Must-Read Before Signing the SPA: The 7 Most Common Pitfalls When Buying a New Project

Once the SPA (Sale and Purchase Agreement) is signed, your relationship with this property is set. Here are the 7 pitfalls to check off one by one before you sign.

Pitfall 1: Only looking at the “after-discount” price, not the nett price

A common play in new-project promotions: nominal price RM500k, they give you a 10% rebate, “so you don’t need to pay a down payment.” Sounds great, but what you should ask is:

• What’s the nett price? How much more expensive is it than subsale homes in the same area?
• Is the loan approved on the nominal price or the nett price? Has your loan amount been “inflated”?

If the nett price is far above the area’s going rate, you may already be in “negative equity” the day you collect the keys.

Pitfall 2: Verbal promises not written into the documents

The free air-cond, kitchen cabinets, and one year’s free management fee the salesperson promised… if it isn’t written into the SPA or a letter of undertaking, legally it doesn’t exist. Insist that every promise is in black and white.

Pitfall 3: Not being clear on the land title category

Freehold or Leasehold? A residential title or a commercial title (the so-called SoHo/SoVo/SoFo are often commercial)? A commercial title means higher utility bills and assessment rates, and the loan terms are different too. All of this affects future resale.

Pitfall 4: Not checking the developer’s background

Does the developer have a history of abandoned projects, delays, or deliverables that don’t match what was promised? First, check the HDA official website blacklist; second, check the handover reputation of past projects; third, look at the financial reports (if it’s a listed developer).

Pitfall 5: Ignoring “hidden” holding costs

For a high-rise project, get clear on: how much the management fee + sinking fund is per month, and on what area basis it’s calculated. RM0.35 psf versus RM0.45 psf adds up to a big difference over the long run. Low-density projects with lots of facilities only cost more in management fees.

Pitfall 6: Signing before the loan is approved

The correct order: booking → loan approved → sign SPA. If the developer pushes you to sign first and wait for the loan, be sure to confirm where the refund clause is written for a failed loan — how it’s refunded and how long it takes.

Pitfall 7: Not reading the contract yourself, leaving it all to the lawyer

The lawyer handles legality, not your commercial judgement. At the very least, personally check: the property price and payment schedule, the delivery deadline (24/36 months), the LAD clause, the handover specifications list, and the car park number and quantity.

If you happen to have a booking document or SPA to sign and aren’t sure where the problems might be — send me a photo and I’ll go through the key clauses for you. This is a favour I often do for buyers, free of charge.