Purchasing a property, especially for first-time homebuyers, can be overwhelming with all the paperwork involved. Out of the many documents that enable the sale of a property, one of them is the Memorandum of Transfer (MOT). In this post, we will outline everything you need to know about the Memorandum of Transfer or Form 14A!
What is a Memorandum of Transfer?
A Memorandum of Transfer (MOT) is a document that stipulates the transfer of ownership from the developer or seller to the buyer. The MOT consists of the details of the buyer, seller, and land title details for the land authorities’ reference.
In short, this is the document that indicates that you are now the legal owner of this property. Once this is signed, the property is officially yours!
What are the Steps You Need to Take to Receive the Memorandum Of Transfer?
Before you receive the MOT, there are a few steps that you have to go through.
- Finding a suitable home loan and lawyer
It’s important that you find the best home loan for you, and although a lawyer is not a requirement, it is recommended so you don’t have to go through all the hassle and headache of documentation, especially if you’re in the dark about it.
- Letter of Offer (LO)
This document is the first step in your property purchasing journey. This is the document that indicates your or the buyer’s desire to purchase and the seller’s willingness to sell. This letter accounts for the relevant furnishings that come with the property, the agreed selling price as well as the date on which the SPA should be signed.
- Sales and Purchase Agreement (SPA)
The SPA is an important document that lists down the terms and conditions of the purchase such as the date of transfer, items included as well as other terms relevant to the sale of the property.
- Facility Agreement
The Facility Agreement is the main loan agreement that you sign with your bank to confirm your home loan.
- Memorandum of Transfer
Finally, you get to sign the Memorandum of Transfer (MOT), also known as Form 14A! The MOT is the document that legally confirms the transfer of ownership of the property you now get to call yours.
What if the Individual or Strata Titles are Not Ready Yet at the Time of Purchase?
In case the Master title has not been divided into individual titles or strata titles at the time of purchase, a Deed of Assignment (DOA) will be issued as a temporary transfer of ownership. An MOT will be issued as the official transfer of ownership once the individual titles and strata titles are released.
What are the Fees Associated with the Memorandum of Transfer?
As with everything, the MOT comes with a cost. Being one of the most important documents in the property purchase process, the MOT comes with a stamp duty charge. The stamp duty is payable once you transfer the deeds to your name.
Here’s a breakdown of the stamp duty fees due when purchasing a property.
| House price | Stamp duty fee |
| First RM100,000 | 1% |
| The next RM400,000:
RM100,001 – RM500,000 |
2% |
| RM500,001 – RM1,000,000 | 3% |
| RM1,000,001+ | 4% |
To paint a clearer picture of the calculation, let’s say a property was purchased at RM800,000. What will be the stamp duty fee imposed on the buyer?
For the first RM100,000 = RM100,000 x 1% = RM1,000
For the next RM400,000 = RM400,000 x 2% = RM8,000
For the remaining amount = RM300,000 x 3% = RM9,000
Total stamp duty imposed: RM1,000 + RM8,000 + RM9,000 = RM18,000
In this case, the buyer has to pay RM18,000 for the stamp duty.
As evident, the stamp duty fee can be quite a hefty sum. Luckily, the government currently provides first-time homeowners with exemptions from stamp duty charges as long as the property is worth not more than RM500,000 and the SPA is completed between January 2021 to 31 December 2025. The stamp duty exemption is also given for loan agreements and transfer of love, which will be briefly mentioned below.
When Do I Pay The Stamp Duty Fee For The Memorandum of Transfer?
In most cases, the MOT is prepared alongside the Sales and Purchase Agreement (SPA) and relevant loan documents when a bank loan is taken out to purchase a property.
However, it is important to note that if you are purchasing from a developer and the property is still under construction, the developer may not issue this MOT at the time of purchase until the land titles have been issued.
The buyer is responsible for the stamp duty fee, and not the seller. If the stamp duty is not paid, the transfer of ownership cannot be executed.
Property Transfer Between Family Members
Although it sounds romantic, the transfer of ownership of property between family members is legally recognized in Malaysia under the consideration of ‘love and affection’. In this case, stamp duty fees can either be partially or fully waived!
Property transfers between spouses get to benefit from a 100% stamp duty exemption, while transfers between parent and child receive a 50% exemption. Unfortunately, there is no stamp duty exemption for transfers between siblings.
The MOT is still required to be stamped and adjudicated in these cases, just as it would in a property purchase.
And there you have it! Learning about the Memorandum of Transfer can be a lot to take in, but once you’ve gone through the process, you’ll find that it’s simpler than you think. We hope you gain some peace of mind after being informed about one of the main documents involved in a property purchase.
If you’re interested to become a successful real estate negotiator, don’t hesitate to be a part of our amazing team!
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