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Q: I am buying a corner lot terrace house that has been converted to use as a kindergarten. The seller is willing to sell the house together with the kindergarten business. I found a bank and qualified for 80% loan for the house. I went to the solicitor office together with the seller, bank representative, and in front of the solicitor, we signed many S&P documents about a month ago. Yesterday, the bank representative called me and informed me that the bank is no longer able to loan me 80%. They can only loan 70% because the house is used for a kindergarten business and is not for my own personal use. I do not have an additional 10% to put down. What should I do now? And whose fault is it? Hasn’t the bank already approved the loan application for 80% margin? How can the bank now simply change the loan agreement after I have signed the S&P?  

A: It depends on whether the loan application documents that you signed disclosed the fact that it's going to be used as a kindergarten. Notwithstanding that, bear in mind that all loan agreements give the banks the right to do anything including withdrawing the facilities at any time for whatever reason. So, even though it's unfair, the bank has every right to pull the loan. You have 3 options:

1. Try to come up with the 10% by hook or by crook
2. Negotiate with the bank to give you 75% instead
3. Get another loan from another bank. You can google and find many comparisons of bank loan rates and margins. It's cheap, fast and hassle-free to do your initial research this way
Finally, there is no point now to go on a fault-finding mission. It wastes time and meanwhile your kindergarten does not get off the ground. The fastest solution would be to get another loan. There is no need to inform the seller. Your lawyer acting in the S &P and loan will ensure that the sale is completed in a timely manner and will extend time for completion if necessary. 

Q: Buyer stopped payment on the 3% earnest deposit after signing the ‘Agreement to Purchase’ form. Whose responsibility is it to demand the 3% deposit from the Buyer?

A: The purchaser has purposely stopped the cheque and decided not to proceed with the sale and has no intention to engage a  lawyer to prepare the SPA. The earnest deposit has not been paid (not credited into the agent's client account), therefore the agreement is voidable.
The Purchaser can then be given another 7 days via an official AR registered letter from the Vendor's lawyer  to reissue a fresh cheque. If sufficient notice has been served and the Purchaser still decides not to proceed, the Vendor then has the right to re-offer the unit to the public. He would no longer have any contractual obligation to the said Purchaser. Likewise, the vendor is unable to take any legal action against the Purchaser, as the latter can say that he has no interest anymore or no money.  

Our advice is, if the earnest deposit is given to the agent and upon the offer being accepted and signed by the Vendor, the agent needs to bank in the cheque as soon as possible, say within 1-3 days’  time. If there is any unnecessary delay which is attributed to the agent, the Vendor might have the right to pursue the agent  for being late in banking in the amount, say after 7 - 10 days.

In practice however, we will advise the vendor to look for a new purchaser as the earlier ‘agreement to purchase’ signed with the defaulting Purchaser is deemed voidable. We can only conclude that it was not a genuine offer.

Q: I'm buying a house with the title stating “Hakmilik Sementara” (Qualified Title) now. This is the only land title that the Vendor can provide me. What's the difference between “ Hakmilik Sementara” and “Hakmilik Kekal” (Final Title)? The house was handed over to the vendor by the developer five years ago. Normally, how long does it take for the developer to convert the “Hakmilik Sementara” to “Hakmilik Kekal”? Will this be a problem for me in future after I bought the house?

A: “Hakmilik sementara” is the qualified title issued before a Final Title is issued. The Final Title is only issued after a final survey of the area has been carried out by the government. The land area stated in the “Hakmilik Sementara” is usually the provisional area and may differ slightly after a final survey has been carried out, usually by a very small percentage, eg. 120.77 sq m to 121 sq m after the final survey.

“Hakmilik sementara” does not mean it is a leasehold or freehold land. Examples of “hamilik sementaras” will be HS(M) or HS(D) or QT(M) or QT(R).  HS(M) is short for “Hakmilik Sementara Mukim”, whilst HS(D) is short for “Hakmilik Sementara Daftar” and QT(R) is short for qualified title registry. Mukim registry means your title is at the district land office while “Daftar” (registry) means it is at the state land registry.

Examples of final titles are Geran Mukim (GM), pajakan Mukim (PM), Geran, Pajakan Negeri (PN).I don't know how long it will take for the final title to be issued. But it should not be a problem. Even properties without titles issued can be transferred and charged without a problem.