Property and ownership information can be found at the appropriate Registry or Land Office. Most information is registered with the appropriate registry or land office. Registered land is a conclusive evidence of title.
There is no current record of information relating to selling prices and the terms of specific transactions in Malaysia. The Ministry of Local Government and Housing is proposing an establishment of a comprehensive data system on all aspects of real estate in Malaysia. In general, implied and explicit information about the transaction is provided by the "middleman" such as a lawyer or a broker.
Institution of Surveyors Malaysia
64-66, Jalan 52/4, 46200 Petaling Jaya, Selangor. Malaysia.
Phone: 603 756-9728
Fax: 603 755-0253
The Board of Valuers, Appraisers and Estate Agents Malaysia (http://www4.jaring.my/lppeh)
The Board of Valuer, Appraisers and Estate Agents Malaysia was set up in 1981 under the purview of the Ministry of Finance, Malaysia. The setup and operation of this Board is governed by the provision of Valuers, Appraisers and Estate Agents Act of 1981. Its primary function is to regulate the valuers, appraisers and estate agents practicing in Malaysia.
Most land laws in Malaysia are substantially based on the British legal system and the principle of common law. Therefore there exist some similarities with some of the US land laws.
Similar to US, Malaysia has capital gains tax levied on taxable gains from disposal of real property and shares in real property companies by residents and non-residents. The tax is governed by the Real Property Gains Tax Act ( Act 169). The taxable gain is the difference between acquisition price and disposal price of real property with appropriate allowances given in the transaction.
The Stamp Duty Act 1948 (Amended 1994) states that in any transaction of property, buyer/purchaser/transferee will pay stamp duty to the government according to the market value of the property. For example, land conveyance duty is payable at progressive rate up to 4% of value; on sale of stocks and shares, 0.3% of value; and on stockbroker’s contract note, 0.5%.
There is no estate duty payment on an estate of a deceased who died on or after November 1, 1991.
The real estate tax (similar to US) is payable by property owners in accordance with applicable rates set by local or municipal authorities. The tax is usually levied as a percentage of either the capital value or of the taxable value of property.
Land tenure in Malaysia is divided into three categories namely in perpetuity, freehold and leasehold.
Normally the state or government hold land in perpetuity with no limitation of time constraints. The stte can provide a state grant of land to individuals for a certain number of period.
State grant of land is normally for a period of 99 years and this is regarded as a freehold in Malaysia.
Leasehold terms can vary from 30, 60 or 90 years depending or the term remaining from the freehold interest.
The National Land Code of 1956 has established uniform land laws for all of the individual states of West Malaysia, which continue to have the responsibility for controlling land ownership. There is no basic restriction on land ownership in Malaysia. Land may be acquired by persons or companies domestically or outside Malaysia provided they conform in all respects to existing land laws.
Similar to the US, tenancy in common in Malaysia involves a case where persons or bodies are co-owners of the property. In this case there is no right of survivorship. The co-owner of tenancy in common can dispose of his or her interest in the property freely without the consent of the other co-owner. In case of death, the interest of that co-owner goes to his or her heirs.
Joint tenancy does exist in Malaysia with some similarities with that of US. Only trustees and personal representatives may hold land as joint tenants with right of survivorship in Malaysia. Joint tenants have a concurrent ownership of the whole property.
Common ownership in Malaysia can be created by partnership agreement. Partnership subsists between person carrying on business in common with the other person. Partnership of more than 20 members is forbidden if purpose is for acquisition of gain. For taxation purpose, individual partners will be assessed on their respective shares of income.
In Malaysia, the only collective ownerships are partnerships (as stated above), joint ventures, corporations and trust ownerships. These types of ownerships are similar in character to those of US.
A valid deed in Malaysia must be signed in the presence of a witness by parties involved in the agreement. It is not necessary for a deed to be sealed, so long as the deed makes it clear on the face of itself that it is intended to be a deed. Section 26 of Contracts Act (Act 136) set down the required elements of a deed and also the agreement under seal. Most of the requirements of the deed are similar to those of the US. Generally, no attestation clause is required unless the deed contains Power of Attorney.
