Why do I need your consent to sell my property?

In a sale and purchase transaction of property in Malaysia, one may hear the agent or the solicitors advising parties in a transaction that “consent” is required from the relevant authorities before the transaction can be completed.

Some parties, particularly, first time purchasers of a property, would probably find this bewildering; why one needs to obtain permission (consent) before buying property.

There are a few types of “consent” that needs to be emphasized here. These consents are governed in the relevant sections in the National Land Code (Act 56 of 1965) and the gazettes by the Government in relation to purchase of property by a foreigner.

“Consent” from the relevant state authority is to be applied due to the ‘restriction in interest’ stated on the title. These ‘restriction in interest’ will vary in each title that holds the property but the main purpose of the statement is to get the seller of the property to apply for the “consent” of the relevant state authority to sell the property.

An example of a ‘restriction in interest’ that appears in a title for a property is “Tanah ini boleh dipindahmilik, dipajak atau digadai setelah mendapat kebenaran Pihak Berkuasa Negeri.”. What this statement simply means is that the current owner of the title to the property will only be able to transfer the title to anyone else, charge or mortgage AFTER the State Authority consent is obtained.

In relation to the foreigner’s purchase of property in Malaysia, Section 433 (B) of the National Land Code (Act 56, 1965) is particularly applicable. It is clearly stated that in the section, any foreigner that is within the interpretation of the act, will have to obtain the consent of the State Authority prior to acquiring or purchasing properties in Malaysia.

In furtherance to a foreigner’s acquisition or purchaser of property in Malaysia, the Government had set up a department called the ‘Economic Planning Unit’ or the EPU (formerly known as ‘Foreign Investment Committee’ or FIC) for any foreign body (individual or company) to apply for consent before purchasing a property in Malaysia which is of value below RM500,000.00. This was in a gazette of Circular 3/2011 which had taken effect from 1^st April 2011.

This application of consent to the EPU is an additional application for properties purchased by foreigner that falls below value of RM500,000.00. In the event that the property that a foreigner is intending to purchase is higher than RM500,000.00, application of consent to the EPU is not applicable BUT the foreigner would still need to apply for the consent from State Authority.

The purpose of having these consent procedures is for the relevant land authority to maintain control over ownership of property in Malaysia.

As you can see from the above examples, some consent relates to “leasehold” property, where in the “leasehold” property the land is leased for certain amount of years, which therefore mean the land belongs to the Government; hence the need for consent application.

Also in the examples above, foreign investors would require consent before buying property. This procedure acts as a safeguard to ensure that Malaysians’ property does not fall into foreign hands, freely.

The procedure to obtain “consent” can be cumbersome and procedural. Every process may take anything from one month to one year to complete the same.

Nevertheless, your appointed solicitors would be able to assist you in this procedure to apply and obtain the “consent”.

By Sarah Kambali 

Sub-Sale : The Term & The Procedures

A fictitious conversation over a cup of coffee between a potential purchaser of a property and the friend who is a lawyer

What is this thing phrased as “sub-sale”? 

Why do I continue to hear that phrase if I talk to a lawyer or a friend who happens to be a lawyer? 

I asked my friend who happens to be a lawyer, what is “sub-sale”?

My friend answered, “sub-sale” is a phrase that most lawyers who are involved in the transaction of buying and selling property from persons or company who are not the developer. 

So, what’s the difference with the normal sales with developers, I asked. 

My friend said, it is a transaction where at most of the time, the buyer, or in this case called “Purchaser”, is actually not the first-purchaser of the property. Parties would involve seller, who is called “Vendor”, who would most likely, but not always, the first purchaser. This Vendor would be selling his/her/their property to the Purchaser, who is eager to purchase the Property. Interesting, I thought. 

So, what would be the procedures to buy from a person who is most likely the first purchaser of a property? 

This was when my friend cringe. My friend answered, it depends on what you are intending to purchase. Most of the time, it would depend on the property that you intend to purchase. These properties are those which the Certificate of Fitness/Certificate of Occupation, has been issued. This certificate is important to prove that the property is already fit for human occupation, i.e. completed construction. 

