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By Jason Lim, REN 84424 · IQI Realty · Checked on 9 November 2026
This guide is for buyers and sellers in Johor Bahru, from Malaysia, Singapore, Indonesia, India, China and MM2H, who have signed a sale and purchase agreement (SPA, perjanjian jual beli) and want out, or fear the other side will pull out. The short answer: there is no general cooling-off period. Once signed, you can only leave through the exits in the SPA and the law. A buyer who simply walks away usually loses the deposit (commonly 10% in a subsale, and 10% or more of the price under the statutory new-launch forms), while a seller who backs out can face a court order to complete the sale.
Quick answer
- No cooling-off period: new-launch and subsale SPAs only have the exits written into them and the law.
- Subsale, buyer pulls out: the seller can usually end the SPA and keep the deposit. A 2019 Federal Court ruling lets a reasonable sum be kept without proof of actual loss.
- Subsale, seller pulls out: the buyer can seek a court order to complete (specific performance) or end the SPA and claim a refund with compensation.
- New launch, buyer defaults: after 30 days’ written notice the developer may terminate and keep 10% of the price (landed, Schedule G), or 10% to 20% depending on how much has been paid (strata, Schedule H), then refund the rest.
- Loan rejected on a new launch: if you show the developer you cannot get a loan because of your income, you pay only 1% of the price and the rest is refunded within 30 days.
- Leaving by agreement: a written mutual termination should cover the refund, caveat, bank and any stamp duty refund claim (generally within 24 months).
General information, not legal or financial advice; ask your own lawyer to read your SPA before you act.
Is there any way out after signing?
An SPA is a binding contract. Under the Contracts Act 1950 (Akta Kontrak 1950) it ends early in only a few ways, each with a different money outcome:
| How it ends | Typical money outcome | Where the rule comes from |
|---|---|---|
| A condition fails (loan, state consent, developer consent) | Refund as the SPA sets out, sometimes less a small sum | The SPA; for new launches, clause 6 of Schedules G and H |
| The buyer fails to pay or complete | Deposit kept (subsale) or set percentage kept (new launch); the rest refunded | The SPA; clause 11 of Schedules G and H; section 75 of the Contracts Act |
| The seller or developer fails to perform | Court order to complete, or termination with a refund and compensation | Sections 40, 74 and 76 of the Contracts Act; Specific Relief Act 1950; section 8A of the Housing Development Act |
| Both sides agree to cancel | Whatever they agree in writing | Section 63 of the Contracts Act |
Neither statutory new-launch form has a cooling-off clause, so the useful work happens before you sign; see my SPA guide and booking fee refund guide.
Subsale: when the buyer wants to pull out
In a subsale (buying from an owner) you usually pay 10% on signing, less any earnest deposit, and the balance on completion. If you do not pay the balance by the completion date or any extension, the seller may keep the deposit as agreed damages and normally refunds anything paid above it, as a Bar Council conveyancing column explained in 2006. My guide to making an offer on a JB subsale covers the earnest deposit stage.
Can the seller really keep the whole deposit?
Usually, if the amount is reasonable. Section 75 of the Contracts Act limits a sum named for breach to reasonable compensation no higher than that sum. In Cubic Electronics Sdn Bhd v Mars Telecommunications Sdn Bhd (Federal Court, 2019), the court held that deposits fall under section 75, that reasonable compensation can be awarded whether or not actual loss is proven, and that the party in breach must show the amount is unreasonable. In that case, a RM90 million sale of land and machinery, the court upheld the forfeiture of the deposits paid.
So arguing that a normal 10% deposit is excessive is hard. If you may not complete, talk to the seller early: an extension or a negotiated release usually costs less than forfeiture.
Subsale: when the seller wants to pull out
If the seller changes their mind, the buyer generally has two routes:
- Hold the seller to the sale. Section 11 of the Specific Relief Act 1950 presumes, until the contrary is proved, that money cannot adequately make up for the breach of a contract to transfer land. Courts can order the seller to complete (specific performance), but the remedy is discretionary, and the buyer must show they were ready and willing to complete throughout, according to a review in an INSPEN journal.
