Can a Purchaser Terminate a Property SPA in Malaysia? We Successfully Negotiated a RM1.39 Million SPA Termination with Only 10% Forfeiture
We recently successfully assisted a purchaser in securing an early termination of a Sale and Purchase Agreement involving a property with a purchase price of RM1,396,800.00.
By the time we were engaged, our client had already paid RM769,567.00 towards the purchase price — more than 50% of the total purchase price.
Our client nevertheless wanted to withdraw from the purchase.
After reviewing the circumstances, formulating our client’s legal and commercial position and putting forward a structured settlement proposal, we successfully secured an agreed termination with the forfeiture limited to only 10% of the purchase price.
The significance of this outcome should not be underestimated.
By way of comparison, under the purchaser-default framework commonly associated with a Schedule H Sale and Purchase Agreement, where more than 50% of the purchase price has already been paid, the stipulated forfeiture may be as high as 20% of the purchase price.
Our client had already crossed the 50% payment threshold.
Yet the negotiated forfeiture was only 10%.
For a RM1,396,800.00 property, the difference between 10% and 20% amounts to RM139,680.00.
In our view, this was a very fortunate and commercially favourable outcome for our client.
The Property Purchase
Our client had entered into a Sale and Purchase Agreement dated 18 December 2025 for the purchase of a property at Pavilion Damansara Heights, Kuala Lumpur.
The purchase price was RM1,396,800.00.
Prior to entering into the SPA, our client had been informed that the keys to the property were expected to be handed over by April 2026.
The anticipated handover timeline was important to our client’s decision to proceed with the purchase.
Our client had intended to relocate to Malaysia and reside at the property. Arrangements had been made based on that intended relocation.
However, the expected handover did not take place within the anticipated period.
As time passed, our client’s circumstances and plans changed substantially.
Our client eventually decided that the property purchase was no longer suitable and instructed us to explore whether the SPA could be brought to an end.
More Than RM769,000 Had Already Been Paid
This was not a situation where our client had merely paid a small booking fee.
Our client had already made payments totalling RM769,567.00 towards the purchase price.
This represented approximately 55% of the total purchase price.
That fact made the situation considerably more serious.
Once a substantial part of the purchase price has been paid, a purchaser who wishes to walk away from a property transaction should not assume that the only consequence will necessarily be the loss of a 10% deposit.
The contractual position must first be carefully examined.
Depending on the applicable SPA, the amount already paid and the nature of the purchaser’s default, the financial consequences can potentially be considerably greater.
Our priority was therefore not merely to “cancel” the SPA.
Our objective was to secure a legally and commercially acceptable exit while limiting our client’s financial exposure as much as possible.
Our Strategy: Negotiate a Controlled Exit
After reviewing the circumstances, we did not immediately commence litigation.
Instead, we formulated a settlement strategy aimed at achieving an agreed termination of the SPA.
We raised the circumstances surrounding the anticipated handover of the property, the representations made to our client, the substantial monies already paid, the continuing delay and the material changes to our client’s plans.
We then proposed that the parties mutually terminate the SPA.
Under our proposal, the developer would retain RM139,680.00, representing 10% of the RM1,396,800.00 purchase price.
The balance of the monies paid by our client would then be refunded.
The proposal was made on a without admission of liability basis, with our client’s rights fully reserved.
Our intention was straightforward: to provide the other party with a commercially reasonable route to bring the transaction to an end without forcing both sides immediately into costly and prolonged litigation.
The Result: Early Termination with Only 10% Forfeiture
The negotiations were successful.
Our client secured an agreed early termination with the forfeiture limited to 10% of the purchase price.
The figures are significant:
Purchase price: RM1,396,800.00
Total amount already paid: RM769,567.00
10% forfeiture: RM139,680.00
Our client had therefore already paid more than half of the purchase price but was still able to exit the transaction on the basis of only a 10% forfeiture.
For us, the importance of this result becomes even clearer when compared against the Schedule H purchaser-default framework.
Why the 10% Forfeiture Was Particularly Fortunate Compared with Schedule H
Schedule H is commonly used as the prescribed form of Sale and Purchase Agreement for residential property involving subdivided buildings.
Under its purchaser-default framework, the amount which may be forfeited can increase depending on how much of the purchase price has already been paid.
Where the purchaser has paid up to 50% of the purchase price, the stipulated forfeiture may be 10%.
Where the purchaser has paid more than 50% of the purchase price, the stipulated forfeiture may rise to 20%.
Our client had paid approximately 55%.
If a 20% forfeiture were applied to a RM1,396,800.00 purchase price, the amount would be RM279,360.00.
The termination we negotiated involved a forfeiture of only RM139,680.00.
The difference was RM139,680.00.
This illustrates why we regarded the eventual settlement as a very fortunate result for our client.
Instead of potentially facing a substantially higher financial loss, our client obtained certainty, brought the transaction to an end and limited the agreed forfeiture to 10%.
We emphasise that whether Schedule H applies to any particular property transaction depends on the nature of the development and the applicable legal and contractual framework.
We do not suggest that the Schedule H forfeiture provisions necessarily governed our client’s particular SPA.
The comparison is nevertheless useful because it demonstrates how significant the negotiated 10% exit was, particularly where more than 50% of the purchase price had already been paid.
Can a Purchaser Cancel a Property SPA in Malaysia?
One of the questions we frequently encounter is:
“Can I cancel my property Sale and Purchase Agreement after signing it?”
There is no universal answer.
Once an SPA has been executed, a purchaser ordinarily has contractual obligations which cannot simply be ignored because the purchaser has subsequently changed his or her mind.
Whether an SPA can be terminated, and the financial consequences of doing so, depend on the terms of the agreement and the particular circumstances.