What about those without the Certificate of Fitness/Certificate of Occupation? I asked. 

That property is normally the ones you are intending to buy from developer and it doesn’t fall into this category of “sub-sale”, my friend answered. 

Again, I had to ask my friend, what are the procedures throughout sub-sale transactions? It couldn’t be that difficult. I was pretty sure a person who is NOT a lawyer could understand the procedures and handles the transaction themselves. 

My friend sighs. 

The procedure depends on the property you are intending to buy. Whether it is a landed property, i.e. terrace, bungalows, semi-d or ones of “on air”, i.e. flats, apartments, condominiums? Whether the property has restriction or not? Whether the property is held under master title or individual title? Whether the property is assigned to banks or charged or free from any encumbrances? Whether you have to deal with the land office? Or do you have to deal with the developer in cases where the property is held under master title? Or would there be any liquidator involved due to the developer being wound up? This is just a few of “whether” situations that can be highlighted to you. 

There’s plenty more, said my friend. 

My friend continued on, “Generally, in any purchasing of property, you would need to deal with either the land office or the developer. In some cases, you would need to deal with the liquidator, for cases where the developer is wound up. If the property is one that is held under individual or strata title, you would need to deal with the land office. You would be signing a transfer form called Borang 14A. As for deals with the developer, this would mean that the property is still under master title. In this case, whoever you are buying the property from has only beneficial ownership of the property. The real owner of the property would still be the developer. This would mean that you would not be signing any Borang 14A for transfer of ownership. Instead, you would be signing another document called “Deed of Assignment. This serves to assign whatever beneficial interest from the seller to you.” 

I had listened to my friend going on and on and I was getting a spinning sensation in my head. In my head I was telling myself, "OMG! All that just to buy one property??" 

One day, I will learn them all from my friend and apply them to my situation. 

We sipped our last drop of coffee and bid farewell. 

At least now I know what are “sub-sale” and the general procedures that entails. Baby steps, I said to myself. Maybe my friend would go on further in details of the form and deed the next time we meet up for coffee.

By : SK aka the potential buyer

Liquidated & Ascertained Damages

Parties entering into a Contract may at the outset, agree to a certain amount of damages. This is usually referred to as 'Liquidated & Ascertained Damages' (LAD).

In laymen language, before you agree to a contract and before you sign that contract, you can agree with the other party, how much money you will pay or receive as compensation, if one party did not respect the terms of the contract. When talking in legal language, this kind of compensation is called 'damages'.

A common place to find LAD is in Sale & Purchase Contracts of Properties. LAD is a useful and quick method to ascertain the quantum of damages to pay.

The Courts have however decided in some cases, that the LAD ought to be a reasonable amount and not punitive in nature. As stated above, LAD is meant to compensate, not to enrich or punish the party who breached the contract.

Next time you enter into a contract, you may consider discussing the insertion of a clause to quantify the LAD, in that contract. Your lawyer would be able to advise you whether that said contract can include an LAD clause (as not all contracts can have LAD).

Consumers' Rights

In our daily dealings with clients, we would occasionally have clients seeking advise on issues which may be too trivial for a Firm to take up, but unfair to the client to not have legal redress. We have had Clients complaining over spoilt loaf of bread, damaged laundry, faulty new radio etc etc.

We would recommend that you seek redress at the Consumer Tribunal. The Consumer Tribunal would hear cases where the consumer was, for example, misled or suffered an unfair practice. A consumer may complaint about the quality of product or service of not attaining a reasonable standard. The filing fee is only RM5.00 per complain and the Forms used to file the claims can be obtaijned at the Consumer Tribunal Office itself.

This Tribunal does not require lawyers, and the Judges hearing there, are fairly sensitive to Consumer rights and they will try their best to help you. You would save legal fees and have the opportunity to present your own case like the lawyers you see in TV.

For more info, please visit the Consumer Tribunal's website at:-

http://ttpm.kpdnhep.gov.my/portal/index.php?option=com_frontpage&Itemid=1

You can also send an e-mail to us at enquiries@rwl.com.my