Property conveyance after death depends on whether there is presence of the will or not. If a will exists for that property then the property will pass to the beneficiary. In most cases the property is transferred by inheritance through the family generations.
There is adverse possession in Malaysia as does exist in US. No information was obtained as to the required occupation time to qualify as the owner of adversely possessed land.
The issuing authorities for titles in Malaysia are the Registry of Titles and the District Land Office. Registry titles are issued in the case of town land or village land, any lot of country land exceeding 10 acres in area or any part of foreshore or seabed. Land office titles are issued in the case of any lot of country land not exceeding 10 acres.
One copy, called the issue document, is held by the owner and the other copy, the register document, is kept at either the Registry of Titles or the District Land Office. The transfer of the property to the purchaser is effected when a Memorandum of Transfer is signed by the seller and buyer and is duly stamped and presented to the relevant land office or registry which will register the transfer.
The strata form of title used for each floor or part of a floor in a multi-story or condominium development is known as a strata title in Malaysia. The Strata Titles Act 1985 provides all statutory guidelines on the use of strata titles.
Unlike US, there is no title insurance in Malaysia. It is therefore necessary to do a thorough title search during any real estate transaction.
Both recording and Torrens systems are used in Malaysia which is similar to the US.
Contracts are governed by Contracts Act (Act 136) which is based on English law. There is a standard agreement (the Sale and Purchase (S&P) agreement) which set out all the terms and conditions agreed between the seller and buyer. These conditions include property description; price; terms of payment; method of payment; transfer of title and the handing over of the property plus provisions to accommodate the requirements of the financial institution granting the loan facility if loan is required to complete the transaction. Four sets of S&P agreement are prepared by the seller’s lawyer to be signed by both parties to the land deal. Damages may be stipulated in the contract in the event of breach and aggrieved person is entitled to the remedies stated in the agreement.
Property Taxes:
Property taxes are discussed in Section 8.6.
In addition to the above, there is RM100,000 levy on houses costing more than RM250,000 allowed to be sold to foreigners as well as the flat 30% rate of property gains tax that they have to pay, if they decide to sell the properties. The International Real Estate Federation’s (FIABCI) Malaysia Chapter president has publicly objected to this type of levy. The levy seems to be discouraging foreign investment into the country.
Land Use & Control:
Town and Country Planning Act 1973 is the main governing legislation in planning of Malaysian land use around the country. This Act has policies on the country planning, zoning, provision of amenities and some buffer zone. There are different categories of uses of land namely: (a) agriculture, (b) building (i) commercial, (ii) residential, (iii) industrial.
In Malaysia, mortgages are created in a form of charge. The NLC states that one may create legal charge in a prescribed form over: (a) whole, but not part only, of alienated land; (b) whole, but not part only of undivided share in alienated land; (c) lease of alienated land, as security for repayment of debt or payment of annuity or other payment.
Legal or statutory charge is effected by registration at appropriate land registry.
The financial institution in Malaysia may give a loan amount of up to 80% of the property price (or up to 90%, provided that the property is less than RM100,000). The lenders or banks will, in turn, take the property as a security for the loan. The bank will then administer the property on behalf of the mortgagor. In case of payment default, the bank can sell the property to recoup its unpaid dues. If the property price is less than the amount of the loan outstanding, then the mortgagor is still liable to pay the difference.
The above procedure is somehow similar to that of the US.
The financial structure in Malaysia has some similarities to that of the US. There are several loan types including housing loans, commercial loans for property development and some short term loans normally provided as working capital.
Both primary and secondary mortgage markets exist in Malaysia. The primary mortgage markets are provided mostly by commercial banks and finance companies. On the secondary mortgage markets, CAGAMAS seems to dominate the market. CAGAMAS is a national mortgage corporation which was set up to mediate between various primary lenders and investors. In other ways, it plays the role of an issuer of secondary mortgage securities. Loan-giving agencies such as the banks and financial institutions can sell their housing mortgages to the corporation. Malaysia homebuyers are also allowed to withdraw 30% of Employees Provident Fund (EPF) savings to buy houses.
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