When advising a purchaser who wishes to terminate a property purchase, we would ordinarily examine matters including:
the termination and default clauses in the SPA;
the amount of the purchase price already paid;
the amount which may potentially be forfeited;
whether there has been any delay by the developer or vendor;
whether there were material representations made before the SPA was signed;
whether there may have been a breach of contract;
whether the purchaser has any independent rights or remedies;
and whether a negotiated termination may produce a better commercial outcome than immediate litigation.
The legal strategy should therefore be determined before the purchaser simply sends a cancellation notice or stops making further payments.
Can a Property Developer Forfeit More Than the 10% Deposit?
Purchasers sometimes assume that if they decide not to proceed with a property purchase, their maximum loss will automatically be the initial 10% deposit.
That assumption can be dangerous.
The consequences of default depend on the SPA and the applicable legal framework.
As the Schedule H comparison demonstrates, there are circumstances in which the stipulated forfeiture reach 20% where more than 50% of the purchase price has already been paid.
For a high-value property, the difference can be substantial.
In our client’s case, the difference between a 10% and 20% forfeiture was RM139,680.00.
This is precisely why we believe a purchaser should obtain legal advice before deciding how to approach an intended termination.
Delayed Handover and a Purchaser’s Decision to Exit
The anticipated handover of a property can be critical to a purchaser.
Some purchasers buy for their own occupation.
Others purchase because they intend to relocate, rent out the property, operate a business or arrange their finances around a particular completion timeline.
When that timeline changes substantially, the purchaser’s circumstances may also change.
That does not automatically mean that the purchaser has an unrestricted right to terminate the SPA.
However, the circumstances surrounding the delay, the contractual terms and any representations made to the purchaser may become relevant when assessing the available legal and commercial options.
In our client’s case, we relied on the overall circumstances to formulate a settlement position which ultimately resulted in an amicable termination.
Why We Did Not Immediately Commence Litigation
Not every dispute should begin with a court action.
When we are instructed in a contractual dispute, we first consider the client’s actual objective.
If the client wants the property, commencing a dispute which destroys the commercial relationship may not necessarily be the best first step.
If the client wants to exit the transaction, the question becomes whether an agreed termination can achieve a better, faster and more certain result.
Our client wanted to bring the transaction to an end.
The priority was therefore to minimise the financial loss and recover the balance of the substantial monies already paid.
A negotiated solution ultimately achieved that objective.
This saved our client from the uncertainty, time and costs associated with immediately commencing contested court proceedings.
Negotiation Can Be as Important as Litigation
Our work as dispute lawyers is not limited to taking cases to court.
Effective dispute resolution requires us to understand when litigation is necessary and when negotiation may produce a better commercial result.
A strong settlement proposal is not simply a request for sympathy or goodwill.
It should identify the relevant factual and contractual circumstances, demonstrate the risks faced by both parties and provide a commercially workable solution.
In this matter, our strategy was to create a viable exit which the other party could realistically accept.
The result was an agreed termination at 10% despite our client having already paid more than half of the property’s purchase price.
Before You Cancel a Property SPA, Speak to a Lawyer
If you have signed an SPA but subsequently decide that you no longer wish to proceed with the purchase, we recommend obtaining legal advice before taking unilateral action.
Do not automatically assume that:
you will only lose your 10% deposit;
all monies above the deposit must necessarily be refunded;
you have an automatic right to cancel;
the developer’s proposed forfeiture is necessarily correct;
or litigation is your only option.
The correct position depends on the agreement and the surrounding circumstances.
A lawyer can review the SPA, payment history, correspondence, representations made during the sale process and the reasons for the proposed termination before advising on the appropriate strategy.
Where substantial sums have already been paid, obtaining advice before taking the next step can be particularly important.
Property SPA Termination and Property Dispute Lawyers in Kuala Lumpur
At JY Ko Advocates & Solicitors, we advise clients on property and contractual disputes involving substantial financial exposure.
Our work includes:
property Sale and Purchase Agreement disputes;
termination of Sale and Purchase Agreements;
developer and purchaser disputes;
delayed handover and vacant possession disputes;
recovery of deposits and purchase monies;
contractual misrepresentation;
settlement negotiations;
commercial disputes; and
civil litigation.
Our approach is focused on the client’s commercial objective.
Where a matter can be resolved through strategic negotiation, we will assess that option.
Where litigation becomes necessary, we will advise on the appropriate causes of action, remedies and litigation strategy.
Considering Terminating a Property Purchase in Malaysia?
If you have already signed a Sale and Purchase Agreement and are considering withdrawing from the property purchase, the timing of your next step can be important.
This is particularly so where you have already paid a substantial part of the purchase price.
We can review the SPA, payment records, communications with the developer or property agent, representations made before the purchase and the circumstances leading to your decision to terminate.
We can then advise on the potential financial consequences and whether there may be scope to negotiate an agreed termination, reduced forfeiture, refund or other resolution.
In our recent matter, our client had already paid RM769,567.00 towards a RM1,396,800.00 property purchase.
Despite having paid more than 50% of the purchase price, we successfully secured an agreed early termination with the forfeiture limited to only 10%.
For our client, that was a very fortunate and commercially significant outcome.
If you are facing a similar issue involving the termination of a property Sale and Purchase Agreement in Malaysia, you may contact us, JY Ko Advocates & Solicitors to arrange a legal consultation.
Disclaimer
Every Sale and Purchase Agreement and property dispute depends on its own facts, contractual terms and applicable legal framework.
The successful outcome described above relates to the specific circumstances of one matter handled by our firm. It does not constitute a representation or guarantee that the same or a similar outcome can be achieved in another matter.
Written on 7th October 2026 (Wednesday)
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Disclaimer: The above proposition is subject to actual facts and circumstances and shall never be referred as the actual law without seeking legal advice. Consult us for more information!