- End the SPA and claim. Under sections 40 and 76 of the Contracts Act, a party who rightly ends a contract after the other side refuses to perform can claim compensation. Some SPAs fix the amount, for example a refund of the deposit plus an agreed sum; check yours.
Your lawyer usually lodges a private caveat (kaveat persendirian) on the title after the SPA, so the seller cannot transfer or charge the property to someone else while your claim stands (The Edge Malaysia, July 2022). See my land title search and caveats guide. If the seller still has a loan on the property, buying when the seller has a loan explains the redemption side.
New launch: when the buyer cannot continue
Licensed housing developers in Peninsular Malaysia, Johor included, must use the statutory SPA forms under the Housing Development (Control and Licensing) Regulations 1989: Schedule G for landed homes and Schedule H for strata homes. The current terms date from the 2015 amendment, in force from 1 July 2015, and cannot be changed by agreement.
Under clause 11 of both forms, if an instalment stays unpaid for more than 30 days after its due date, the developer may terminate after giving at least 30 days’ notice in writing by AR registered post. If it does, the money you have paid is applied in this order:
| Step | Schedule G (landed) | Schedule H (strata) |
|---|---|---|
| 1. First | Unpaid late-payment charges go to the developer | Same |
| 2. Then forfeited | 10% of the purchase price | 10% of the price if up to 50% has been paid; 20% if more than 50% has been paid |
| 3. Lastly | The rest is refunded to you | Same |
| Can you stop it? | Yes, if your loan is approved and the required undertaking is given before the notice period ends (clause 11(3)) | Same |
Illustration with made-up round numbers: on an RM800,000 condo under Schedule H, a buyer who has paid RM240,000 (30%) and is terminated would lose RM80,000 (10%) plus any unpaid late charges, with about RM160,000 refunded. Had the buyer paid RM480,000 (60%), the forfeiture would be RM160,000 (20%). If your bank has paid progress bills, ask how a refund is applied to your loan.
If you simply no longer want the unit, selling it on before completion may be possible with the developer’s consent, which can come with an administrative fee, as a 2006 Bar Council conveyancing column described. See the progressive payment schedule for when bills fall due.
When the developer is the one at fault
A late handover does not by itself let you cancel. Under clause 26 of Schedule H, the developer must deliver vacant possession within 36 months (24 months for Schedule G) and pays late-delivery damages of 10% a year of the price, counted day to day; the SPA continues. See my LAD claim guide.
The main statutory exit is section 8A of the Housing Development Act (Act 118). If the developer refuses, delays, suspends or stops work for a continuous six months or more, you may terminate with your end financier’s written consent (which cannot be unreasonably withheld) and the Controller of Housing’s certification, and the developer must refund all money received within 30 days, without interest. It applies to SPAs made after the 2012 amendment (Act A1415). See my abandoned housing projects guide.
For claims of up to RM50,000 based on the SPA, the Tribunal for Homebuyer Claims (Tribunal Tuntutan Pembeli Rumah) is a lower-cost route. Claims are filed within 12 months of the relevant date, which includes termination of the SPA by either party before the CCC was issued. Awards are aimed within 60 days of the first hearing, and lawyers generally cannot represent parties (Act 118, sections 16M, 16N, 16U and 16Y).
About to sign an SPA in JB?
Send me the project or address and whether it is a new launch or a subsale. I’ll go through the exit clauses with you, the loan, consent, default and refund terms, so you know what to ask your lawyer before you sign.
WhatsApp JasonIf your loan is rejected or smaller than expected
New launches. Clause 6 of Schedules G and H deals with financing. You apply in writing within 30 days of receiving the stamped SPA, and the developer must try to help you get a loan. Then:
- Income too low: if you cannot get the loan because of your income and show this to the developer, you pay only 1% of the purchase price, the SPA ends, and the developer refunds the rest of what you paid within 30 days (clause 6(3)).
