01| Property Terms that you must know before buying your new home

When it’s time to start looking for our first property purchase, we will come across a lot jargon we might not have heard before. If we are confused by the terminology used in the real estate industry, here is an A to Z of all the real estate jargon terms that we need to know.

Freehold - a freehold property means we could owned it as long as we wish and we are free to transfer the ownership of the property to anyone and anytime. However, the state government can claim back the freehold property for public purposes such as building highways. In such a case, compensation will be given. 

Leasehold - a leasehold property means we are leasing the property or land from the state government for a period of time; generally, the lease terms could be 30, 60, 99 or 999 years depend on the state government. We can apply for a lease renewal when the lease expires, the costs of which differs from state to state. 

Malay Reserved - also know as “Tanah Rizab Melayu”. The Malay Reserved land or property can only be owned and held by Malays only. Non Malays are not allow to buy, rent and running business on the Malay Reserved land or property. 

Bumi lot - Bumi lots are units of land or property which can only be purchased and owned by Bumiputeras. Meanwhile, these Bumi Lots generally enjoy a mandatory minimum discount offered to Bumiputeras on property. 

Property Title - Titles just like our birth certificates, it stated everything and anything about the property. It includes the property location, sizes, land use, ownership, express and impress interest, etc. an individual title is given to owners of landed properties such as terraced, bungalow, and semi detach houses. On the other hand, strata titles are issued to property owners with shared facilities such as condominiums, apartments and gated and guarded landed home. 

Certificate of completion and compliance (CCC) - it is a vital document issued by local authorities to show that the property is completed according to the required standards and is fit for occupation. 

Accessory parcel - it is a property that we own but is not attached to the main parcel. An example of an accessory parcel is car park which is located away from the main condo unit. 

Sale Purchase Agreement (a.k.a. SPA) - the SPA is a legally binding contract which outlines the details of a sale between a buyer and a seller. It protects both parties by ensuring every party cannot change the terms and conditions that are mutually agreed. 

Memorandum of Transfer (MOT) - a MOT is a legal document that certify the official transfer of property ownership from the seller to the buyer. 

Defect liability period - a period of between 18 and 24 months whereby the developer must repair any defect(s) identified by the home buyer due to defective workmanship or non-compliance to the original floor plan. Simply saying, this is a warranty period given by the developer after handover of keys. 

Joint management body (JMB)/ Management Corporate (MC) - a body that is set up to run and maintain a strata property - condominium, services apartment, flats, & gated-and-guarded landed home. The committee members work together to ensure proper documentation, payment schedules, accounting and the upkeep of the property. And the most important part is the JMB/MC must strictly follow the Strata Management Act 2013. 

Vacant possession (VP) - it means the home sellers handover the keys to the homebuyers. And, homebuyers will also receive a copy of the CCC. 

Maintenance fee - if we are buying any property with shared facilities such as condominium, we need to pay the maintenance fee. It is a monthly charge that we pay to cover the recurring costs for upkeep of common areas in the property. The recurring costs include the hiring of security guards, property management and administration staff, utilities bills for common areas, cleaning services, landscaping services, lifts servicing and minor repair works on common property. 

Sinking fund - this a special fund maintained by the JMB/MC for unexpected costs that may arise and for the long term structural upkeep or upgrades to the common property. One of most common use of sinking fund is painting or repainting any part of the common property. 

Assessment tax - it also know as “cukai pintu”. It is payable twice a year to the respective local authority. The collection of assessment tax is for maintenance cost of the city such as landscaping and street lights. 

Quit rent - or “cukai tanah “, which literally means land tax. All property owners are compulsory to pay quit rent annually to the relevant state Land Office. 

Progressive interest - If we buying a home which is under construction from the developer, we need to pay the progressive interest. It is the interest we need to pay to the bank which approved our mortgage. The banks will release our loan amount to the developers once they have completed a certain stage of the building process. These stages and amount are set by the Ministry of Housing and Local Government (KPKT). Thereafter, banks will charge us the interest on the released amount 

Housing Development Act (HDA) - it acts as safeguard the interests of homebuyers who purchase their house from the developers. As long as we are buying a residential properties that is developed by a licensed developer, we would come under the protection of the HDA act.