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a) Landed (Individual Title)
b) Non-landed (Strata Title)
c) Low Cost
d) Non-Low cost

a) LANDED PROPERTIES (With or without Title)

Landed properties refer to those properties that are
situated smack on a piece of individual land which
are already issued with the Issued Document of Title.
They vary in sizes and hence the cost of the
Owners are beneficial and legal owners and can deal
with the land in anyway they please.
Eg: Bungalow, Semi-detached Bungalows,


Non-landed properties refer to those properties usually highrise buildings like condominiums and apartments, which are
located on a piece of common land and issued with a title deed
called the master title before sub division into strata title for
each of the individual units comprising the high-rise
The owners of these individual units do not known the land on
which the building is erected but has beneficial interests only.
They however have legal ownership over their individual units
by way of the strata title.
Owners cannot deal with the land except their own units and
are always subject to covenants agreed upon at the time of
purchase of the properties.


Low cost properties currently refer to properties below
RM42, 000-00 in value and can either be landed or non-landed properties.
Housing developers are required since 1982 if their overall development
exceeded 5 acres to allocate 30% of their developments for low cost
housing in line with the government's policy of encouraging house
ownership for the lower income sector of the society.
Only those households with aggregate incomes of RM3000-00 or less are
eligible to purchase low cost properties and they cannot resell such
properties within 5 years from the date of purchase without the consent of
the State Authority.
A point of interest is that of late government has rolled out a number of low
cost housing projects under the 1Malaysia Development Program.


Any properties priced above RM42,000-00 are
classified as non-low cost properties and can be
either landed or non landed properties. Properties
above RM40,000-00 but below RM80,000-000 are
termed low medium costs.


Leasehold and freehold refer to the tenure of the owners have
over the use of their properties.
Lease which means a
certain time frame in the occupation or use of the land and
leasehold land means that the land concerned is granted
to the occupier for that duration state on the title deed
which is usually above 2 years duration.
Leases can be 66 years as usually is the case with properties
tin Perak State or 99 years as in Selangor. Such tenures are
specifically endorsed on the title deed. Generally the land
reverts back to the state after the tenure expires and
depending on the situation, generally with a payment of a
premium to the State, the owners can renew the tenure.
Otherwise the land reverts to the state.


Freehold properties have no expiry dates endorsed

on the title deed and as such ownership is perpetual
and can be passed on to future generations.
As such freehold properties command a premium
over leasehold properties and are much sort after


a) Directly from Developer
b) From individuals (secondary market)
Many house buyers especially first time buyers seek their
properties from developers at new launching of housing
developments or projects. The reason being that the houses
are new compared to the secondary market, prices are fixed
and ease of dealing where developers would have lined up a
panel of solicitors and financiers as well
to assist the
prospective buyers to obtain financing.
The secondary market is also vibrant today. Buyers can buy
their properties through real estate agencies, through
advertisements by individual sellers and
through direct

c) Legality
The Sale and Purchase Agreement
Buying and selling of any properties must be done with a written
contract to safeguard the interests of the buyers and the sellers.
They must engage the services of solicitors to draw up the sale
and purchase agreements for the benefits of both parties and for
the solicitors to follow up with the documentations required for the
transfer of the properties.

Title Search
It is of paramount importance to make a title search with
the Registrar of Titles at the respective land offices of the
area where the property is located.
Even if the property is still under a master title as in the
case of condominiums and apartments where the
developer has not subdivided the property yet, it is still
important to do the title search on the master title.

Salient issues that can be gleamed from a title search are

as follows:1) The particulars of the title concerned are correct, e.g.: the title no, lot
no, district where it is located
2) Name of the present owners endorsed on the title
3) Size of the land
4) Whether it is freehold or lease hold (the expiry date of the tenure will
be indicated)
5) Any restrictions-in-interest endorsed on the title the Agreement must
contain a proviso that time will not run until the consent has been
obtained for properties where there are restrictions-in-interest like "
this land cannot be sold, transferred or charged for whatsoever
reasons without the consent of the State Authorities", an application
must be made to obtain the consent first.

