LLB 40403 CONVEYANCING PRACTICE

TUTORIAL I

PREPARED BY:
D’AANZ & CO
ANIS AQILAH BINTI ASHBAKHRI (056796)
MUHAMMAD DANISH RAHMAN BIN SUHAIMI (055409)
NUR AFIFAH BINTI AZAMY (056815)
NURANEESA BINTI AHMAD ZAHURI (056822)
ZUHAIRAH BINTI MOHD ZAHIRUDDIN (056821)

QUESTION 1
En Rahman and Puan Siti have come to an agreement on the sale to Puan Siti of all that piece of
land held under Individual Title GM5433 Lot 7625 Mukim of Tanjung Ara, Dungun together with a
double storyterrace house erected on it (‘the Property’) at the price of RM450,000-00. The
Property is currently charged UOB Bank Sdn Bhd (Company No. 67896-A) (the Chargee) on
18.5.2018 vide Charge Presentation No. 20678/2018. The title contains a restriction-in-interest
that states "the said land cannot be transferred or charged or leased without the consent of the
State Authority''. They wish to formalise the oral agreement. En Rahman who is your client comes
to see you with Puan Siti. Puan Siti has never purchased any residential property prior to this. En
Rahman is now desirous of selling and Puan Siti is desirous of purchasing the Property.
I. Both parties want you to act for them. Advise parties on the legal position with respect to
the Legal Profession Act and the Bar Council’s Conveyancing Practice Rulings.
II. If you are to act for the Purchaser explain to the Vendor what you can do for him if he
chooses not to be legally represented.
III. Advise the Purchaser on the process of the sale & purchase from the Purchaser’s
perspective. Explain reasons for the various searches, risks, effect of bankruptcy, taxes,
stamp duty. Highlight also the recent policies imposed by the relevant authorities for the
sale and purchase transaction due to Covid-19 pandemic to both the Vendor and the
Purchaser.

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QUESTION I
Both parties want you to act for them. Advise parties on the legal position with respect to
the Legal Profession Act and the Bar Council’s Conveyancing Practice Rulings.

The general rule in the conveyancing practice provides that a solicitor is not allowed to
represent both parties in one transaction where he/she can only represent one client at one time
per transaction. This rule is clearly embedded in Section 84(1) of the LPA 1976. Besides, it is
strengthened with Rule 18 and Rule 19 of the Bar Council’s Conveyancing Practice Rulings. Rule
18 stated that “A Solicitor acting for a Developer in a housing project cannot act for any Purchaser
in respect of any lot in the same phase of the project.” Meanwhile, Rule 19 provides “A Solicitor
shall act for one party only in any transaction under the First, Second and Fourth Schedules of
the Solicitors' Remuneration Order, 1991 but may witness or attest the signature of the other party
without charge.”
By applying these provisions to the current issue, En Rahman, the vendor in this
transaction, is my client and Puan Siti is the purchaser in this sale and purchase agreement.
According to the law, a solicitor can only represent one party at one time per transaction by virtue
of Section 84(1) of LPA 1976 and Rules 18 and 19 of the Bar Council’s Conveyancing Practice
Rulings. Therefore, as a solicitor, I can only act for the vendor which is En Rahman only to prevent
a conflict of interest that may arise from this transaction. Furthermore, Puan Siti, as the purchaser,
can only be acted by another solicitor.

QUESTION II
If you are to act for the Purchaser explain to the Vendor what you can do for him if he
chooses not to be legally represented.

Based on the recent case, it is important for En Rahman to know that the solicitor is only
representing the purchaser which is Puan Siti. So, as the solicitor’s purchaser, I might prepare a
statutory declaration for Mr. Jual to declare that he is non-represented. Consent from a State
Authority is required before En Rahman can sell the property, thus he may appoint me as the
purchaser's solicitor to apply for such consent. However, En Rahman must understand that, if
there is no conflict of interest and he pays the appropriate legal fees, I may act on his behalf of
him to obtain the necessary consent. This does not imply that I represent En Rahman in the sale
transaction.

