introduce our associates’ banker and lawyer to assist your case.
The bankers and lawyer that we introduce are the one that familiar with Transfer Property To Family Member with by way of Memorandum of Transfer (MOT). There is No Sale and Purchase Agreement (SPA) involvement.
If you do not require a home loan, we will not introduce any bankers to you — just the lawyer.
Next, you shall forward some of your income documents to the respective bankers for approval. Once your home loan approved, the lawyer will start to open the file for your MOT and Loan Agreement file.
If you want to know the cost of doing MOT and Loan Agreement by the lawyer, you can click the following link to request a quotation from the lawyer.
You can finance your loan agreement fees with your loan, so if you want that, make sure you have mentioned this to the banker before the application.
You can’t finance your MOT fees, this one you need to pay your own.
For your information, most banks are not willing to consider by way of MOT, they prefer by SPA. But, we have a few who are willing to do by way of MOT. If you want to know which bank, talk to us at 012-6946746.
Yay! Now Your Loan Approved.
Review your bank letter offer with the bankers and understand the terms and conditions before signing the Offer.
If everything looks right, sign the Letter Offer and get the lawyer to start doing the paperwork.
Double-check on the terms and make sure there is no condition on letter offer asking for “Submission of SPA to the bank.”
There is no SPA in this process.
The lawyer will open MOT and Loan Agreement Files
The best way is to appoint the same lawyer doing the MOT and Loan Agreement. One lawyer to rule them all. (chuckles)
There is nothing wrong to appoint two lawyers, but we found in the past, one competent lawyer will be easier and faster for the whole process.
If you engage one lawyer, you only need to meet up with one lawyer to sign MOT and Loan agreement.
If you engage two, you need to go to two places to get the documents sign.
When it comes to following up, you need to call two different lawyer firm to get your updates. Isn’t it easier to call only one lawyer, one place?
The lawyer might need one to two weeks to complete the agreement. Once it complete, arrange with the lawyer to sign the documents.
Do not delay the signing as it might delay the whole process.
At this point, you shall pay the lawyer, the MOT fees, and Loan Agreement Fees. If you finance your Loan Agreement Fees, then you don’t need to pay the lawyer.
I Want To Know The Cost
Everything you do will have a price or cost. So, let’s breakdown the cost of doing by way of MOT.
1.Memorandum Of Transfer (MOT)
MOT will include professional lawyer fees, CKHT filing fees, stamp duty, disbursement fees, and SST 6%.
a. Professional Lawyer Fees for Preparation of Memorandum of Transfer
The professional fees will be charged depending on the property value and based on Solicitor’s remuneration order.
You can check the legal fees scale from the following article.
Hence, if the property still charged to a bank, there will be additional professional fees for Discharged of Charge.
b. Cukai Keuntungan Harta Tanah (CKHT) Filing Fees.
CKHT filing is compulsory for every individual that doing property transfer.
The cost of CKHT filling is as follows:
Filing CKHT 2A ( RM200 Per Transferee)
Filing CKHT 1A ( RM300 Per Transferor)
Filing CKHT 3 ( RM100 Per Transferor)
Usually, it will be complete and submit by the lawyer; however, if you have the experience of filing up the form and willing to make your submission. You can opt to do it yourself.
c. Property Transfer Stamp Duty (Malaysia)
Every individual required to pay stamp duty for property transfer when he/she transfer their property to another individual.
The Property Stamp Duty scale is as follow.
For the first RM100,000, 1%
From RM100,001 to RM500,000, 2%
From RM500,001 to RM1mio, 3%
The subsequent amount is 4%
Okay, there is a special exemption when it comes to transferring between the following two categories.
a. Parent to Child or Child to Parent.
b. Between Spouse.
The law provides for a stamp duty exemption for a transfer of property by way of love and affection. (Pindah Milik Tanah Kasih Sayang)
In contrast, according to the Stamp Duty (Exemption) (No. 10) Order 2007, the law provides for stamp duty exemption for a transfer of property between family members by way of love and affection as follows:
a. Parent to Child or Child to Parent – 50% Exemption Rate
b. Between Spouse – 100% Exemption Rate
okay, let me understand more. (I can hear some of your voice)
When I transfer my property to my husband by way of love and affection, I don’t need to pay stamp duty?!
Are you kidding me? This is fantastic!
Yes it is ! ( virtual hugs)
If you and spouse are having a difficult time and in the path of separation. And there is a property in the picture.
You might want to transfer the property first before signing the divorce paper to get the stamp duty exemption under love and affection.
If doing by way of Sale and Purchase Agreement, there will be two disadvantages.
a. There will be another cost for Seller part (existing owner). It will cost about RM1500-RM2000 easily.
b. Property Transfer Stamp Duty (Malaysia) will be on full fees. You can’t apply for exemption under love and affection stamp duty or Pindah Milik Tanah Kasih Sayang.
d. Disbursement Fees
Disbursement fees is a fee that includes adjudication fees, affirmation fees on Statutory Declaration, land search fees, state registration fees, transportation, photocopy, and lots of other costs that needed to complete the transaction. The price usually in between of RM1500 to RM2000.
e. Sales and Services Tax (SST), 6%
Sales and Services Tax (SST), 6% will be imposed on the Professional Lawyer fees and some of the disbursement fees.
Okay, now you know all the fees in the MOT Fees quotation that charge by a lawyer.
If you want an MOT quotation (the actual amount) so that you can do the calculation, you can click the following link to request a quote from the lawyer.
In the same time, the bank will arrange their panel valuer to site inspect the property. Once the valuer site inspects the property, they will issue a valuation report to confirm the property value to the bank.
The cost of preparing the valuation report is called a valuation fee. The valuation fee is about 0.50% from the loan amount. You can get the actual valuation fee amount by asking the banker to check with their panel valuer firm.
For both, loan agreement and valuation fee, you can either finance these fees with your loan or pay your own. Either way, you should let your banker know upfront, before the submission of application.
okay, we have covered all the costs involved in completing the MOT process.
Sit back and Relax
At this point, let your lawyer and banker complete the process. There are so many back end process that you and I don’t need to know.
During this time, you can follow up with the lawyer every two weeks. To check-in how’s the process going on or is there any hiccups.
That is why it is essential to engage with a lawyer and banker that can be trusted and efficient.
The process of MOT is varied from one case to another. But, we can give you an unbias estimation of completion as follow.
But, it should use as a general reference, not to the actual case. For the real case, you should get the correct information from your lawyer.
a. Individual or strata title property with leasehold property and existing property charged to a bank.
Duration: 6-7 months.
b. Individual or strata title property with freehold property and existing property charged to a bank.
Duration: 3-4 months.
c. Individual or strata title property with leasehold property and existing property free from loan
Duration: 3-4 months.
d. Individual or strata title property with freehold property and existing property free from loan
Duration: 1.50 – 2 months.
The estimated completion period is calculating from the date you signed both agreements, MOT and Loan.
Completion Of MOT
Now, it’s over. But, one last thing you should check.
Request a copy of the title from your lawyer and check the title for the owner name.
Make sure it was under the correct name and keep your title or title copy somewhere safe.
You might need it if you are going to sell the property or taking new financing from the bank.
If you do, please don’t shy to reach out to us again, our contact number is 012-6946746.
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Your Friendly Online Mortgage Consultant, Melissa Lee.