By VIKTOR CHONG
viktor@mystar.com.my
Due diligence to protect self and property

Jimmy explains the process of a property purchase.

PETALING JAYA: Performing your due diligence is important to protect yourself and your investment, said SP Chen, Leong & Partners co-founder Jimmy Kwok.

“The person you are dealing with might not even be the legal owner of the property, and a prudent property investor must always practise some basic due diligence before locking himself or herself in the transaction,” said Kwok.

For starters, Kwok said that the purchaser should visit the property at least once.

“Find out if there is a tenant currently staying there. Understand that the purchaser is not legally allowed to remove the occupant without cause if there is an existing tenancy

“If you are interested in moving into the property immediately, the existing tenant must be kind enough to terminate the tenancy. Otherwise, the purchaser will need to wait for the entire length of the tenancy for the tenant to move out,” said Kwok.

He suggested that the purchaser should also prepare a list of fixture and fittings to be included in the sales and purchase agreement.

“If you would like certain items to be included, such as air conditioning, light fitting and so on, get the confirmation from the seller and ensure to list them down in the agreement.”

“This listing will be attached by your lawyer in the sales and purchase agreement. Without it, the seller has no obligation to provide any of those to you,” added Kwok.

He also said that purchaser should find out if there are any defects on the property during the visit.

“Regarding the rectification and defects of the property, you can spell out the seller’s responsibility to fix such defects in the agreement before the seller hands over the keys to you. As the sale of a property is always on an “as is where is” basis, the purchaser’s inability to discover any flaws will result in him or her forking out additional money to repair the property later.

Regarding the legal ownership, Kwok emphasised the importance of requesting for proof of ownership from the seller or property agent before paying the earnest deposit.

“For a property with an individual title, the name of the registered owner can be found in the individual title itself. Other information such as restrictions in interest and encumbrances will also be disclosed in the individual title. The purchaser can then find out if the seller requires authority consent for the sale and transfer of the property”

For a property without an individual title, such as new projects which is still under a master title, the ownership could be proven through the latest sales and purchase agreement and/or the deed of assignment. Check the documents and make sure the name corresponds with the name of the seller,” he said.

Kwok also advised the audience to engage a good lawyer to smoothen the transactions. He shared that a good lawyer could be found through a recommendation from a seasoned property investor. “Do not be afraid to inquire about the lawyer’s amount of experience in the field. For first-time property investors, I would recommend using a lawyer from a smaller firm.”

His rationale was that a lawyer from a smaller firm might be able to spend more time to educate the property investor throughout the entire transaction. “As a first-time property investor, it is important that you educate yourself,” said Kwok.

He recently spoke at the Property Mastery Conference 2017.

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