After you have put your booking fee, what happens next (Vendor-Purchaser – subsale)?
You saw a house and decided to buy. You gave the booking fee (usually RM5,000) to the agent. What happen after this?
In buying property, unless you are buying from the developer where Housing Development (Control & Licensing) Act 1966 is the law that governs how this procedure is carried out, or else, it is under your own contract with the seller. Of course, this contract is based on Contracts Act, 1950 which is itself an Act of Parliament no less. People go to Law Firm to do this Sale and Purchase Agreement. An agent MUST not do this agreement for the parties.
Your agreement to buy and seller’s acceptance coupled with the RM5,000 (or any other amount agreed) booking fee as the consideration with certain conditions. What are the usual conditions?
1. That the seller is willing to sell at a price (say RM300,000)
2. That the property is at a certain address or Title Lot No.
3. That the seller is to ensure it is free of encumbrances (no limitation for him to sell)
4. That the buyer is willing to buy at a price (say RM300,000)
5. That the buyer has to come out with subsequent amount (usually bank loan).
6. That time is an essence – 14 days to sign the sale & purchase agreement.
If you feel that the time is too short (14 days is common practice), you can put it at 21 days or 30 days. It is up to you. I would suggest, 21 days may be more appropriate nowadays as we are busy and getting documents to the bank might take some times.
Tomorrow, we discuss about what could happen if things fall out.