- Other reasons: if you turn down an offered loan, fail to meet its conditions or lose eligibility so the offer is withdrawn, you remain liable for the full price (clause 6(4)).
Subsales. Nothing in the law excuses you because a bank said no. Whether your deposit comes back depends on a loan condition in your offer letter or SPA: how long you have, how many applications count, what proof is needed and how much, if anything, is kept. Without such a condition, a rejected loan can leave you in default. Read why housing loans get rejected and what to do when the valuation is below the price before you commit.
Foreign buyers: when state consent is refused or delayed
Under section 433B of the National Land Code, non-citizens and foreign companies may acquire land only with the State Authority’s approval, and section 433C makes a dealing in breach of it null and void. Foreigners can generally buy Johor homes only from RM1 million, with some exceptions such as designated zones (New Straits Times, April 2026); see Johor’s minimum price and quota.
- Make the SPA conditional on consent, with a set period and a refund of your deposit if consent is refused. Where a title carries a restriction in interest, a 2006 Bar Council column noted consent periods are usually agreed at 4 to 12 months.
- New launches: ask the developer how consent will be applied for and what happens to your 10% if it fails.
For MM2H, I coordinate with a MOTAC-licensed MM2H agent and handle the property side; approval is decided by the authorities. See MM2H property support.
Death or bankruptcy of a party
- Death. Under section 38(2) of the Contracts Act, promises bind the representatives of a party who dies before performance, unless the contract says otherwise, so the estate usually steps in; see letters of administration.
- Bankruptcy. A bankrupt’s property vests in the Director General of Insolvency, and the bankrupt cannot transfer it themselves (Malaysian Department of Insolvency FAQ, checked November 2026).
Walking away by agreement: mutual termination
Section 63 of the Contracts Act lets the parties agree to rescind a contract. This is often the calmest exit. Put it in a written termination agreement prepared by the lawyers, covering:
- Money. How much of the deposit is refunded or kept, by whom and by what date, including sums held by a lawyer as stakeholder.
- Caveat. The buyer withdraws the private caveat. The National Land Code provides for withdrawal by the caveator (section 325), removal by the Registrar or the court (sections 326 and 327) and compensation for a caveat entered without reasonable cause (section 329).
- The bank. If a loan was approved or disbursed, agree with the bank how it is cancelled and any released sum returned.
- Stamp duty. Section 57 of the Stamp Act 1949 allows relief on stamps for executed instruments that later fail their purpose in listed situations, for example where a party will not complete. LHDN says relief or refund applications under sections 57 and 58 generally go in within 24 months of the instrument’s date (LHDN guideline, 6 November 2025). Ask your lawyer whether your SPA, transfer or loan agreement qualifies.
- Legal fees. Work already done is normally charged. Ask your lawyer at the start what you pay if the matter is aborted; see legal fees in Malaysia.
Before you sign: exit clauses to check with your lawyer
- Who holds the deposit as stakeholder, and when it is released.
- Loan and consent conditions: period, proof needed and refund if they fail.
- Default by either side: what is forfeited, refunded or claimable, and by when.
- Completion and extension periods, late interest, and which delays stop the clock.
Also see how to check a developer, subsale risks and the legal steps of buying in Johor.
Where to buy if this matters to you
If certainty matters most, a completed home you can inspect and finance before signing removes several risks:
- Mount Austin: an active resale market of condos and landed homes.
- Tebrau, Setia Indah and Molek: established areas with many titled landed homes.
- Iskandar Puteri: Medini, Puteri Harbour and EduCity, with new launches and completed condos.
- JB Sentral and Bukit Chagar: high-rise homes near the CIQ and the RTS Link station.
Compare areas on my JB property map, or weigh the two routes in new launch vs subsale.
More Johor living guides: The SPA explained · Booking fee refunds · Housing loan rejected · Abandoned housing projects
Frequently asked questions
Can I cancel an SPA after signing in Malaysia?
