This is the 1st part of a series of articles by Christopher Chan on ‘Land Law’.
Pre-British times
Generally, land tenure in Peninsular Malaysia prior to the arrival of the British onto our shores was based on customary land tenure. Under the customary system of land holding, any person who carried out the task of clearing the waste land was entitled to occupy it provided he cultivated it and gave one-tenth of the produce to the State. This gradually became the basis of how Quit Rent was introduced later on.
In Sabah and Sarawak, similar customary land ownership systems prevailed where any person could own land on the basis of his clearing, cultivating and maintaining the land.
Arrival of the British
With the coming of the British into Malaysia, English law of conveyancing was introduced where privately executed deeds were the basis of title to land. This gave us some form of structure to land ownership in the country.
Later when the British influence and rule spread to the rest of Peninsular Malaysia, the new Torrens system of land registration was introduced. We adopted this from Australia and found this to be more efficient than the English system as it enabled a simple, cheap and effective system of land tenure and registration. The Torrens system of land registration is named after South Australian Sir Robert Richard Torrens who was largely credited with designing and implementing it.
The distinct advantages of the Torrens system as compared to the English system are as follows:
- Because the land titles Register contains all the information about the person’s land, it means that ownership and other interests do not have to be proved by long complicated documents, such as the English system; and
- Torrens created a central registry where all transfers of land are recorded in the register, thereby producing a single title with a unique number that also records easements, mortgages and discharges of mortgage.
The main land law in Peninsular Malaysia today is the National Land Code (NLC) 1965 which came into force on 1 January 1966. The laws governing the whole country is rather fragmented as Sabah and Sarawak too have their own sets of laws – Sarawak Land Code and the Sabah Land Ordinance.
The land registration in all states in Peninsular Malaysia is Torrens System which is administered by the State Land Offices and coordinated by the Department of Land and Mines.
Torrens system is a registration system on titles of land. It is based on the concept of 'indefeasibility of title', which means that once an interest is registered, it is good against the whole world and the state guarantees the interest. Over the years, there have been case laws which have challenged this concept but we shall not go deeper into this matter as my objective is to just introduce the concept to you readers.
It is important to note that ‘indefeasibility of title’ applies only when the title of a property has been issued and the name of the owner has been registered on it. However indefeasibility does not apply when a title is obtained by fraud, misrepresentation, forgery and when a property interest is otherwise unlawfully acquired – section 340 of the NLC.
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Land tenure
Land tenure in Malaysia can be either one of the following:
- Freehold or land held in perpetuity. Note that this right is not absolute as government can still acquire your land under the Land Acquisition Act 1960 and furthermore under section 45 of the NLC, the owner of the land is not entitled to extract any minerals or rock material from the land. This right resides with the state government. The owner of the land may obtain a permit from the state authorities for these purposes.
- Leasehold, which essentially means that the land is owned by the State Government but the individual who has acquired a leasehold title in the land may occupy it for any time period not exceeding 99 years as permitted under section 76(a) of the NLC. Upon the expiry of the lease, the land shall revert to the State Authority. However there are provisions in the law for the extension of leasehold land which I will delve into greater detail in my 2nd series of my Land Law article.
Christopher Chan is an Associate Director and Registered Estate Agent with Hartamas Real Estate Group. He holds a Bachelor of Arts (Victoria University of Wellington, New Zealand), Post Graduate Certified Diploma in Accounting & Finance (CDipAF) (The Association of Chartered Certified Accountants (ACCA), UK), Master of Business Administration (MBA) (Edinburgh Business School, Heriot Watt University, Scotland) and is a Certified Residential Specialist (The National Association of Realtors, USA) and is a member of the Malaysian Institute of Estate Agents (MMIEA). He was an adjunct lecturer at UCSI University.
He can be reached at christopherchan@hartamas.com.
Click here to continue to Part 2!
