If you need to remove joint owner name in a property and have no idea how to do it, then this article is for you. We also share a few tips on how to save money when doing the property transfer. Check out the article here.
Ever been asked the same thing repeatedly? This week, we have that kind of week.
Lately, we have more people asking to remove their name in a joint ownership property.
When you buy a property with someone, it is significant to think twice and really think deeply on that decision.
Because, if you don’t take it seriously, in future you might end up spending more money to divide the property and it’s value.
Let’s look at the top reasons why people REMOVE JOINT OWNER NAME FROM PROPERTY?
TOP REASONS PEOPLE REMOVE JOINT OWNER NAME FROM PROPERTY
There are many reasons why people remove joint owner name from property and the most common ones are these.
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A breakup between girlfriend and boyfriend.
Some relationships just don’t work, and maybe the couple never thought they would break up in a million years, but it happens and is quite common nowadays. If the couple owns the joint property, they might want to divide the asset equally.
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Divorce between Spouse
Marriage life sometimes can be challenging, complex and when it doesn’t make sense anymore, people separate from each other. They will also need to segregate their assets and property, that is when the need to remove the joint owner name.
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Apply for new citizenship
Many Malaysian has forgone their citizenship by applying to another country citizen. And one of the most popular countries is Singapore.
And once you are holding Singapore citizenship, you have to abide to their rule. And one of the rule is, if you want to buy a house (HDB flat) in Singapore, you can’t own a property in Malaysia. Therefore, many ex-Malaysian have to transfer their property to other family members like parents, siblings, etc.
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Buy new property
If you have two existing properties and both still attach to a home loan, getting a 90% margin for your 3rd property can be tricky.
When a person with 3rd property applies for a home loan, the bank will consider it a 3rd housing loan.
Someone with a 3rd housing loan will only be granted loan approval of 70% margin. That means the person needs to have at least a 30% deposit to pay, and it’s a burden for many people.
Therefore, this people decide to transfer one of the two properties to someone else and shift the loan to that person to get a higher loan margin for the 3rd property.
THE CASES
We receive two different clients asking about removing joint owner name in the property , in addition the current property’s title has just been issued.
Case number 1
Mr X co-own an apartment with his girlfriend.
Since the breakup, he decided to transfer his ownership to his girlfriend.
Case number 2.
Ms Y co-owned a house with her current ex-husband.
She wanted to remove her name from the ownership of the house.
In both cases, the developer has sent out a notice of issuance of strata title.
That means they need to engage a lawyer to complete the Perfection of Transfer and Perfection of charge.
THEIR EXISTING LAW FIRM ADVISE THIS
For both cases, the assigned law firms advised them to do a Perfection of transfer (POT) and Perfection of Charge (POC) to tackle the issuance of strata titles before removing the joint owner name.
After they completed POT and POC transactions, the law firm will proceed with the second transaction, removing the joint owner name (MOT or SPA) and refinancing.
I am not surprised at all when many law firms will encourage such solution and chronological order.
Perhaps it is more profitable for them.
THE BEST SOLUTION
But, I think there is a better and efficient way.
Our approach is unique and different here.
We usually lookout for the best option for the client, which includes the less cash you spend to achieve your aim.
THIS IS HOW WE WILL DO IT
If this case is up to us, the first step is to advise our associate law firm to write in and ask the developer for permission removing the joint owner name to another party without the need to execute a POT first.
In the event the developer allows it, you’re not required to spend money on POT and POC. You can directly skip the transaction and straight to the property transfer and refinancing.
That means you can save about RM2-3k in the process. Not only that, you will save time too.
Once getting the confirmation, then the party that going to take over will proceed with getting financing from selective banks.
And eventually proceed with property transfer and refinancing loan documents.
WHY SELECTIVE BANKS?
Well, because when it involves a property transfer between girlfriend and boyfriend or spouses, there aren’t many banks to choose from unless you will execute a Sale and Purchase Agreement (SPA).
Typically, we will avoid the Sale and Purchase Agreement.
When a Sale and Purchase Agreement is executed, the Purchaser must pay whole stamp duty even though she already owned half of the property.
So, as much as we love the SPA for more selection of banks, we try to avoid this as we want the client to pay less stamp duty.
STAMP DUTY IS EXPENSIVE!
If you haven’t noticed, stamp duty is the most expensive cost when owning a house. So, the lesser you pay, the better it is.
When there is no Sale and Purchase Agreement to execute, you’ll need to use another document called Memorandum Of Transfer (MOT) or, technically, Form 14a.
If MOT is involved and not SPA, this is when many banks reluctant to provide financing.
But, the good news, not all banks.
There are still a few who are very keen to do it with MOT.
If you want to know which bank, please do come and talk to us first and we will recommend the right bank for you.
You can call us at +60126946746 ( talk to Mr David)
CONCLUSION
If using SPA, you can easily get financing, but you have to pay more money.
Using MOT, you pay less money, but few banks finance your loan.
Another downside about using MOT for financing is your case will be treated as a refinancing case.
Refinancing cases will face a strict bank policy and guidelines. That means the loan margin is lower 80-85%, the Debt service ratio (DSR) is tighter, and there are more documents to review.
But, not too worry.
We have done many cases, and as long as you have a good profile and credit score. Everything should be okay.
Okay, that is my sharing today, hope you learn a few things from this article.
If you have any further questions about property transfer, the perfection of transfer or charge or even any related to home financing stuff, call us at 012-6946746 (talk to Mr David).
Talk to you guys soon!
Before you go, check out this article. You might enjoy reading this.
PROPERTY TRANSFER BETWEEN UNMARRIED COUPLES
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