A Major Mistake Home Buyers Make When Paying the Booking or Earnest Deposit

The biggest mistake home buyers make with a booking fee or earnest deposit is not paying "too much". It is paying before they know who owns the property, who is receiving the money, what the document they signed actually says about refunds, and whether the deal can go ahead as expected. There is no single percentage, whether 2%, 3% or 5%, that makes a payment safe on its own. Check the title and the seller, the account you are paying into, the financing and refund terms and your proof of payment before any money moves.

You have found a subsale home you like. The agent says another buyer is waiting. To "secure" the unit, you are asked to sign an offer to purchase and transfer the earnest deposit today. This is the moment most costly mistakes happen, because the focus is on the amount, not on the questions below.

A scenario that happens more often than it should

A couple has been renting for years and has finally saved enough for a deposit on a home of around RM550,000. They find a unit online, view it with the agent and a man introduced as the owner, and are told it is an international (non-Bumiputera) lot of about 1,700 square feet with two parking bays and no outstanding maintenance charges.

The next day they sign the agent's offer letter and transfer the earnest deposit to the agent, who says this is "safer" than paying the owner. A month later the agent has gone quiet. When the couple reach the owner, he says he never received the money.

When a lawyer finally checks the title, the picture changes completely:

• the property is part of a deceased person's estate, and the man they met is only one of several heirs, not the appointed administrator;

• the administrator has not yet been appointed;

• the man is a bankrupt;

• the unit is smaller than described and sits on a Bumiputera lot;

• the other heirs do not agree to the price; and

• the "agent" was not a registered estate agent.

Every one of these problems could have been found before the money was paid. Most buyers will never face all of them at once, but each one on its own is enough to put a deposit at risk.

Mistake 1: assuming "3% is standard" means the payment is safe

In the Malaysian subsale market you will often hear that the earnest deposit is a few percent of the price. But market practice is not a substitute for contract terms.

How much you pay, when it becomes part of the full deposit, when the balance is due and when the money can be refunded all depend on the documents and the agreement for your transaction.

Do not decide just because someone says:

• "everyone pays 3%";

• "this is the agent's SOP";

• "we will adjust it in the SPA later"; or

• "if the loan is rejected, you will definitely get a refund".

Ask for anything important to be recorded in writing.

Mistake 2: paying before you know who the real owner is

Before money moves, you should have enough information to verify the property and the person selling it. Depending on the type of title and transaction, the checks may cover:

• the name of the registered proprietor;

• the title, lot or unit number;

• the tenure and any restriction in interest;

• any charge in favour of the seller's bank;

• any caveat;

• whether an individual or strata title has been issued; and

• if the seller is not the registered owner, the basis of their authority to sell (for example, as the administrator of an estate or under a power of attorney).

Under the National Land Code, what is registered on the title matters a great deal for registered land. If what you were told by the advert or the agent does not match the title, do not assume it will sort itself out later. A land search, and a bankruptcy search on the seller, can be done before you sign anything.

Mistake 3: transferring money to an account you cannot verify

Before you pay, ask:

1. Who owns the receiving account?

2. In what capacity is that person or firm receiving the money?

3. Is the money being held as stakeholder, paid directly to the seller, or received by a firm or agency?

4. When can it be released to someone else?

5. Which document governs the release or refund of the money?

6. What official receipt will be issued?

If you are asked to pay into an individual's personal account with no explanation you can verify, that is a strong reason to stop and check.

If the money is received by a solicitor as client or stakeholder money, the Solicitors' Account Rules 1990 govern the client account, withdrawals and account records. That does not mean every house deposit must be paid to a lawyer. It means that when someone tells you the money will be "held by the lawyer", you can and should verify the firm, the account and the actual stakeholder terms.

If an estate agent is involved, check that the agent and negotiator are registered with the Board of Valuers, Appraisers, Estate Agents and Property Managers (known in Malay as LPPEH) through the LPPEH website.

Mistake 4: not reading what the booking form says about refunds

Deposit disputes are rarely just about "I have paid". The real question is:

What was agreed when I paid?

The Contracts Act 1950 provides the basic framework for contracts, but the effect of a particular booking form depends on its wording and the facts. Check whether the document explains:

• the amount of the earnest deposit;

• whether it forms part of the full deposit;

• who holds the money;

• the deadline for signing the SPA (sale and purchase agreement);

• any financing condition;

• what happens if the seller pulls out;

• what happens if the buyer pulls out;

• what happens if the bank loan or LPPSA financing is not approved; and

• whether there are any other conditions before the SPA.

If a refund was only promised on WhatsApp but the booking form says something else, you have already opened the door to a dispute.

Mistake 5: not making the financing condition clear

Many buyers pay before their bank or LPPSA (Lembaga Pembiayaan Perumahan Sektor Awam, the public-sector home financing board) approval is final. Do not assume "subject to loan" has one standard meaning.

