A Complete Guide to Sales and Purchase Agreement Malaysia

A Sales and Purchase Agreement (SPA) is the legal contract that confirms a property transaction in Malaysia. Once signed, it binds the buyer and seller to specific terms such as price, timeline, and responsibilities.

If you are buying a home for the first time, chances are you have already heard the word “SPA” thrown around by agents, banks, or family members. Usually right after a booking fee is paid, and often without much explanation on the taxes.

Well this guide was created to explain what an SPA really is, when you sign it, what is inside it, and what you should check before committing. 

So let’s get to it buyers!

What Is a Sales and Purchase Agreement (SPA) in Malaysia?

A Sales and Purchase Agreement, usually called an SPA, is the document that officially turns a “yes, I’ll buy it” into a legal commitment.

Before the SPA, most buyers are still in a soft commitment stage. You may have paid a booking fee, signed a booking form, or agreed on a price verbally. At this point, things still feel flexible.

Once the SPA is signed, that flexibility ends.

In simple terms, the SPA answers one big question: 

“What exactly did both sides promise to do, and by when?”

In Malaysia, the SPA records several core things in writing:

• Who is buying and who is selling
  This includes full names, identification details, and legal capacity. This matters more than people realise, especially for jointly owned properties or inherited homes.
  
  
• Which property is involved
  Not just the address, but the legal description. This includes lot numbers, title type, and whether the title has been issued. This prevents disputes over what was actually sold.
  
  
• The agreed purchase price
  The SPA confirms the final price, not what was casually discussed earlier. This becomes the reference point for loan releases, stamp duty, and future disputes.
  
  
• Payment timelines and completion periods
  This section explains when deposits are due, when the balance must be paid, and how long each party has to complete their part. Miss these timelines, and penalties may apply.
  
  
• What happens if something goes wrong
  The SPA spells out what happens if the buyer cannot pay, if the seller delays, or if the property is not delivered as promised. This is where forfeiture, penalties, or termination rights appear.

Once you sign the SPA, you are legally bound.

Backing out after this point is not as simple as changing your mind. Depending on how the SPA is written, you could lose your deposit, pay damages, or face legal action. 

Important note: In some business or corporate contexts, SPA can also mean Share Purchase Agreement, which has nothing to do with property. In this guide, when we say SPA, we are referring strictly to property Sales and Purchase Agreements.

When Do You Sign the SPA in a Home Purchase Timeline?

The SPA is signed after you have decided to proceed, not while you are still shopping or negotiating.

In Malaysia, most property purchases follow a sequence like this:

For most buyers, the SPA is the first point where the transaction becomes legally serious.

Developer Properties

For properties bought directly from a developer, the SPA is almost always:

• Prepared by the developer’s appointed lawyers
• Based on a standard format set by housing regulations
• Issued within a fixed period after booking

Buyers generally cannot change the wording, but should still understand what they are agreeing to.

Subsale Properties

For subsale transactions, the SPA is:

• Drafted by lawyers acting for both buyer and seller
• Customised to the specific property, title status, and loan situation
• More flexible, but also easier to misunderstand if not explained clearly

Because subsale SPAs are not standardised, this is where careful review matters most.

An Important Clarification for First-Time Buyers

While the timeline above is typical, two points often surprise first-time buyers:

• You may sign the SPA before your loan is fully approved
  Banks usually require a signed SPA before releasing loan documents. If the loan later fails, the outcome depends on the SPA’s “subject to loan approval” clause.
  
  
• Signing the SPA is what legally locks the deal, not the loan agreement
  Many buyers assume the loan is the commitment point. In reality, the SPA is.

Once the SPA is signed by both parties and stamped, backing out will have legal consequences. We can’t stress this enough.

Developer SPA vs Subsale SPA, What’s the Real Difference?

Not all Sales and Purchase Agreements work the same way, and this difference affects your risk as a buyer.

In Malaysia, there are two common types of property SPAs. One is used when buying from a developer, and the other is used when buying from an existing owner.

Developer SPAs follow regulated formats, while subsale SPAs require closer scrutiny because terms can vary.

If you assume both are the same, you risk missing clauses that affect timelines, penalties, or ownership transfer.

“Developer SPAs are predictable but rigid. Subsale SPAs are flexible but require careful checking.”

Read more: Rental Income Tax in Malaysia: Guide for Property Owners

What Are Schedule G and Schedule H, and Why Do People Mention Them?

Schedule G and H are standard SPA formats for developer projects.

• Schedule G applies to landed properties such as terrace houses
• Schedule H applies to strata properties such as apartments and condominiums

These schedules come from housing regulations and aim to protect buyers by standardising clauses such as:

• Completion timelines
• Late delivery damages
• Defect liability periods

Because the wording is standard, buyers usually cannot negotiate these SPAs. However, understanding what is already included helps manage expectations.

