If I am selling, I don’t need a lawyer
Many sellers (I’ll describe them as Vendors) assume that if they are selling (and receiving money), there is no risk on their part and therefore, there is no need to spend money appointing a lawyer to act for them. Afterall, most if not all, buyers usually appoint a lawyer. So, they feel that it would be better to just let the buyer’s lawyer do the job and all they need to do is just to sign on the dotted line. That’s perfectly fine if the Vendor is capable of understanding the legalities of the terms and conditions in a sale and purchase agreement and, if the property being sold is free from encumbrances or restriction-in-interests. Otherwise, the Vendor would have to sort out the discharge of charge or obtain a receipt and reassignment (if there is an existing loan) or to apply for state consent (if the property is leasehold) by themselves.

If the Vendor has a lawyer, I don’t need a lawyer
Likewise, some buyers think that it is perfectly okay to just rely on the Vendor’s lawyers. The thing is, the Vendor’s lawyer’s interests and professional duty is to protect the Vendor and to draft the agreement favouring the Vendor. Unless the buyer knows what he is in for, it would be foolhardy for the buyer to be unrepresented.

I will get my keys as soon as I sign the sale and purchase agreement
No, you won’t. On the average, you will probably get your keys between 1 to 3 months after the signing of the sale and purchase agreement. The agreement needs to be stamped, the transaction needs to be valued by the Inland Revenue Board and monies need to be paid. Make that longer if the property is leasehold (where state consent is required), charged to a bank and or the purchase is to be financed by a bank.

Inflate The Purchase Price So That I Can Get A Better Loan
Buyers who need a full loan to purchase a property sometimes think that if the purchase price is inflated, the banks will grant them a loan which would cover the original purchase price. Eg. the property is to be sold for RM100,000.00 but the buyer can only qualify for a loan of RM90,000.00 (usually banks offer a maximum of 90% loan). So, the price is inflated to RM112,000.00 so that the buyer can get a loan of RM100,800.00. However, they fail to realise that the banks usually will conduct a valuation of the property to ascertain the market value and the loan approved usually is dependant on the market value or the sale price, whichever is the lower. By the way, as far as the Inland Revenue Board is concerned, stamp duty payable would be based on the market value or the sale price, whichever is the higher and that can add up to quite a lot.

Inflating the Sale Price would be good for the Vendor
Some buyers persuade the Vendor to inflate the selling price for the reason described in the immediate paragraph above and pay the Vendor a little bit extra to cover any “inconveniences”. Vendors better think twice because pursuant to Budget 2010 culminating with the Finance (No. 2) Bill 2009 which was gazetted via the Real Property Gains Tax (Exemption) Order 2009 effective 1st January, 2010, Vendors will have to pay tax on the chargeable gains. And inflating the sale price would increase the chargeable gains.

A Sale and Purchase Agreement (SPA) will contain salient information like the vendor and the buyer’s personal details as well as a detailed description of the house being sold. It will also stipulate the total purchase price which is made up of the deposit payable and balance purchase price. The timeline for payment of the total purchase price is also stated in the SPA and it is not uncommon for the timeline to be based on 3 months plus an extension of a further 1 month.

Apart from the identities of the parties, description of property, pricing and timeline, the SPA will also include the rights and obligations of both parties during the course of the SPA. There are many things which the parties may need to do. Taking our earlier example wherein the house is currently charged (mortgaged) to a bank, the vendor will be obliged to obtain a Redemption Statement cum Undertaking from his bank in favour of the Purchaser or the Purchaser’s Bank. This Redemption Statement will indicate the amount which is payable to redeem the property by reason of the loan taken by the Vendor. The SPA will also include various warranties by the Vendor eg, that the property is not subject to any acquisition by the relevant authorities, that the quit rent and assessment has been duly paid and that the Vendors are not undischarged bankrupts.

With so many terms and conditions present on the SPA, it is highly advisable that each party appoint his own solicitor to look after his interests. As explained in one of my earlier articles on the scale legal fees for sale and purchase of properties, a solicitor may not act for both vendor and purchaser in the same transaction.

After the vendor and buyer are satisfied with the terms of the SPA, the SPA is then executed by the parties and subsequently stamped at the Stamp Office. Time begins to run and the parties would be guided by the SPA on what they need to do before the property is ultimately registered in favour of the buyer’s name and keys are passed.

Buying a house

To start off, some matters need to be mentioned. The house in question is a double-storey terrace house which is currently charged to a bank by the Vendor. It is situated on freehold land and individual title has been issued by the Land Office. The house is marketed for sale by a property agent and upon viewing the house, negotiation takes place on the purchase price. The buyer should insist on having a copy of the title or at least the title particulars so that a search can be conducted on the title at the Land Office to ascertain the identity of the current owner of the house and the existing encumbrances on the house.