If financing is essential to your decision, check:

• what type of financing is covered;

• the amount or margin you need;

• how long you have to obtain approval;

• whether one bank's rejection is enough or you must try others;

• what proof is needed to show the application failed; and

• what happens to the earnest deposit.

The vaguer the clause, the harder it is to rely on when something goes wrong.

Mistake 6: not checking restrictions, consents or title status before committing

A property that looks ordinary can have issues that change the timeline or whether the deal can proceed at all. For example:

• a leasehold title with a restriction in interest;

• state consent needed for the transfer or the charge;

• a caveat;

• a charge to the seller's bank;

• a title that has not yet been issued;

• an estate that has not been administered; or

• a seller that is a company or acting under a power of attorney.

Not every issue means you should walk away. But each one should be identified before you accept a short deadline or strict forfeiture terms.

Mistake 7: keeping only a screenshot of the transfer

Proof of the bank transfer matters, but it does not necessarily show why the money was paid. Keep a complete set:

• the booking form or offer to purchase;

• the official receipt;

• the proof of transfer;

• the name and registration number of the agent or negotiator, if one was used;

• the advert or property particulars, if they contain material details;

• WhatsApp messages or emails about refund or financing terms;

• copies of any title documents you were given; and

• any financing approval letter.

If a dispute arises, the documents in context are far more useful than a single transaction screenshot.

Mistake 8: waiting for a problem before speaking to a lawyer

A lawyer can help after a problem arises. But the least expensive option is usually to identify the risks before the money and the contract dates are locked in.

Before the earnest deposit is paid, a buyer's lawyer can:

• check the title or property details;

• review the booking or offer terms;

• explain the refund and financing conditions;

• identify consent or redemption issues;

• assess who should be receiving the money; and

• list the points that need to be carried into the SPA.

This does not guarantee the transaction will succeed. It means your decision is made with better information.

A 10-minute checklist before you pay

Stop and answer these questions:

• I know the name of the owner or seller and the basis of their authority to sell.

• I know exactly which property and title this is.

• I know how much I am paying and what that payment represents.

• I know who owns the receiving account.

• I know who will hold the money until the SPA or a stated condition.

• I have the refund and forfeiture terms in writing.

• I understand what happens if my financing fails.

• I know the SPA deadline and when it starts running.

• I will receive a receipt and copies of all the documents.

• If anything is unusual, I have checked it with a lawyer.

If several of these are still unanswered, do not let "there is another buyer" pressure replace basic checks.

If you have already paid and a problem appears

Do not panic, and do not make threats you are not sure you can carry out. Gather all the documents and work out:

1. what the booking form or offer says;

2. who received the money;

3. whether the money is still being held or has already been released;

4. what event triggers a refund or forfeiture;

5. who failed to do what was promised; and

6. which deadlines are still running.

Then get advice based on the actual documents. Whether you can recover the money or claim for losses cannot be decided from the label "earnest deposit" alone.

How ASCOLAW can help

Before you pay, you can send ASCOLAW:

• the booking form or letter of offer to purchase;

• the payment instructions you were given;

• the purchase price;

• the property and title details;

• the seller's name;

• the agent's or negotiator's details;

• the status of your bank or LPPSA financing; and

• any special promises about refunds, furniture, repairs, tenancy or timing.

From there, ASCOLAW (Messrs Akmal Saufi & Co) can help you understand what you are committing to and which points should be clarified before any money moves. Fill in the ASCOLAW enquiry form below with your booking form and property details, and our team will contact you.

Frequently asked questions

Who should I pay the earnest deposit to?

It depends on the documents and the arrangement for your transaction. What matters is that the recipient is verified, their capacity is clear (for example, stakeholder, seller or firm), the release and refund terms are in writing, and you receive an official receipt. Be cautious about paying into an individual's personal account that you cannot verify.

Is a 3% earnest deposit standard in Malaysia?

A few percent is common in the subsale market, but no percentage is a legal standard that makes a payment safe on its own. The booking form and your agreed terms decide how much is paid, how it is held and when it can be refunded.

Can I ask for time to check before signing the offer letter?

Yes, and you should. A seller or agent who pressures you to sign and pay immediately without allowing any checks is a warning sign.

How do I know whether the seller is bankrupt before I pay?

A lawyer can carry out a bankruptcy (insolvency) search on the seller, together with a land search on the title, before you sign any document.

I paid and the seller changed their mind. Will I get my money back?

It depends on what the booking form or offer says, who is holding the money and what actually happened. Gather all your documents and get advice before signing anything else or agreeing to a release.

This article is general information only and is not legal advice. Every transaction is different. Get specific advice from a licensed lawyer on your own documents before taking any action.

Related guides

• Buying Property in Malaysia

• Loan Rejected After Signing the SPA: What Happens to the Deal & Deposit

• Balance Purchase Price in a Malaysian Property Sale: What It Means & When You Pay

• Conveyancing Lawyer in Malaysia: What They Do, Fees & How to Appoint One

• Legal Fees for Buying and Selling a House in Malaysia (2026 Guide)