Skip links

What Is A Sale & Purchase Agreement (S.P.A.)

I don't understand... What is S.P.A.?

You have finally found the perfect property after what seem like ages of viewing and consideration. Congratulations on that! 

Finding the perfect property is only the beginning! Going through all the details in the Sale and Purchase Agreement is another tedious job that all property buyers have to go through.

We agree that it’s not easy trying to understand a Sale and Purchase Agreement, especially if you are not familiar with the property purchase procedures. So let us walk you through a basic understanding of what is a Sale and Purchase Agreement, and why it is important for property sellers and / or buyers.

What is a Sale and Purchase Agreement (S.P.A.)?

The Sale and Purchase Agreement – sometimes also called an S&P agreement, or simply S&P – is a legal document containing details of the property transaction between the buyer and the seller. 

Once the S.P.A. is signed, it basically means that the sale and the purchase of the property is legally agreed upon by both parties, including all the details that are outlined in the agreement.

What is included in the S.P.A.?

A LOT. The S.P.A. contains extensive and comprehensive details that have been mutually agreeable between the seller and the buyer. These details include purchase price, any conditions and precedents, payment terms, loan details, delivery of vacant possession, defect liability, and other information that are relevant to the specific property.

It also outlines any course of action if the seller or buyer fails to meet the requirements as agreed in the S.P. A. 

Since the Sale and Purchase Agreement is mutual agreement between the seller and the buyer, can both parties draft the agreement on their own?

Not really…

So, who prepares the S.P.A.?

It is advisable to engage a professional conveyance lawyer specialising in property related documentation to prepare the S.P.A. This is important as to avoid any unnecessary technical delay or errors in any process of the sale and purchase of the property.

Usually, the lawyer who prepares the S.P.A. is appointed by the seller, but it has to be mutually agreed by both seller and buyer.

Are there different types of Sale and Purchase Agreements?

Yes. There are a few different types of S.P.A. in the property market, depending on the type of property. The templates governing primary residential property are provided by the government and defined in terms of Schedules.

The two main Schedules that are currently in use in Malaysia are Schedule G and Schedule H. Schedule G covers individually owned properties, like terrace houses; while Schedule H deals with strata properties, and are more detailed in terms of the clauses regarding common properties such as swimming pools, parking space and other shared facilities.

Primary properties that are commercially owned adopt Schedules that are slightly different compared to primary residential properties.

Is the S.P.A. binding?

If by binding, you mean legally, then yes. Once you have signed the S.P.A., no further negotiations are normally allowed. Any disputes that happens after an S.P.A. is signed may be considered a legal dispute as the Sale and Purchase Agreement is a contract that is legally binding and enforceable in the court of law.

This is why an S.P.A. is important when you purchase a property – it serves as a legal document to protect the interest of both seller and buyer. So, be 1000% serious and make sure you fully understand all the statements and clauses before signing the S.P.A.

So what happens if a breach in agreement happens? Is it possible to cancel the S.P.A.?

Yes, either the seller or the buyer may cancel the S.P.A., if the terms and conditions of the agreement allow it.

Depending on the situation and the clauses outlined in the S.P.A., the seller or buyer may be penalised for any breach of agreement. If any of the clauses are breached, it may lead to the possible cancelation of the S.P.A.

This however, is another legal topic to be discussed on its own.

Is the S.P.A. the same as a Sale Deed?

The Sale and Purchase Agreement and Sale Deed are two different documents, that are both legally binding.

The S.P.A. is by definition, a legal contract between the seller and buyer stating their agreement to sell / buy a said property at a future date. Typically, there is a waiting period for the transfers (ie. of ownership from seller to buyer).

A Sale Deed on the other hand, is a legal document that proves the seller has transferred the ownership of the property over to the buyer. With the Sale Deed, the property rights and interests are fully acquired by the buyer, who is now the new property owner. 

How to calculate the cost of S.P.A. and Stamp Duty?

This is a valid factor to consider when it comes to purchasing your dream home!

The cost of S.P.A. and stamp duty varies according to the relevant details of the property, specifically its price. For reference, it is estimated to be around 3-4% of the total purchase of the property.

Take advantage of HOC 2020-2021 now!

Now that you have gained some knowledge on what is S.P.A. and its importance, you are ready to purchase your dream home!

The HOC 2020 – 2021 ends on 31st May 2021! If you’ve been planning on your dream property purchase, now is the best time to act on it and benefit from the HOC initiatives and incentives!
Check out the list of Plenitude Property projects under HOC! 

Like what you are reading? Remember to LIKE our Facebook Page and FOLLOW our Instagram Profile for more updates.


This article is intended to convey general information only. It does not constitute advice for your specific needs. This article cannot disclose all of the risks and other factors necessary to evaluate a particular situation.

Any interested party should study each situation carefully. You should seek and obtain independent professional advice for your specific needs and situation.

Leave a comment