6) Any other encumbrances like Private Caveat, Registrar Caveat

7) Whether the title deed is charged to any financial institutions

8) Category of land use, generally indicated as Agriculture, Building,
9) Express conditions, generally restrictive in nature and normally
imposed on agricultural land indicating the type of agricultural activities
that can be carried out on the land like for rubber trees cultivation
10) Any land acquisition of the land or part of the land by the government
under Section 4 or Section 8 notice of the National Land Code.

i. Buying from Developer or Individuals (including

Registered Private Enterprises)
Since the introduction of the Housing Developers
(Control and Licensing) Act 1966 & Regulations 1989 &
1991 the Sale and Purchase Agreement has been
incorporated into the Act.
As such the buyers today are protected by the force of
law. Both parties ie the seller and the buyer each should
engage the services of their respective solicitors to
protect their individual interests.


Salient Terms To Look Out
a) Date of agreement
b) Buyers name as per NRIC
c) Sellers name as per NRIC
( if seller is a company to check against the company
d) Particulars of the title deed - Conduct a land search at
the land registry to ascertain that the land is not
caveated or otherwise encumbered in any way which
may potentially affect the transfer of the property

e) The purchase price and mode of payments - If buying

from a developer there will certainly be a schedule
indicating the time frame for payment according to the
stage of construction
f) Note the size of the property - This is indicated in
the attached plan if buying from a developer
g) Note the default clauses:Beware of any annulment clauses which the sellers can
Default clauses shall be fair to both parties especially
with regards to compensation in case of default by
either parties

In cases of sub sale where the Sale and Purchase

Agreements are not standardized and governed by
legislature, buyers must be extra careful that the interests
of buyers are adequately protected
h) Additional terms if buying from developer
Attachments known as schedule G and H are attached to the Sale and
Purchase Agreements where properties are purchased from developers.
Schedule G is for non strata properties whereas Schedule H is for strata
properties (amendments 2002). There are attachment to these
schedules indicating the location and layout of the property concerned.
Note if the property is encumbered
i. If there is restriction in interest necessitating consent from the
state authorities.
ii. If the property is charged to any financial institutions
necessitating to obtain discharge of the property or
iii. If the master title is charged to a financial

institutions to obtain a letter of exemption from foreclosure

proceedings in the event the developer defaults
Ascertain if the sellers are adjudicated bankrupts - A check with the
Registrar of Companies or the Insolvency Department will reveal the
status of the parties concerned. Avoid entering into any contracts
with undischarged bankrupts
Where the property is a unit within a larger building comprising of
many units as in the case of condominiums or apartments, buyers
will have to execute a document called the Deed of Mutual
Covenant which is a document spelling out the rights and
privileges as well as the limitations of the purchasers in relation to
the usage of the common properties.


To note whom to pay for what in terms of legal fees
stamp duty etc.


There is a need for both the buyers and
sellers to declare the
transaction to the Tax Authorities via forms CHKT 1A and 2A which
will be undertaken by the solicitors within 60 days of the date of the
Agreement if it involves a sub sale.
The current tax bracket in Malaysia is 30% for the first till third year,
20% for fourth year and 15% for the fifth year of ownership. Thereafter
there will be no taxes involved for local citizens and permanent
Foreigners pay a 5% flat rate after the 5th year
It is imperative now for solicitors to retain a portion of the purchase price
for remission to the Tax Authorities via form CKHT 3. The quantum to
retains is 2% of the sale and purchase from price which must be
remitted to the Income Tax Department within 60 days from the date of the
Sale and Purchase Agreement or from the date of the approval of consent to
transfer from properties with restrictions-in-interest.

Properties with Issued Document of Title
The transfer of ownership of the property is completed with the
owner's name duly endorsed on the document of Title and with a
similar entry with the registry of title at the Land Office.
Such transfer is facilitated by the document called the Memorandum
of Transfer or simply Form 14A.
Prior to submission to the Land Office there is a need to submit the
document to the Collector of Land Revenue (Tax Department) for
adjudication of the transfer fees and
after the adjudication and
payment of the said transfer fees can the Form 14A be presented to
the Land Office.
Owners must check that their names are property endorsed on the
Issued Document of Title otherwise it will be troublesome in any
further dealings.