What Does an SPA Usually Contain, Clause by Clause?

Most SPAs look long and intimidating, but only a handful of sections truly affect your money, timeline, and risk.

Purchase Price and Payment Schedule

This section confirms the final agreed price and how payments are made. It states:

• How much deposit has been paid
• When the balance is due
• If payments are made in stages or in one lump sum. 

Banks and lawyers rely on this section to release funds. If you miss a payment deadline here, penalties can apply even if everything else is ready.

Completion Period

This clause sets the official deadline for completing your purchase.

Developer properties 

• Refers to when vacant possession must be delivered
• For HDA-regulated projects, the SPA usually fixes:
  • 24 months for landed homes (Schedule G/I)
  • 36 months for strata units (Schedule H/J)
    
    
• If the developer misses this deadline, buyers can usually claim Liquidated Ascertained Damages (LAD)

Subsale properties

Refers to when the seller must transfer ownership and hand over the keys

Vacant Possession

Vacant possession means the property is handed over to you, not just on paper, but in usable condition.

This clause explains:

• When you get the keys
• If utilities should be connected
• Whether the property must be empty and fit for occupation

Many disputes happen when buyers assume vacant possession means “ready to move in,” but the SPA defines this more precisely.

Defect Liability Period (DLP)

The defect liability period is the window where defects must be fixed by the seller or developer.

For developer projects, this period usually starts after vacant possession and lasts for a fixed number of months. 

Buyers must report defects within this time. If you miss it, repair costs may fall on you instead.

Late Delivery or Late Payment Penalties

This clause sets out penalties if deadlines are not met.

• If a developer delivers late, damages may be payable to the buyer. 
• If a buyer pays late, interest or penalties may apply. 

It is important to check that penalties are clearly defined and not one-sided.

Termination and Forfeiture

This section explains what happens if the transaction fails.

It covers situations such as loan rejection, prolonged delays, or breach of contract. Depending on how this clause is written, deposits may be forfeited, refunded, or partially returned.

Many property disputes do not happen because buyers failed to read the SPA. They happen because buyers did not realise which clauses carried financial consequences.

If you understand these sections, you already understand the heart of the SPA.

What Should You Check Before You Sign the SPA?

This is where many first-time buyers make costly assumptions.

Before signing, confirm:

• The property description matches what you viewed
• Completion timelines are realistic
• Penalty clauses apply both ways, not one-sided
• Defect obligations are clearly defined
• Termination clauses are specific, not vague

If the SPA feels rushed or unexplained, that is already a signal to slow down.

A conveyancing lawyer’s role is not just to prepare documents, but to explain risks in plain terms.

SPA Stamping and Fees, What You’ll Pay and Why It Exists

Stamping doesn’t create the contract, but it is what makes your SPA “usable”, so it can be recognised by LHDN, admitted as evidence in court, and used for registration with the Land Office.

In Malaysia, SPAs and related documents such as the Memorandum of Transfer (MOT) or Deed of Assignment (DOA) must be stamped with the Inland Revenue Board (LHDN). 

For documents signed in Malaysia, you normally have 30 days from the date of execution to stamp them. If you stamp late, LHDN can impose penalties on top of the normal duty.

How stamp duty is calculated

Stamp duty on a property transfer is charged on a tiered scale based on the higher of the purchase price or market value:

There are various exemptions and rebates (for example, for eligible first-time home buyers or certain transfers between family members). 

These depend on current government policies, so it’s best to check the latest LHDN guidelines or speak to your lawyer.

Typical SPA-related costs

When budgeting for a property purchase, it helps to set aside money for these items separately from the property price:

• Stamp duty
  A government tax based on the property value, using the tiered rates above for the SPA/MOT/DOA, plus 0.5% of the loan amount for the loan agreement.
  
  
• Legal fees
  Fees paid to lawyers for preparing, reviewing, and completing the SPA, loan documents, and related filings. These are usually charged according to a regulated scale.
  
  
• Disbursements
  Out-of-pocket expenses such as title searches, registrations, stamping fees, and administrative charges.

These costs are not hidden charges, but they often catch first-time buyers off guard because they are paid upfront and are not covered by the housing loan. 

Read more: A Beginner’s Guide to Personal Financial Planning

MOT vs DOA vs LACA, Which One Applies to Your Property?

These documents exist because property ownership does not always transfer instantly in Malaysia.

When you buy a property, your name does not always go onto the title straight away. 

This depends if the property title has already been issued and whether a bank loan is involved. That is why different documents are used at different stages.

The Three Documents Explained Simply

What This Means for Buyers

• If the title is already issued
  Ownership can be transferred directly using an MOT. This is common for landed subsale properties.
  
  
• If the title is not issued yet
  An MOT cannot be used. Instead, a DOA records your ownership rights until the title is ready. This is very common for apartments and condominiums.
  
  
• If you are taking a housing loan
  A LACA is used so the bank’s interest is protected while the title is still pending.

