Real Estate Due Diligence in Malaysia

Updated on Wednesday 25th October 2017

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Due diligence is basically an investigation performed on a potential investment. It serves to confirm all the facts in regards to a sale. In the case of purchasing a property, the due diligence is about assuring yourself that you get exactly what you are paying for.

The legal due diligence in Malaysia

The legal due diligence is a procedure through which two things are verified:

-    the legality of the owner (or seller),
-    the legality of the property.

When conducting a legal due diligence, our lawyers in Malaysia will request the ownership documents for searching every detail. For example, if the title corresponds to the identification and name of the owner, the status of the title (freehold or leasehold) and, in the leasehold case, the expiration date, if the property is mortgaged to a certain bank or company etc.

Title of property and documents

If the individual’s title of property has not yet been issued by the Land Office, then the property is surely held on a master title. In such a case, our law firm in Malaysia can help you by making sure that there are presented certain documents:

-    The main documents will be the sales and purchase agreement (between the developer and the seller),
-    The loan agreement (between the buyer’s bank and the seller),
-    A copy of the finalized payment between the owner and the bank (in case the owner was offered a loan),
-  All of the necessary documents are available (especially if the property was purchased from a previous owner).

These documents constitute the trail and history of ownership for the property. So, if any of these documents are missing, our attorneys in Malaysia will help trace the parties who were involved in the initial transaction.

We invite you to watch the following video on real estate due diligence in Malaysia:

The financial due diligence

If a person needs a bank loan for financing a part of the property, the matter should be discussed with the bankers - if he or she will qualify for the margin of finance required. Also, the margin must not be against the sales and purchase agreement.

Of course, there will be legal costs for obtaining the agreement. More so, there is a tax named GST (Goods and Services Tax) which is 6% of the purchasing price of all industrial and commercial properties. This is a part of how our lawyers are able to help you on this matter. If anyone has any other questions regarding this subject or if he/she would need the help of Malaysian lawyers, do not hesitate to contact us.