Properties Where Document of Title Has Not Been Issued

Sometimes the strata titles have yet to be issued for each of the
condominium or apartment units due to a variety of reasons. In such
cases the evidence of ownership is reflected in the document called
the Deed of Assignment.
The sellers assign their rights and interests in the properties to the
buyers. Importantly the Developer must be notified of such a
transaction or assignment by vesting a copy of the Sale and
Purchase Agreement together with the Deed of Assignment with the
The developer must acknowledge the assignment and undertake to
enlist the names of the purchasers into their list of owners to facilitate
the transfer of ownership when the strata titles are issued in the
As in the case of the Form 14 A, the Deed of Assignment must also
be submitted for adjudication of payment of transfer fees and
payment must be duly made to the Collector of Land Revenue for
the document to be legalized.

Loans to Finance the Purchase of the Properties

Most purchasers normally finance their purchases of
properties by loans from financial institutions like banks,
insurance companies, cooperatives and building societies.
Such loans are termed mortgage loans or housing loans and
are obviously secured by a charge or an assignment over the
properties being purchased.

Buyers should always survey the financial market first before

committing themselves in buying properties since financial
institutions are stringent in the approval of financing for asset

Factors to be concerned are:1) Eligibility - Eligibility invariably hinges on the age, income capacity
And the status of the purchasers where bankrupts or those blacklisted
will not be considered (blacklisted by CITOS)
2) Amount of loan - This will determine the initial outlay that the
purchasers must fork out
3) Interest rate - Rates vary from bank to bank but the base lending rate
is similar across the board; should negotiate for the best rate
4) Terms of repayment - Monthly installments usually dependent on the
amount that can be set aside or disposable income
5) Duration of loan - Usually dependent on the quantum of loan, age
and amount that can be set aside
6) Payment of legal fees and stamp duties - Some financial institutions
capitalise these as part of the loan


Upon settlement of the loan it is imperative to remove the names
of the financial institutions from the title deed and the Land Office
With Title Deed
The process involves the submission of a form called the
Memorandum of Discharge of Charge to the land office together
with the issued document of title, the charge document and
payment of a fee.
Without Title Deed
The process will involve the execution of the document called the
Deed of Receipt and Reassignment by the parties concerned and
the filing of which with the High Court where the Power of Attorney
was file. This is to revoke the Power of Attorney given to the
financial institution which granted the loan.

7. Real Property Gains Tax (RPGT) In Malaysia +

Real Property Gain Tax Act 1976 imposed a tax regime on the disposal
of all properties in Malaysia. It was temporarily suspended in 2008-2009
to stimulate the property market, and reintroduced in 2010. The year
2014, RPGT witnessed an increased in the tax percentage for the 5th
straight year since 2009.
RPGT is a tax on chargeable gains from disposal of property. A chargeable
gain is the profit when the disposal price is more than purchase price of the
property less any miscellaneous claims.
RPGT is also imposed in the procurement and disposal of shares in
companies where 75% of their tangible assets are in properties, otherwise
called Real Property Companies (RPC). RPGT applies to both residents and

Taxation is strictly on the positive net capital gains which is disposal

price less the purchased price less the miscellaneous charges such
as;( stamp duty, legal fees, advertisement charges ,etc). Additionally,
a waiver on the taxable amount is granted to individuals (but not
The holding period is from the date on the S&P agreement till to the
disposal date.
For a simple and a quick calculation, the formula is;
Chargeable Gain = Disposal Price - Purchased Price
Net Chargeable Gain
= Chargeable gain - Exemption Waiver (RM10,000 or 10% of
Chargeable Gain,whichever is higher)
Tax payable = RPGT rate (based on holding period)* Net Chargeable


