The Sales and Purchase Agreement (SPA) plays an important role in a home buying journey. It finalises legally binding terms and conditions in the home buying process and protects the interests of both the developer and home buyer. In this article, we will explore the definition, types, and some characteristics of the SPA.



A SPA is a binding and legal contract between two parties that obligates a transaction between two parties, which are the buyer and the seller. According to Investopedia, SPAs are typically used for real estate transactions, but they are found in all areas of business. The agreement finalises the terms and conditions of the sale, and it is the culmination of negotiation between the buyer and the seller.

Before a transaction can occur, the buyer and the seller negotiate the price of the item to be sold and the conditions for the transaction. The SPA is a framework for the negotiation process. The SPA is often used in cases of a large purchase, such as a piece of real estate. SPAs also contain detailed information concerning the buyer and the seller. The agreement records any deposits that have been made as negotiations advance and parts of the agreement that have already been met. The agreement also records when the final sale is to occur.

Before examining various types of SPAs for residential properties from developers, it is worth noting that all residential properties sold by a developer whilst under construction are governed under the Housing Development (Control & Licensing) Act 1966 and Housing Development (Control & Licensing) Regulations 1989. This encompasses the entire process of the development from the submission and obtaining a developer’s license to the contract of sale to the delivery of vacant possession and attendance to defects by the developer.


A sample photo of a project under construction by Malaysia Top Developer, IJM Land.

Smart Property Investors Know The Law author Elizabeth Siew Wai Kit cited that residential properties, under the Housing Development (Control & Licensing) Act, are properties meant solely for human habitation purposes OR partly for human habitation and partly for commercial purposes. By that, it implies terrace houses, semi-detached and bungalow houses, condominiums, apartments, serviced apartments, and SOHO (Small Office Home Office).

Some important points within a sales and purchase agreement include the following:
Parcel to be free from encumbrances before the purchaser take vacant possession

• Schedule of payment
• Loan
• Interest on Late Payment
• Default by Purchaser and Determination of Agreement
• Document of Title and Transfer of Title
• Position and Area of the Lot
• Delivery of Vacant Possession and Manner of Delivery
• Defect Liability Period