Once the buyer is satisfied with the condition of the house and the purchase price, a booking fee is paid to secure the sale of the house. In this connection, the usual booking fee imposed in Klang Valley is 2% of the purchase price. Payment is made in favour of the property agent’s firm and a simple agreement is executed by both the vendor and the buyer on the important terms of the sale.

The agreement would usually include the names of the vendor and buyer, their correspondence addresses, subject property for sale, purchase price, period for payment of balance purchase price, default and dateline for signing of the formal sale and purchase agreement.

The buyer is given a receipt by the property agent for his booking fee and a copy of the simple agreement. Thereafter, the buyer has to appoint a lawyer to begin preparation of the formal sale and purchase agreement and to protect his interest throughout the transaction. In this instance, the minimal documents which the buyer is required to forward to his lawyer would be a copy of his identity card, copy of booking receipt, copy of the simple agreement, particulars of the vendor’s lawyers, buyer’s income tax number and submission branch, copy of title to the house and copy of vendor’s loan agreement. If the buyer does not have some of the documents, especially the documents which are in the vendor’s possession eg. the loan agreement, the buyer’s lawyers would write to the vendor’s lawyers for a copy of the same.

To be continued in Part 2. If you don’t want to miss Part 2, subscribe to this site’s feed for free so that you can be updated automatically.

Some lending agencies do most of their business with those individuals who have previously filed for bankruptcy or otherwise have poor credit. In most cases, an individual will not be able to take out a loan until the bankruptcy period has ended or their case has been dismissed in court. These types of loans are dependant on whether you filed for Chapter 7 or Chapter 13 bankruptcy.

For example if your case is classified as Chapter 7 bankruptcy, you only have to wait for two years until you can take out another loan. If you happened to file for Chapter 13, you will have to wait until you have paid the creditors what they are owed and the judge dismisses the case. It is because of the many nuances between these classifications that you should always hire a bankruptcy lawyer to represent you. It may seem expensive to hire a lawyer when you’re about to file for bankruptcy, but if you want to keep anything that you own, hiring a lawyer is essential.

When filing for bankruptcy, even though you should have a lawyer, it is important to know the differences yourself. By filing for Chapter 7 bankruptcy, you will be forced to sell your assets and give the money to your creditors. When apply for Chapter 7 protection, it would be helpful to compile a list of your sale-able assets and your debts. Take this to your lawyer so that he can determine if any of these assets are protected from liquidation based on which state you live in. Anything that you can’t place on the exempt list will have to be turned over to the state for them to sell to the highest bidder.

Chapter 13 protection allows an individual to work out a payment plan with the creditors without having to pay interest. When you file for this type of bankruptcy, you must present a plan as to how you’ll get out of debt, and you’ll have to give a big percentage of your check to the state to settle your debts. Secured debt that you have to pay off such as property cannot be more than $922,975 while unsecured debt such as credit card debt can’t equal more than $307,675.

In order to file for bankruptcy, you must enroll yourself in credit counseling in order to learn fiscal responsibility. After taking this class, you and your attorney will have to meet with those who you owe money where you will present your plan to pay off your debt. Your creditors have thirty days to challenge your plan of action and 90 days discuss the next course of action for you with the court.

The biggest different between Chapters 7 and 13 is that with Chapter 13, the court will allow you to keep your home and car as well as certain other possessions. As suggested earlier, it is always best to retain a lawyer when beginning the process of filing for bankruptcy. Only with their help will you be able to properly protect yourself and your family in these troubling times.

This article is written specifically with United States audience in mind. However, you are advised to seek a local lawyer near you to ensure the accuracy of the details shared here. If you are in Phoenix, get the advise of a Phoenix Bankruptcy Lawyer.

It would not be surprising to find that the number of bankrupty cases continue to rise in tandem with the reported loss in jobs or the thought of filing bankruptcies become more frequent in the mind of these workers. Would filing for bankruptcy be the best option there is to get out of the terrible financial mess that is plaguing these workers?

The best thing that they can do in this scenario is to appoint a lawyer who is an expert in these bankruptcy cases or to consult a trustworthy and competent financial consultant who would be able to give the best advise on how to manage the spiralling debts. Be frank with them and give them full details of your financial situation and discuss with them the best way out of the mess.

