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HOW TO SUCCESSFULLY BUY AN AUCTION PROPERTY

These days one will notice many Proclamation of Sales being advertised in the newspapers. Although on one side, this is a sign that the general economy is not doing so well, but on the flip side it can be an opportunity to get the property you had been eyeing for a really good price. Here are some pointers for those of you who may be contemplating buying a property from the Auction market.

Choose the property carefully. It is tempting to put your money in something which just seems too cheap to resist. Don’t be impulsive. I notice that prudent clients are patient and will only “pounce” when they are absolutely sure that the property is what they want. For example, if you have for some time wanted to have an apartment in Cyberjaya, now is the time for you to scan through the advertisements for apartments on auction in Cyberjaya.

Inspect the property. The good thing about auction is that you may have the chance to view the property. If you are diligent enough, you can find out a lot of information about the property which brings me to my next point…

Do a thorough due diligence. In an auction, the buyer takes the property on an “as is where is” basis. The bank has no obligation whatsoever to reveal to the buyer anything other than the address. So, as a potential buyer, it is up to you to find out the details. Check out the latest outstanding on the maintenance, assessment and utilities. If the owner has defaulted in his loan, high chances that he will not be on the ball with the bills as well. You can check the mail box and also ask the management office if they can provide you with the latest bills.

You must also check if there is an occupant in the property, either a tenant or the owner or even an illegal occupant, because in auction cases, the bank has no obligation to deliver vacant possession. This may be tricky and will be the deal breaker. If you find a difficult occupier who doesn’t seem to understand that he has to vacate, you may be stuck in a legal battle to “evict” him.

Check the title to the property. In some cases, the title may have been issued, but it is not perfected, meaning it may be still in the developer’s name. In this case, the successful bidder is looking at a double transfer which means double stamp duty and legal costs.

Factor in all the costs before you plunge into the bid. You have to take into account the outstanding payments which I have mentioned in paragraph 3, the stamp duty in paragraph 5 and also the legal costs involved in the transfer and your bank loan. Usually the bank will give you 3 months with a month extension with interest to complete the payment of the full purchase price. However, if there is an issue with the title and you are relying on a bank loan, you may need more time which will mean an interest at 8 to 10 percent per annum on the balance purchase price to the bank for the extension of time.

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5 SIMPLE THINGS YOU CAN DO NOW TO SECURE YOUR ESTATE

5 SIMPLE THINGS YOU CAN DO NOW TO SECURE YOUR ESTATE

Estate matters is one of the most difficult legal cases to handle. The main reason is because it involves family. Family members tend to have a lot of unresolved emotional issues amongst themselves and these issues invariably surface when a loved one passes on and there is a legacy to be distributed.

Having done some complex estate cases, these are 5 of my most basic steps you can take NOW to avoid a lot of stress and cost when the inevitable does happen.

ONE: List down ALL your assets and place the titles to it in one folder. One of the biggest difficulty beneficiaries face is in finding the assets of the deceased. So, get onto making a list of your properties, your bank accounts, your EPF account, your insurance policies, your shares and whatever assets you have. Then, find the titles and statements to each of them. Make at least one copy and keep the copy and the originals in a separate place, so that in case one is lost, the other is available. Banks and government related departments will require some kind of authorisation for access to information, which makes things very complicated for your family members who may need those urgently to start the process of applying for the Letters of Administration. It is important to get the List of Assets correct, because it is cumbersome and costly to have to amend the LA if there are items which have been left out. You should consult your accountant for larger estates to make a proper inventory and even leave a copy with him.

TWO: Get nomination forms done up. You can easily sort out your EPF, Insurance, PNB and even pension by filing up the nomination forms. Each of these institutions have their own nomination forms, and by filing them you can either name who your Beneficiaries of the funds there will be or appoint a Trustee who will be able to access it and distribute it according to your wishes.

THREE: Set aside some money in a Joint Account for estate administration cost. It is sad when I meet clients who have loads of “locked-up assets” but almost none to afford the legal fees involved in estate matters. Often, they end up having to be at the mercy of Trust Corporations who will charge on the value of the estate for their services, and most importantly, loose their freedom to manage the estate. Although these Trust Corporations may agree to advance the legal fees for the court process, but mind you, they will take out their charges from the estate as soon as they have unlocked it. You will have no control over the amount of the charges or what ultimately happens to the estate. So, put aside at least a minimum cost of commencing an action, so that your Administrator can obtain the Letters of Administration from the High Court and with that start to unlock the rest of your assets including bank accounts. A reasonable estimate for the entire administration is around 5% of the estate value, so you should have at least 2% on stand-by.

FOUR: Identify your Administrator. This is the most sensitive part of estate management. It is not easy to express preference of a certain family member over others as all Beneficiaries feel they are entitled. You can appoint up to four Administrators, so if you have a small family and wish to avoid conflict, there is no harm to name all of them. A good number in my opinion is two. And, preference to those who will be the significant Beneficiaries. For Muslim estates, the best way is to follow the Faraid and name the two potentially largest Beneficiaries in the Faraid Certificate. There is a Divine reason for it, and I feel that we should respect it.

FIVE: Get some legal advice. I know this may sound self-promoting, but honestly, get a legal consult from a reliable estate lawyer. A good estate lawyer will be able to predict the court processes your family may have to go through in administering your estate. They can also offer you some estate planning solutions. But, make sure you consult a reputable lawyer and the best recommendation is from the word of mouth. So, do ask around from family, friends and other professionals like accountants. They may be able to direct you to a person who has assisted them professionally and effectively. Don’t be fooled by companies offering easy solutions using instruments like Hibah, Gift, Trust and the such. These are all highly complex legal instruments which only a qualified lawyer should be advising on. And, be mindful, that lawyers have their professional duty of care to clients which non-legal entities do not

I hope you found this useful. If you have any inquiries on our services, do drop us a line.

Regards, Aisha Mubarak.