Should You Be Worried If You Don’t Get an MOT Immediately?

No. This is normal.

Many buyers do not receive an MOT right away, especially for strata properties. This does not mean ownership is unsafe or incomplete.

The point to remember: Different documents apply at different stages, but all of them exist to protect your ownership and the bank’s interest until the title is ready.

Can You Cancel an SPA After Signing, and What Is Realistically Possible?

Yes, cancellation is possible, but your options are usually limited and costly.

Once an SPA is signed, you are exiting a legal contract. Unfortunately, what happens next depends less on what you want and more on what the agreement allows.

What Usually Happens in Practice

Depending on how the SPA is written, one or more of the following is realistic:

• Deposit forfeiture
  This is the most common outcome if the buyer initiates the cancellation. Booking fees or deposits are often lost.
  
  
• Partial refund through negotiation
  In some cases, especially subsale transactions, both sides may agree to a partial refund to avoid a longer dispute.
  
  
• Additional damages
  If the cancellation causes clear losses, the other party may claim compensation beyond the deposit.

Full, no-loss cancellation after signing is rare unless the SPA specifically allows it.

When Is Cancellation More Feasible?

There are a few situations where buyers have more room to move:

• Loan-related conditions are written clearly
  If the SPA is expressly subject to loan approval and the loan is genuinely rejected, termination may be allowed with reduced loss.
  
  
• Early-stage subsale transactions
  If the property has not progressed far and both parties want out, mutual termination is sometimes achievable.
  
  
• Seller or developer breach
  If deadlines are missed or obligations are not met, buyers may have stronger termination rights.

Understanding the Sales and Purchase Agreement in Malaysia

Once you understand how an SPA works, what the clauses actually mean, and where the real risks sit, the buying process becomes far more predictable and less stressful. 

If you are planning a property purchase and want clarity beyond the legal wording, especially around cost planning, stamp duty, legal fees, and tax implications, it often helps to speak to professionals who look at the numbers as well as the documents.

That is where Accounting.my can support you, not by selling property advice (we don’t do that), but by helping you understand the financial and tax side of major transactions with our accounting services.

We hope you find this guide helpful and to those going through their first ever home-buying journey, we wish you the best!

Source:

• Housing Development (Control and Licensing) Regulations 1989 (HDR 1989) – Prescribes standard SPAs (Schedule G & H), timelines, and key clauses for HDA-regulated housing projects.
  
  
• Schedule G & Schedule H SPA Forms (statutory templates) – Set out vacant possession timelines, late delivery LAD, and defect liability provisions used in developer SPAs.
  
  
• VC&C Law – “Liability of a Developer after the Defect Liability Period in Housing Development (Control and Licensing) Regulations 1989” (2025) – Confirms 24-month DLP from vacant possession and 30-day rectification requirement.
  
  
• Luib Bhullar – “Defect Liability in Malaysia: What Homebuyers Need to Know and How to Take Legal Action” (2025) – Explains defect liability period, typical defects, and enforcement options for Malaysian homebuyers.
  
  
• MahWengKwai & Associates – “FAQ on Liquidated Damages for Late Delivery of Properties by Developer” (2020) – Explains LAD under HDA SPAs, calculation basis and purchaser rights.
  
  
• ASCO Law – “Liquidated Ascertained Damages for Late Delivery of Property” (2024) – Detailed guide to LAD, Federal Court decisions, and how buyers claim LAD for delay.
  
  
• L&A World / laworld.com – “Liquidated Ascertained Damages & the MCO Effect in Malaysia” – Notes that LAD under HDA SPAs is typically 10% p.a. of the purchase price, calculated daily.
  
  
• EdgeProp – “Booking fees: Legalising the prohibited?” (2021) – Discusses Regulation 11(2) HDR 1989 and confirms prohibition of booking fees for HDA projects; explains penalties and policy rationale.
  
  
• MahWengKwai & Associates – “LAD to be calculated based on the date of payment of booking fees” (2021) – Covers Federal Court ruling on LAD start date and reiterates that booking fees are prohibited under HDR 11(2).
  
  
• Zul Rafique & Partners – “Housing Development (Control and Licensing) Act 1966” note (2021) – Analyses clauses in Schedule G/H and interpretation of “from the date of this agreement” for VP and LAD.
  
  
• LHDN / Inland Revenue Board Malaysia – Official “Stamp Duty” page – Outlines the basis of stamp duty, reliance on higher of consideration vs market value, and general rules.
  
  
• PwC Malaysia – “Stamp duty” page – Explains stamp duty concepts, deadlines and penalty mechanics under Malaysian law.
• iProperty / PropertyGuru SPA & HDA guides (e.g. LAD, DLP, HDA overview) – Consumer-facing explainers on how HDA protects buyers, typical SPA clauses, and practical steps for claiming LAD or defects.