To save costs (which you should if you are already in a financial mess), it would be best to find a lawyer near your location. For instance, if you are in Los Angeles, finding a Los Angeles Bankruptcy Lawyer should not be difficult with a few searches on the net or through recommendation. In Malaysia, however, it would not be as easy to find a lawyer who specialises in bankruptcy cases through a net search because lawyers are not allowed to openly advertise their services.

At this point, it is important to get the use of your credit cards under control to avoid going any deeper into debt. A big indicator that you are close to bankruptcy is that your credit cards are maxed out. People will find that using credit cards is a debt trap as it is very difficult to pay off your bill plus the high rates of interest. A good way to keep yourself in check is to never spend more than 60% of your total maximum limit. Your credit card may also break down how you’re spending your money. Look at these statements to determine where you can cut back spending to maximize the use of your dollar.

A big error that people often make is taking out a line of home equity and spending that money on frivolous items. While you are allowed to borrow money against the value of your house, this should only be done in an emergency situation and not to pay off your shopping bills. Losing your job means losing all of the benefits that come with it, including insurance that you and your family will surely need. In that situation a home equity line would be appropriate, but barring an emergency like that, avoid taking out a loan against your house.

Because of the recent downturn of the economy, it may be very difficult to find a new job that supports your family’s usual standard of living and provides the way your last job may have. Unemployment is one of the main precursors to bankruptcy, so be sure to save a bit of money for a time when it will help you avoid a very difficult decision. No matter how secure your job may be, in this economy, nobody’s job is 100% guaranteed and everyone would be wise to make preparations.

Avoid allowing anybody to convince you to co-sign their loan. By co-signing, you agreed to be held accountable in case the other person defaults, and it in no way benefits you to be on the hook for a loan that isn’t yours. This is another leading cause of bankruptcy.

To re-iterate, to avoid going bankrupt, make sure to keep tabs on where your money goes, and avoid using credit cards that will ensnare you in debt. Always save a little bit of money from your paycheck in case of emergencies and keep the value of your home intact by avoiding the temptation of a home-equity loan.

Foreclosure

Foreclosure can occur for a variety of reasons. For some people, an increase in expenses, a job loss, or even an illness within the family can mean that they are unable to meet the monthly mortgage obligations. When payments are failed to be made on the home, the truth is that the bank has the right to retain ownership of the home, until the home has been repaid in full – which means, the entire link of the home.

Homeowners need to be aware of the alternatives to foreclosure. Foreclosure is a lengthy and expensive process, and it is avoided by many lenders – as it is looked on as a last option. Many times, the lender is able to post-date the payments, adding the outstanding debt on to the term of the loan. Lenders also have the ability to lower interest rates and lengthen the payment term to decrease the amount in which homeowners are paying each month.

Foreclosure cannot occur until a notice of default has been filed with the homeowner. This often occurs after a mortgage or home payment has not been paid for three to six months, or billing periods. The homeowner has until the foreclosure sale date to rectify the situation and repay the debts to maintain the ownership of the home.

As an alternative to homeowner, there are a variety of counselling services available to the homeowner. The counsellor acts as a liaison between the homeowner and lender to negotiate a lower rate and help the homeowner to maintain ownership of their home, without the hefty price tag

Unfortunately, filing for bankruptcy may get you into even more financial trouble. Bankruptcy would put a blemish on your credit record that would last for at least 6 years. This is definitely not good to hear. For one thing, availing for new loans or even credit cards will be next to impossible during that period. You will have no other choice then than to get rid of that stain as soon as possible by selling various assets.

Now that you’re enlightened about the devastating negatives bankruptcy can bring, it’s time to look at a more adequate solution you should first consider. If you are one of the hopeless debt acquirers who still happen to have a source of steady income and could still somehow pay their monthly bills, then take heed of this solution: consumer proposal.

In the most basic sense, a consumer proposal is a kind of arrangement where you simply ask for your creditors to lessen the amount you have to pay them. You cannot be blamed if you’ve never heard of this, as for some reason, it is a way out that’s often overlooked. On the flip side, you might ask why the creditors should agree to such terms. Well, filing for bankruptcy will not really do much with the creditors in the long run as compared to you still continuing to pay them. So giving them your consumer proposal will also present them an alternative that might prove more advantageous to both parties.

And what advantages you can have. Consumer proposals allow a less harmful effect on your credit rating. You also won’t face the prospect of losing any assets. In the issue of interest, the rate will be fixed during the repayment period. Other freezes include wage garnishment and several other collection processes that you are required to undergo. Finally, as mentioned above, you will only pay for at least 20% of the total debt amount hanging on your head.