Not at will; there is no general cooling-off period. You can leave through a failed condition in the SPA, a breach by the other side, a statutory right such as section 8A of the Housing Development Act, or a written agreement with the other party.
Will I lose my 10% deposit if I back out of a subsale?
Usually, yes. Most subsale SPAs let the seller end the agreement and keep the deposit if the buyer fails to complete. In 2019 the Federal Court held that a reasonable sum can be kept without proof of actual loss, and the buyer must show it is unreasonable.
What happens if I stop paying a new launch developer?
Under clause 11 of Schedules G and H, if an instalment is unpaid for more than 30 days the developer may terminate after at least 30 days’ written notice. It keeps unpaid late charges and 10% of the price, or 20% for a Schedule H strata home if more than half the price was paid, and refunds the rest.
What if my home loan is rejected after signing?
For a new launch, if you cannot get a loan because of your income and show this to the developer, you pay only 1% of the price and the rest is refunded within 30 days. For a subsale, it depends on the loan condition in your offer letter or SPA.
Can the seller back out of a subsale after signing the SPA?
Not without consequences. The buyer can ask the court to order the sale to go ahead, or end the SPA and claim a refund and compensation. A private caveat stops the seller dealing with the title meanwhile.
Can I get stamp duty back if the sale is cancelled?
Sometimes. The Stamp Act allows relief for executed instruments that fail their purpose in listed situations; LHDN generally takes applications within 24 months of the instrument’s date. Ask your lawyer whether yours qualify.
Thinking about signing, or wanting out?
Tell me the project, new launch or subsale, and where you are in the process. Before you sign, I walk you through the SPA’s exit clauses so you can raise the right points with your lawyer. If a deal has fallen through, I can help you find another home or plan a resale. You can also book an appointment, or a Zoom consultation if you are abroad.
Sources: Housing Development (Control and Licensing) (Amendment) Regulations 2015, Schedules G and H (clauses 6, 11 and 26), Federal Gazette text, in force 1 July 2015, checked November 2026; Housing Development (Control and Licensing) Act 1966 (Act 118), sections 8A, 16M, 16N, 16U and 16Y, text as amended, checked November 2026; Contracts Act 1950 (Act 136), sections 38, 40, 56, 63, 74, 75 and 76, checked November 2026; INSPEN, Journal of Valuation and Property Services Vol. 16, “Remedies of Specific Performance for Land Contracts: Legal Development”, accessed November 2026; University of Malaya Law Review (online), commentary on the Federal Court decision in Cubic Electronics, accessed November 2026; Journal of Malaysian and Comparative Law, Vol. 48 No. 2, “Lessons from Indian Law: Applying the New Principles in Cubic Electronics”, 2021; Bar Council Conveyancing Practice Committee column, “Understanding an SPA (Part 1)”, The Sun, 8 December 2006, via the National House Buyers Association; Bar Council Conveyancing Practice Committee column, “Understanding an SPA (Part 2)”, The Sun, 22 December 2006, via the National House Buyers Association; The Edge Malaysia, “Know your stuff: the importance of private caveats”, July 2022; National Land Code (Act 828), sections 323 to 329 (private caveats), 433B and 433C (non-citizens), checked November 2026; New Straits Times, “Foreigners hit Johor property resale wall”, 20 April 2026; Malaysian Department of Insolvency, bankruptcy FAQ, checked November 2026; Stamp Act 1949 (Act 378), section 57 (allowance for spoiled stamps), checked November 2026; LHDN, Garis Panduan Pengenalan Duti Setem di bawah Akta Setem 1949, 6 November 2025; LHDN, Stamp Duty FAQ, updated 31 December 2025
Jason Lim, REN 84424, IQI Realty Sdn. Bhd. E (1) 1584/6. General information checked on 9 November 2026, not legal or financial advice. Laws and SPA terms differ and change; confirm with your lawyer, your bank, LHDN and the land office before you sign, terminate or stop paying. The illustration uses made-up figures.