We have discussed on the types of land title in Malaysia. So now you may be wondering how do you then transfer a land title in Malaysia? In this article we will go through a few crucial steps as well as give you some important knowledge and points that would assist you to transfer a land title from a land owner or known as a vendor to a purchase.
In general, here are the things that we will be covering in this article;
· Who are the parties involved in a land title transfer
· What information you need to transfer a land title
· What documents you will need before starting the land title transfer process
· Why do you need a lawyer in a land title transfer
· What do you have to pay and how much it will cost to transfer a title
· How long does it take to transfer a land title?
· When do you need a state consent for a land title transfer
What information you need to transfer a land title in Malaysia
Based on Section 43 of the National Land Code 1965, the person who buys house or a land must attain the age of majority. And to indicate that the person is eligible, the parties must expressly provide a document as a proof that he has attained the age of majority.
Therefore, in order to prove so you must give a copy of your Identification Card (if you are a Malaysian citizen) or a copy of your passport (if you are a foreigner) to the relevant authority or your lawyer. Your personal identification is also needed by the relevant authorities i.e. land office for the said transaction.
Material information of the property
You can’t do the transaction without knowing what you are dealing with. For this reason you need the latest information of the land title. You can do this by conducting a land search at the land office.
With the land material details ascertained you or by your lawyers from the result of the land search will have a glimpse of the procedures that needs to be complied. Getting the result of the land search would allow your lawyers to have a base idea of how long it would take to transfer the land title. If you appoint a lawyer, the land search will be conducted by the lawyer.
Among the key information that you will look for in a land title as well as in a land search are;
1. If the land is subjected to Restriction in Interest, which means the owner of the land or the vendor cannot deal with the land unless he obtains consent from the State Authority.
2. If the land is an estate land in compliance to Section 214A of the NLC 1965, in order to transfer any estate land, the owner or the proprietor of the land must obtain consent from the Estate Land Board.
3. If the land is subjected to a charge, the purchaser would need to require the vendor to firstly discharge the charge on the land title.
Personal Tax Information for the purpose of Real Property Gains Tax purposes
At the beginning, it must be ascertained if the vendor is liable to pay any real property gains tax. A real property gains tax is a tax charged by the government on the profit that you make from selling the land. Therefore if you make a gain/profit from it, then you are is liable as a vendor to pay this tax.
For that sole reason in order to order prepare for this process you need to prepare your tax registration number. This information will then be used for this process at the Inland Revenue Board (LHDN).
Transaction Purchase Price of Property / Land
All the parties would need to come to terms or agree on the full purchase price as well as the breakdown of the payments. For example, the earnest deposit, balance deposit and balance purchase price. Parties need to also agree on the payment schedule of the transaction. Once the balance of the purchase price is fully paid, the new proprietor’s name will be registered on the title and a new title will be issued by the Land Office.
What documents you will need before starting the land title transfer process
There are various documents involved whenever a transfer of real property is to occur. Among others;
1. The sale and purchase agreement that has been executed and stamped between you and your vendor / purchaser;
2. The previous sale and purchase agreement of the property;
3. The executed Memorandum of Transfer;
4. The Quit Rent payment receipt of the current year;
5. The latest Assessment Tax payment receipt;
6. The original land title;
7. Deed of Assignment (in cases where the land title has not yet been issued to the Vendor)
The new Sale and Purchase Agreement
The Sale and Purchase Agreement is an agreement where it sets out the terms and conditions of the sale that shall be executed between the vendor and the purchaser.
It is a common practice for the vendor’s lawyer prepares the Sale and Purchase Agreement. This is usual as the vendor’s lawyer has all the information pertaining to the property. However, if both parties agree, the purchaser’s lawyer may also prepare the agreement, in which case the particulars of the property should be made available to the purchaser’s lawyer.
Memorandum of Transfer (Form 14A)
Memorandum of Transfer (Form 14A) is a form of registering the title into the purchaser’s name at the Land Office. The Memorandum of Transfer is prescribed under the NLC 1965 to affect the registration of transfer of ownership where title is available, and it will be prepared by the purchaser’s lawyer. Both parties will need to sign this document to proceed the transfer of title from the vendor to the purchaser.
Deed of Assignment
Deed of Assignment is prepared when there is no title issued for the property. It functions to transfer all the rights of the vendor to other to the purchaser.
If a Vendor has entered into a financing agreement with a bank and has an exisiting Deed of Assignment for the benefit of the bank, the vendor will need to settle the loan first and get the bank to reassigned the property back to him.
What do you have to pay and how much do you have pay to transfer a title?
Here are the things that you need to take note of with regards to the cost if you intent to transfer a land title.
As a vendor
1. Payment of RPGT tax (chargeable gain if any);
2. Payment of quit rent & assessment rent (of the current year);
3. Payment of outstanding loan/redemption sum (if applied);
4. Payment of registration for State’s consent (if applied);
5. Payment of legal fees to the vendor’s lawyer.
As a purchaser
1. Payment of stamp duty tax;
2. Payment of MOT registration fee;
3. Payment of legal fees to the purchaser’s lawyer;
How long does it take to transfer a land title?
Usually, it will take about three (3) months from the day you have signed the Sale and Purchase Agreement (SPA) provided there isn’t any encumbrances on the land title. Meanwhile, in a situation where the process of transfer requires the vendor to ask for State Authority’s consent, it could take up to more than six (6) months from the date of signing the SPA.
