A property booking form is the very first document that potential house buyers would sign to indicate interest in the property as well as being one of the required documents for a home loan application.
The booking form may only be two or three-pages long but it signifies the beginning of your homeownership journey. It would be quite careless to underestimate the effects that this simple document might have toward your property transaction.
Here are a few key things in the booking form that every potential house buyer should be aware of:
1. Deadline for home loan application: Standard Term vs Extended Term
Typically, the booking form states that buyers are given 14 days to secure a house loan to finance the property. This can be referred to as the “standard term”. However, in reality, it might not be possible to obtain a home loan within the 14 days as there are a lot of factors that could delay the bank’s approval – such as salary, high commitments, etc.
In the outcome of a home loan rejection, the booking form becomes void (i.e. unusable) as the buyer is now unable to finance the property purchase and therefore, cannot complete the purchase transaction.
As such, it’s advisable to amend or extend the standard term to ensure that ample time is given for securing the home loan. It is quite common for a period of 21 days to be granted and there have even been instances where a period of 30 days was given.
The request to amend or extend the standard term may be made through either the seller (for subsale property) or the housing developer (for a primary/new launch property). Do be mindful that the approval is at seller/housing developer’s discretion, although generally, most would allow the change or extension.
Another thing to be aware of is that certain booking forms use “working days” while others use “calendar days” in their standard term. Buyers need to be mindful that the former excludes the weekends while the latter includes them.
2. Name on Booking Form: Single or Joint Name?
As mentioned above, a home loan rejection would lead to the booking form being void as the purchase transaction cannot be completed without a means to finance that purchase.
A common method to overcome this is by inserting another person’s name into the “and/or nominee” section of the booking form. The reasoning behind this is that should the potential home buyer’s loan application be rejected, the purchase transaction could still be completed if the nominee is able to secure a home loan separately. The potential home buyer and his/her nominee could then decide if they wish to be either joint owners or to have the nominee be the homeowner.
Generally, most new housing developments allow you to include a nominee or joint purchaser during the booking stage, but there are certain ones which require the approval of the developer. It’s not so much of an issue in secondary property purchases as the choice of adding additional names to the booking form is up to the homebuyer.
MORE: 4 things to consider before applying for a Joint Loan
3. Recovery of deposit
Usually, for a secondary property, a sum of between 2-3% of the purchase price is paid as earnest deposit. This sum of money is usually paid to the seller or their agents (either the property agents or the lawyers) upon signing the booking form.
As most booking forms for the secondary market are prepared by the property agents and have a standardised format, buyers should look out for the phrase “subject to approval of loan” or “subject to XX% loan approval” as this would determine if the earnest deposit is recoverable in the event that the home loan is rejected and the booking form becomes void.
This phrase would typically be a special condition in the booking form and may be coupled together with the deadline for the home loan application.
As for primary property, the booking fee collected by the developer may range from a standard RM500 per unit and may go up to 5% of the purchase price. This fee is also usually collected after the buyer has chosen their desired unit and signed the booking form.
Primary market booking forms are prepared by the developer and are therefore specific to the respective housing developers. Potential buyers should read through the Terms and Conditions in the booking form to check if the booking fee paid is recoverable. Most of the time, the housing developers would refund the booking fee less any admin charges even if the Terms and Conditions do not state that the booking fee is recoverable.
Homebuyers should be aware that the collection of payment by any person before signing of the Sale and Purchase Agreement, is prohibited under the Housing Developer’s Regulation 11(2). Therefore, if the developer or property agent refuses to refund the money, buyers can lodge a complaint with the Housing Tribunal.
4. Margin of financing
In Malaysia, first-time homebuyers are allowed a maximum 90% margin of financing – the home loan amount can be a maximum of 90% of the net purchase price, whereas homebuyers with two or more home loans are allowed a maximum 70% margin of financing. This, however, would depend on factors such as age, salary, employment status, CCRIS and DSR (Debt Service Ratio) of the homebuyer.
As such, homebuyers need to be careful not to kill their chances of purchasing their dream home by including a specific condition which states that the validity of the booking form depends entirely on the approval of their maximum margin of financing.
For instance, if the condition states “Subject to a 90% loan” and due to unforeseen circumstances you are only able to secure an 85% loan from the bank, your booking form might become void unless you can come up with the 5% difference. Thus, it is wise to amend the condition to ” Subject to loan approval”. That way, even if you are unable to secure the maximum amount of financing, you can still get back your booking fee.
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5. List of Fittings and Furnishings and/or Defects
This is only applicable in secondary property purchases as typically the home is sold together with certain fittings and furnishing that belonged to the seller that they may not wish to keep. The list will be attached to the booking form and it is the buyer’s responsibility to check and tally the list with the fittings and furnishings on the property.
It is normally prepared after the buyer has had a look at the property and has negotiated with the seller on what fittings and furnishings will be included in the purchase of the property. If there are any fittings and furnishings that the buyer does not want to include in the list, it is the seller’s responsibility to remove it.
Along with the list, homebuyers are also advised to include a list of defects that are noticeable on the property. As secondary properties are sold on an “as is where is” basis, general wear and tear of the property is to be expected especially if the property is more than 10 years old.
However, if there are major defects, the seller may be compelled to repair the defects before handing the property over to the buyer. Therefore, buyers are advised to be vigilant during the property scouting and make a note of any major defects so that they can negotiate with the seller and include it as another condition in the booking form.
The home buying process can be quite a tedious and challenging task as it involves a lot of research and time in determining the type of home that would best suit your needs. Having a trusted property agent and a good lawyer to advise you will help save time, money and ensure that you are getting the best deal possible.
If you are curious as to how much you will have to fork out for the services of an agent and a lawyer, read this article next to find out what are the closing costs involved when acquiring a residential property.
Edited by Reena Kaur Bhatt