Sunday, 28 February 2021

Awful effect of Mark Up transaction

Mark up has become an invented terminology happen in most of the Conveyancing transactions in Malaysia every now and then, to assist buyer not to pay down payment and legal fees, or reduce their burden by paying less, to buy a new house.

It will happen when the actual purchase price whom the seller intends to receive has been appreciated in order to match the maximum bank reckoned market value in sale and purchase agreement for the sake of receiving maximum loan amount from that particular bank.

From preface, it can promote the sale of the Property in Malaysia. However, as we perceive, this practice might hit the entire property market invisibly in a long run.

First, untrustworthy property value.

From book value, property value is appreciated year by year. If this kind of practice is all along, the market value recorded in relevant government authority may not be accurate, since it may not reflect the solid value of the property, and the worse is, there is a portion of value has been left fictitious. 

Second, it doesn’t attract competitiveness in investment.

As a seller, you may manage to win the first round, but it will discourage the future buyer to buy in property, the price of the property may not appreciate, and it could have the possibility to remain stagnant. With the creation of different type of investment, one can perceive that the return of other investment can earn faster than investing money in property market within short span of time.

With time passing by, the property will only fit for its residential use, commercial use and industrial use, the investment in property market will no longer exists in future.

Third, criminal responsibility

Let us draw an example, in our neighbouring country Singapore, they take this kind of fake transaction seriously - Singapore Cashback Criminal Charge, disregard the purpose is out of kindness to assist buyer to possess a dream house, to get cash back from bank or to promote the sale of a house, back to square, it is a criminal offense.

In a recent case - Singapore Mark Up Case Conviction Case, a man has been convicted for one year imprisonment for appreciating the selling price in order to get additional amount of loan, his offense was charged and convicted under section 423 of penal code chapter 224.

We are not sure how our banks in Malaysia will look into this rotten way of transaction, but for everyone an information, Malaysia has the same version of penal code as if our counterpart Singapore.

You may read both countries section 423 of penal code, the only difference, one can perceive, is the duration of imprisonment, but the rest of two countries penal code with respect of Section 423 of Penal Code are exactly same and similar.

Please bear in mind that criminal charge is always open to be investigated by the government authority at anytime until a case is closed.

Base on Singapore news we share above, one can perceive that this kind of charge will usually implicate seller, lawyer and agent.

We trust there are many ways to promote the sale of property, why do you, as a seller, need to expose yourselves facing a potential criminal charge in future for the sake of selling your house to receive the proceed of sale?

We are not sure how the enforcement authority will look into it this type of recorded transaction in future, but true prevention is not waiting for bad things to happen, it’s preventing things from happening in the first place.

Should you have any legal inquiry, you may look for us as your Johor Bahru Lawyer.

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