However, it is also important to note that if the land is still subjected to a charge, the vendor or the owner must first discharge the charge from the property which then the transfer of title can be transferred to the buyer.
Who are the parties involved in a land title transfer?
Aside from the vendor and the purchaser, cooperation and the involvements of other parties are also required to complete the land title transfer transaction. Below are the parties involved to ensure a successful transfer of the property;
1. The Vendor
The vendor is the party that sells the property and owns the property. Where there is title issued to the property, the appropriate authority to confirm registered ownership of the property is the land office. However, if the title has not yet been issued, then the appropriate body to confirm beneficial ownership is the developer who is the current registered owner of the master title.
2. The Purchaser
The purchaser is the party that buys the property and has to pay the purchase price of the property. The purchase price has to be paid in the manner as sets in the Sale and Purchase Agreement.
3. The Vendor’s Lawyer/Solicitor
The vendor’s lawyer acts on behalf of the vendor, and their duties are:-
i. to ensure that the purchase price is received based on the completion date;
ii. to assist the vendor to pay the tax if there is chargeable gain;
iii. to apply for consent of transfer if the land is subject to restriction in interest;
iv. to make sure that the title to the property is rendered and delivered to the purchaser’s lawyer.
4. The Purchaser’s Lawyer/Solicitor
The purchaser’s lawyer acts on behalf of the purchaser, and their duties are:-
i. to prepare the Sale and Purchase Agreement, MOT, entry and withdrawal of caveat (Form 19B & Form 19G), and CKHT 2A to LHDN;
ii. to register the MOT at the Land Office;
iii. to ensure that the title is registered in the name of the purchaser upon full payment of the purchase price to the vendor.
5. The Vendor’s Financier/Bank
The vendor’s financier/bank is also a party involved in the process of transferring the title to the purchaser if the vendor has a loan charge to the property and has not fully settled the housing loan. This loan was originally obtained by the vendor to help finance the purchase of his own property. The property was charged to the financier/bank and the title of the property was kept by the bank as a security to the said loan.
Now, when the vendor intends to sell his property which is still charged to the bank, the transfer of title to the purchaser will involve settling the vendor’s loan beforehand so that the original title can be obtained from the bank. The vendor’s lawyer will have to prepare the discharge document for execution by the vendor’s bank when the vendor’s loan is settled.
6. The Vendor’s Financier Lawyer
The vendor’s financier lawyer acts to execute the discharge document once the vendor’s loan is settled. The document would be discharged by a Deed of Receipt and Reassignment (DRR).
The vendor has to either settle the outstanding loan on his own or it can be settled by the purchaser from the purchase price.
7. Government Agencies
Below are the relevant authorities involved to complete every process of transaction to transfer the land title to the purchaser or the buyer :-
a. Land Office and Pejabat Tanah Galian
· For land search, registration of caveat, & MOT, collection of land title
b. Inland Revenue Board (LHDN)
· For payment of RPGT & stamp duty
c. Insolvency Department
· For bankruptcy search
d. Jabatan Penilaian & Perkhidmatan Harta Malaysia (JPPH)
· Valuation of property for stamp duty
e. Local Authority
· To obtain consent for transfer of title
When do you need a state consent for a land title transfer
A state consent is required if the title has a restriction in interest, ie the property cannot be sold without the consent of the state authority. If this is the scenario, you will need to firstly prepare an application form for consent from the state authority to transfer the property to the purchaser. The application form can be obtained from the relevant land office.
Section 5 of the NLC 1965 provides that a restriction in interest is any limitation imposed by the State Authority on any of the powers conferred upon a registered proprietor to deal with his land by way of a transfer, lease, charge, easement, tenancy or statutory lien over his land, as well as his powers to subdivide, partition or amalgamate his land. The effect of a restriction in interest is that it limits the rights and powers of a proprietor to freely deal with his land.
Therefore, if a registered proprietor wishes to transfer a land title to another party, he must first obtain the consent of the State Authority. Failure to obtain consent to deal with the land will render any transaction entered by the proprietor void and unable to be registered. In real world scenario what this means is the Land Office won’t even start the land title transfer process.
What will a purchaser lawyer do in a Land Title transfer
If the property to be transferred has a land title, these relevant documents will be prepared by the purchaser’s lawyer:-
i. Prepare and assist the Vendor to execute the Sale and Purchase Agreement;
ii. Assist Vendor to execute the Memorandum of Transfer (MOT);
iii. Prepare the Real Property Gains Tax Form for the Vendor CKHT 2A (RPGT);
iv. Assist the purchaser to apply consent from the State Authorityto transfer the property (if it is needed);
v. Prepare and register a private caveat form (Form 19B) together with statutory declaration of the Vendor; and
vi. Prepare and register a withdrawal of caveat (Form 19G).
What will a vendor lawyer do in a Land Title transfer?
These relevant documents will be prepared by the vendor’s lawyer:-
i. Assist Purchaser to execute the Sale and Purchase Agreement (that has been signed by the vendor);
ii. Prepare the Memorandum of Transfer to register the Land Title under Purchase’s name;
iii. Prepare the Real Property Gains Tax Form for the Purchaser CKHT 1A (RPGT)
iv. Obtain relevant information from the Purchaser for the purpose of the land title transfer transaction.
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The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
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AKMAL SAUFI & CO (ASCO LAW) is a legal firm licensed under the Legal Profession Act 1976 and a member of the Malaysian Bar Council.