1) Exemption on gains from the disposal of one residential property once in a
lifetime to individual (Should be utilize this once in lifetime opportunity
2) Exemption on gains arising from the disposal of real property between family
members (e.g. husband and wife, parents and children and grandparents and
3) 10% of profits OR RM10,000 per transaction (whichever is higher) is not

.RPGT RATES for 2014


Citizens / PR



<= 3 Years




<= 4 Years




<=5 Years




> 5 Years



+ Subject to change with tabling of every budget


National Land Code:
S 340 340(2) of the NLC reads that the title or interest of any person shall not be
indefeasible (not liable to being annulled or undone), in any case of fraud or
misrepresentation; or where the registration was obtained by forgery; or where a
title or interest was unlawfully acquired by the person in the purported exercise of
any power conferred by any written law.
Meaning : S340 (2) confers immediate indefeasibility to the one whose name is
endorsed on the Title Deed notwithstanding it being perpetrated through fraud.
Re Adorna Properties Sdn Bhd v Boonsom Boonyamit 2000
Facts : involves two parcel of land in Tanjung Bungah Penang belonging to
Boonsoom Boonyamit (BB) a Thai national.
Without the knowledge of BB the land were sold to Adorna Properties Sdn Bhd
(Adorna) by an imposter in 1989.

June 18, 1988

6 April 1989

- The imposter Sun Yoke Eng @ Boonsom Boonyamit made

a statutory declaration that the title deed was lost. Managed
to get a certified copy of the title deed.

Imposter sold land to Adorna after she made a

declaration that the name on the title deed and her ID is one
and the same person
- BB sued and filed case in High Court against Adorna.
Court gave judgment in favour of Adorna
- BB appealed to Court of Appeal
Court gave judgment in favour of BB
- Adorna appealed to Federal Court
Court gave judgment in favour of Adorna


- BB's son appealed to the Federal Court to set aside the

judgment but was struck down by the apex court.

Result : Over the last decade, that apex court judgment based on the Adorna
case had created a loophole in the law, causing many legitimate landowners to
lose their lands through unscrupulous means via forged documents, as it allowed
the transfer of a good title to a purchaser who buys the property in good faith,
notwithstanding the forgery.


2010 Tan Yin Hong v. Tan Sian San & 2 Ors.
The Federal Court had revisited the Adorna Properties case following an
appeal in a similar circumstanced case -- Tan Yin Hong v. Tan Sian San & 2
Ors. -- which was first brought to court in 1987.
Facts : The Pahang government had alienated and issued a land title in Tan
Yin Hong's (TYH).
In 1985, TYH received a letter from the bank demanding a repayment for a
sum amounting to RM309,000 for an overdraft facility given by the bank to a
Cini Timber Industries.
Upon investigation, TYH discovered that a person named Tan Sian San (not
related and who has since disappeared) had forged his signature in 1977,
and created a power of attorney, a document stating that he was authorised
to act on behalf of Tan Yin Hong.
With the forged power of attorney, Sian San then charged the land to RHB
Bank in 1984 as security for a loan to Cini Timber Industries, and
subsequently disappeared.

In 1987, TYH filed a suit against the bank. In 2003, the High Court dismissed
his application, based on the Adorna Properties decision. The Court of
Appeal upheld the ruling.
TYH, the appealed against the Court of Appeals 2009 decision, which
relied heavily on the principle of immediate indefeasibility in the Adorna
Rightfully, on 21 st Jan 2010, the Federal Court rule that the banks charges
against Tan Yin Hong could be set aside as they were based on void
"I am legally obligated to restate the law since the error committed in Adorna
Properties is so obvious and blatant.
It is quite a well-known fact that some unscrupulous people have been
taking advantage of this error by falsely transferring titles to themselves. I
hope that with this decision, the Land Authorities will be extra cautious when
registering transfers, Justice Zaki ruled in his four-page supporting written
judgment. The Federal Court also awarded RM75,000 in costs to Tan.
RESULT: The law now protects registered owners and bona fide buyers for
good consideration.