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QUESTION III
Advise the Purchaser on the process of the sale & purchase from the Purchaser’s
perspective. Explain reasons for the various searches, risks, effect of bankruptcy, taxes,
stamp duty. Highlight also the recent policies imposed by the relevant authorities for the
sale and purchase transaction due to Covid-19 pandemic to both the Vendor and the
Purchaser.
In the event that the purchaser appoints his solicitor to act for him in the sale and purchase
of the property, the solicitor must conduct a land search against the title. Land search can be
made under S. 384 (made by the individual copying what he sees from the land office's records)
or S. 385 (an application to the land office so that a certificate of an official search can be obtained)
of the NLC. The purpose of the land search is to ascertain who is the registered proprietor, to find
out whether there are encumbrances on the title, to find out whether there are restrictions in
interests and to find out whether there are any dealings or restraints of dealing presented for
registration (e.g: private caveat)

Besides, the purchaser's solicitor must conduct a bankruptcy search on the vendor to
prove that the buyer is free from bankruptcy. It can be made online or over the counter. The
reason for the bankruptcy search is to know the status of the vendor to ensure that the property
is still in the possession of the vendor but not of the Director General as a bankrupt person cannot
hold any property. If the vendor is a bankrupt person, his property shall be under the hand of the
liquidator and if we want to deal with his property, we need to get approval from the liquidator.

On other hand, the purchaser's solicitor also must determine whether the vendor is liable
to pay real property gains tax (RPGT). If the vendor sells his property within five years of acquiring
the property and makes a gain, he is liable to pay for RPGT and the purchaser has to file Form
CKHT 2A with the Inland Revenue. Where the vendor is not liable for RPGT, the purchaser's
solicitor will be served Form CKHT 3 filed by the vendor of an exemption certificate under S. 8 of
the RPGT Act 1976.

Upon receiving the Notice of Stamp Office as to stamp duty payable, the payment should
be done at the stamp office within 14 days. Failing to do so will get a penalty in addition to the
amount of the said duty payable. Stamp duty can be paid over the counter or by way of e-payment.

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 The COVID-19 outbreak, declared a pandemic by the World Health Organization on 12
March 2020, has undoubtedly left various effects on the commercial and business sector.
Numerous policies had been introduced and imposed by the relevant authorities for the sale and
purchase transactions in order to maintain and increase the growth of the commercial and
business sector in Malaysia.
One of the policies that had been introduced and imposed by the government for the sale
and purchase transaction is the Exemption of Real Property Gains Tax (RPGT) for disposal of
residential property where the gains arising from the disposal of residential properties by
Malaysian citizens between 1st June 2020 to 31st December 2021 will be exempted from RPGT.
Such exemption is given up to three (3) residential properties per individual. These policies had
been announced during PENJANA 2020, where under the Exemption Order, Malaysians will be
exempted from paying the 5% (or higher) RPGT for the disposal of residential property from 1st
June 2020 and 31st December 2021. Additionally, under Budget 2022, Former Finance Minister
Tengku Zafrul announced that the government will no longer impose Real Property Gains Tax or
RPGT for property disposals by individuals comprising Malaysian citizens, permanent residents
and foreigners starting from the sixth year.
Furthermore, according to Penjana Economic Package 2020 in Malaysia, Stamp duty
exemptions are granted for instruments of transfer (partial exemption) and loan agreements
(full exemption) for sale and purchase agreements signed between 1st June 2020 until 31st May
2021. Under Budget 2023, the 100% stamp duty exemption for first-time homeowners remains,
applicable for properties priced RM500,000 and below through the Keluarga Malaysia Home
Ownership Initiative (i-Miliki) initiative from 1st June 2022 to December 2023.
In addition, it is also advisable for both vendor and purchaser to include force majeure
clauses in their sale and purchase agreement in order to protect both parties’ interests. Generally,
a force majeure clause caters for certain unforeseeable events that would render the parties’
obligations under the contract impossible to perform which in this case, an unforeseeable
pandemic such as the Covid-19 outbreak. By invoking this clause, the party may relieve himself
from the performance of his obligations totally or for a specific period, as provided in the
agreement. A force majeure clause also usually confers a right on the counterparty to terminate
the contract if the force majeure event subsists beyond a specified period.
Next, as the Covid-19 pandemic has brought about many uncertainties when it comes to
timelines for completing a sale and purchase transaction, it is essential to carefully draft the
completion period clause in the sale and purchase agreement. This can be seen as the various

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delays that could possibly happen due to the Covid-19 current policies. It is prudent to ensure that
a proper time frame is drafted into each and every process while also ensuring there is space to
allow for extension to cater for delays not attributable to the fault of either contracting party in
order to protect the interest of both parties.
Conclusively, it is the responsibility of the lawyer to keep updated on the current policies
of the sale and purchase agreement in order to make sure the correct and accurate advice will be
provided to the clients.