To get you started with your proposal, you should hire the help of a professional trustee. This person will assist you in readying your proposal and presenting it to the creditors in question. And you need all the help you can get, as getting it approved means 75% or more of your creditors give their thumbs up. If it ever gets rejected, the trustee and you will then set up a meeting for further renegotiations.

As you can see, your decision on paying off huge debts should point towards vying for approval of a consumer proposal. If nothing else, anything is better than bankruptcy, and this is one of those things that make bankruptcy even more of a bad idea.

In Ong Ah Long v Dr. S Underwood [1983] 2 MLJ 324, Syed Agil Barakbah FJ had this to say in respect of how damages (general damages) for personal injuries ought to be treated:-

“It must be borne in mind that damages for personal injuries are not punitive and still less a reward. They are simply compensation that will give the injured party reparation for the wrongful act and for all the natural and direct consequences of the wrongful act, so far as money can compensate… .”

Through past decisions, Courts would be guided on what is a fair and reasonable amount to compensate the injured party. Similar injuries and residual disabilities would be compared and a sum awarded to reflect the pain and suffering sustained and loss of amenities to the injured party. So far so good. Now, let me show you some headaches based on recent reported cases which dealt with damages for head injuries.

In Baharuddin b Sulong & Anor v Hiew Chong Choo [2008] 1 PIR 40, the Kuantan Sessions Court awarded RM100,000 for “severe head injury resulting in the plaintiff suffering from impaired attention span (immediate recall), impaired recent recall and some impairment of constructional ability (constructional apraxia) and left lower limb weakness and numbness.”

In Mohd Shafri b Rehan v Mohd Nurrul Amry b Mohd Rahim [2008] 1 PIR 55, the Melaka Sessions Court awarded RM80,000 for “haemorrhagic contusion of the right temporal and parietal lobes and left thalamus. The Plaintiff suffered permanent impairment of concentration, memory, calculation and dexterity of the right hand and gait.“

Then, in Zaidi b Talip & 6 ors v Semawun ak Bau & anor [2008] 1 PIR 73, the Miri Sessions Court awarded RM100,000 for “comminuted depressed fracture of the left temporoparietal bone, fracture of the anterior wall of the left maxillary bone, fracture of the left ethmoid bone and haematoma over the head, bleeding in the left ear and resulting in the Plaintiff suffering from cognitive and memory impairment and blindness in the left eye“.

Subsequently, the Kuantan Sessions Court in Paramasivan a/l Savy Peruman v Ibrahim b Mohd Amin & anor [2008] 2 PIR 10 awarded RM150,000 for “cerebral oedema and severe head injuries with impaired attention span, impaired recent recall, impairment of execution of written commands, weakness in the right upper and lower limbs“.

Readers will note that the awards are not consistent and some might argue that certain residual disabilities probably deserve more in compensation compared to the other. There will never be a satisfactory award when it comes to valuing one’s life and limbs. The Court does its best to come up with a fair award but it does not help when the Courts themselves have largely diverging awards for similar injuries with similar residual disabilities. Not only does it create uncertainty, it also puts lawyers in a difficult position to advise their clients on the potential damages to be awarded.

A little background on how stamp duty is derived would be necessary at this stage. For a transfer of an immovable property worth RM250,000.00, the stamp duty payable would be 1% on the first RM100,000.00 and 2% on the balance. Therefore, the full stamp duty payable on the instrument of transfer would be RM4,000.00. With the 50% stamp duty exemption, the purchaser saves RM2,000.00 if the value of the transaction is RM250,000.00. For obvious reasons, the amount saved is reduced proportionately if the value of the transaction is lesser than RM250,000.00.

For Loan Agreements, the stamp duty payable is RM5.00 for every RM1,000.00. Therefore, where the loan is RM250,000.00, the stamp duty payable would be RM1,250.00. With the 50% stamp duty exemption, the borrower gets a savings of RM625.00. Again, if the loan amount is lesser, the savings would naturally be lesser and in proportion. But then again, how many people out there will actually benefit from these savings?

Many loan packages for the purchase of immovable properties offered by financial institutions today come with free legal fees (and disbursements). Refinancing packages also offer zero moving costs as the financial institutions absorb the legal fees and disbursements on behalf of the borrower. Of course, the financial institutions make up for their initial costs in funding the legal fees and disbursements by earning through the interests chargeable on the loan throughout the loan tenure. With this Budget 2009 announcement, in reality, not all borrowers will benefit directly from the 50% stamp duty exemption accorded to loan agreements for loans up to RM250,000.00. It would seem like the financial institutions are the ones who benefit the most from this 50% stamp duty exemption.