What Are Land Titles?
It is the document that proves the ownership over a property. It is issued by the state authority to owners of properties as evidence of their ownership.
Land titles contain information such as:
- Name and particulars of owners;
- Encumbrances such as charges to the bank, tenancies (tenancy for more than 3 years), easement, etc;
- Private caveat, registrar caveat or lienholder caveat;
- Layout plan of the land;
- Amount of quit rent;
- Any notice of acquisition by the authority;
- Any subdivision or amalgamation of land, and
- Particulars of previous land titles.
When the title is issued, there will be a copy for the owner known as Issue Document of Title (IDT) and a replica copy of the same kept by the land office known as Registrar Document of Title (RDT).
When the land search is conducted, the search will be made on the RDT. This is to ensure that the details in the RDT are the same as in the IDT. So, if you intend to buy any property, it is important to always ask for a copy of the title (IDT) from the owner so that a land search can be made on the RDT to verify and confirm the authenticity of the IDT.
Below are the common land titles in Malaysia:
In stratified developments, each unit will be issued a strata title and as well as a Master Title for all the common properties and facilities such as the walkway, playground, swimming pool, tennis court, gym, etc, where the ownership of such common properties will be vested with the management corporation. All house owners in the development will be members of the management corporation.
The management corporation will be managed by a council or committee who are elected annually in an annual general meeting to manage the common properties/facilities, decide on the rate of maintenance charges, sinking funds and other roles that are provided under the laws.
Possible Conditions
Now that we have gone through the types of land titles in Malaysia, do be aware that these titles may contain certain conditions and restrictions as well.
Titles may be classified as residential, commercial, agricultural or industrial, and it may also contain conditions such as the type of building that can be erected on the land, the size of the building and the height of the building.
There may also be certain specific reservations of land for Malay or Bumiputera Reserved units. This means that properties that have such conditions can only be transferred or sold to Malays or Bumiputera only.
Another example would be properties that can only be sold to certain residents. Such examples would be reserved units that can only be sold to the residents in Selangor or units that can only be bought by people that live in Penang.
Residential property
It can be held under a title classified as Residential or Commercial. There are also houses such as serviced apartments, small office/home office development or condominiums developed on top of a mall that is held under the commercial title.
Restriction In Interest
Besides that, land title may also contain restriction in interest, in which any transaction to sell, transfer, charge or lease the land may require consent from the state authority. Therefore, before any sale and purchase can be completed, consent from the state authority must be obtained.
The National Land Code also provides that a foreigner or company with foreign interest may only purchase land after obtaining consent from the state authority.
Consequently, the sale and purchase of land/property with the title subject to restriction in interest will require more time to be completed as the consent must first be obtained.
Hence, property that is not subject to restriction in interest has better demand as transactions can be carried out speedily without having to go through the process of application for consent.
There is a misconception in the market that Leasehold Title will be subject to restriction in interest and whereas Freehold Title is not subject to such restriction in interest, this is not true. Most Leasehold Titles contain restrictions in interest but some don’t have such restrictions, and similarly, most Freehold titles do not have restrictions in interest but some do.
Although restrictions in interest that require an application for consent is time-consuming, it helps to deter speculation and manipulation of property price from sky-rocketing. This may benefit fresh graduates or first-time buyers as they can afford such properties with a fairly stable property price.
Summary
Always ask your lawyer to conduct a land search before you place your deposit to buy any property. The land search report will provide the needed information that will help you in making decisions and understanding the property that you intend to buy.
Click here to learn more about Freehold vs. Leasehold: Does It Matter?
The statement and information in the articles are the opinion of the writer and meant only as a guide. Any property purchase, rental or lease involve many legal issues and other complication depending on the individual facts and circumstances. Readers and Users are strongly advised to seek professional advise including from qualified and competent lawyers, bankers and/or real estate agent to verify the information and the statement before embarking on any purchase, rent or lease of any property. To the fullest extent permitted by law, we exclude and disclaim liability for any losses and damages of whatever nature and howsoever cause and arising including without limitation, any direct, indirect, general, special, punitive, incidental or consequential.