As a buyer, there are a few methods of property purchase that can be considered, i.e. buying direct from the developer, from the secondary market (existing property owners) or from a property auction.

An auction sale can be categorised into 2 types i.e. Loan Agreement cum Assignment (“LACA”) and Non-LACA. “LACA auctions” are for properties without the issuance of a title, also known colloquially as “master title properties” which are auctioned by banks. Meanwhile, “Non–LACA auctions” are properties with individual titles issued, which are usually auctioned by the High Court.

We often hear stories from our relatives or friends that they purchased an auction property because it is cheaper than buying a sub-sale property. Whilst it may seem cheaper, however, there may be hidden charges, costs and risks that many buyers are not aware of.

There are advantages and disadvantages to buying an auction property and as a buyer, here are some recommended steps to take before going to an auction:

Land Search

Before you proceed to purchase the property, make sure that a fresh land search has been conducted on the property. The particulars of the title (master title or individual title) can be found on the sale auction flyers or you can personally call the developer to check on the land particulars and obtain the necessary information before placing your deposit during the auction. It is important to check the ownership of the property, and if there are any caveats entered to determine any 3rd party interests or encumbrances registered on the property, which you will need to remove at your own cost. If you are not sure how to read the land search, please consult your solicitor to explain the title details to you.


As a potential buyer, it is necessary to conduct a property check on the surrounding area of the property and also of the property itself, as you will be purchasing the property on an ‘as is where is basis’. This means that you not only purchase the physical property as it is, you also assume the risks of any ‘occupants’ (living or otherwise), that may come along with it. Tip: Visit the property at night. As many of us work during the day, it is best to check if there is anyone who is still occupying the property by conducting the check at night (over several days if possible). This helps determine if the property is indeed vacant. You can also ask the neighbours, the management office or even the cleaners who might be able to share their observations.

Do keep in mind that if you are unable to obtain the vacant possession of property at the end of the transaction, you will need to lodge a police report and obtain a court order to evict the occupants. The estimated time frame to obtain an eviction order usually takes about 3 to 6 months. However, the eviction proceedings can only commence after the auction transaction is complete.

Payment / Charges

As a potential buyer, before placing your deposit for an auction, you need to plan your finances carefully. Apart from setting aside 5% – 10% for your deposit, you may also need to set aside another 5% of the auction price as the legal fees for the appointment of solicitors, stamp duty, advance payments for utilities such as TNB, SYABAS, Indah Water, service charges, sinking fund, quit rent, assessment and many more.

Do bear in mind that some of the payments for these utilities are required to be paid in advance and not all can be reimbursed or paid by the auction banks. As a precaution, always read the terms and conditions of the auction sale carefully before proceeding to bid for the property to avoid losing your deposit for the reason that you are unable to pay for and complete the transaction on time.

Legal Advice & Appointment of Solicitors

As a potential buyer, it is advisable to appoint a solicitor for legal advice and to conduct some basic but essential searches before going to an auction. The solicitor can advise you on the terms and conditions of the auction sale especially on the fine print of what to look out for, i.e. the payment, time frame or pre-conditions of what buyers are allowed to bid on the property, especially if the property is a bumiputra lot. You may also seek the solicitor’s advice on the procedures related to matters on what to expect during and after the auction, assistance on the estimated calculation of the legal fee and / or stamping for the transaction matter.

At this point, you may also inform your solicitor(s) of your intention to appoint them if you decide to proceed with the bidding at the auction. This is because the time frame for a completed transaction takes about 90 – 120 days depending the type of purchase. If it is a LACA property, you have to complete the transaction within 90 days whereas a Non – LACA property takes about 120 days. If there are any delays in paying the balance purchase price, your deposit will be forfeited, as in most cases, no further extension is allowed unless there are reasonable grounds given.


This article was written by Shawn Ho (Partner) & Suzanne Fam (Senior Associate) from the corporate practice group of Donovan & Ho.  Shawn leads the corporate practice group of Donovan & Ho, and has been recognised as a Notable Practitioner, whilst the firm has been recognised as a Notable Firm for Corporate and M&A by Asialaw Profiles 2020.  We are also ranked as a Recommended Firm by IFLR1000 2020.

Our corporate practice group advises on corporate acquisitions, restructuring exercises, joint venture arrangements, shareholder agreements, employee share options and franchise businesses, Malaysia start-up founders and can assist with venture capital funds in Seed, Series A & B funding rounds. We also advise on property transactions and real-estate related tax planning. Feel free to contact us if you have any queries.


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