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#1 Guide To Understanding Malaysia Land Transfer Procedure

Posted by Els on August 25, 2022
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In Malaysia, there are a set of documents and costs that need to be submitted and paid to the authorities in order to transfer land titles successfully. Here’s a full guide to understanding the Malaysia Land Transfer Procedure.

Importance of Understanding Malaysia Land Transfer Procedure

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The land transfer procedure is important as it ensures that the purchaser is legally recognized as the owner of the property. Put simply, a land transfer procedure is a process to transfer the title of a registered property from one owner to another. The procedures must be followed to ensure that the land transfer is completed and the new owner can enjoy the legal rights as the registered owner of the land.

There are a lot of procedures that need to be done when it comes to transferring land titles in Malaysia. Besides basic information about the parties and properties involved, there are sets of documents that you need to submit to the authorities, as well as the costs you need to bear regardless if you are the vendor (original owner) or the buyer. With that in mind, let’s go through the details of the land transfer procedure in Malaysia.

Malaysia Land Transfer Procedure: Types Of Land Titles In Malaysia

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A land title is important as it is the official record of the legal owner of the property. It also records the details of the property. In Malaysia, there are several types of land titles, and each of them has different restrictions. Two of the most common types of land titles are Freehold and Leasehold property.

Malaysia Land Transfer Procedure: Freehold Title

Freehold property is a property in which the owner of the property has ownership for perpetuity. The transfer of freehold property is more convenient as there are usually fewer restrictions.

Malaysia Land Transfer Procedure: Leasehold Title

A leasehold property is a property in which the owner was given the ownership of the property for a limited period of time. Once the period has expired, the ownership will return to the State Authority and the owner has to apply to extend the lease from the State Authority.

Malaysia Land Transfer Procedure: What information do I need?

The very first step to transferring a land title is to obtain relevant information from the relevant parties.

Details of parties involved

MyKad Copy (IC). To ensure that the purchaser is eligible to purchase the property, the purchaser needs to provide a MyKad copy to show that he has attained the age of majority. Authorities like Land Office also need a copy to verify the identity of the vendor and purchaser.

Personal Tax Information for RPGT purposes

You need to pay tax to the government on the profit that you make from selling the land. The tax is named the Real Property Gains Tax (RPGT). Therefore, the vendor needs to prepare the tax registration number to facilitate the process at the Inland Revenue Board (LHDN) if the vendor makes a profit from the land transaction.

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Property’s information

To avoid fraudulent transactions, the purchaser must ensure that the vendor is the real and the latest owner of the land. The purchaser can determine the owner of the land by conducting a land search at the Land Office. The land search is usually conducted by a lawyer.

Besides determining the latest owner of the property, a land search is also important for determining the key information including the restriction in interest, type of land use, and whether the land is subjected to a charge. This information can help you to estimate the time needed to complete the transfer.

If there is any restriction in interest in the land title, the vendor needs to obtain consent from the State Authority before transferring the land. Meanwhile, if the land is estate land, the vendor needs to get the consent from Estate Land Board for the transfer. If the land is charged to a chargor, which is usually a financial institution, the vendor needs to settle the outstanding sum and discharge the charge on the land title.

Malaysia Land Transfer Procedure: Documents Required For The Transfer Of Land Title

The documents that are required in the land transfer procedure in Malaysia include the Sales and Purchase Agreement (SPA),  the Memorandum of Transfer (MOT), the receipts of the quit rent payment, the receipts of the latest Assessment Tax payment, the original land title, and deed of assignment in a certain scenario.

The new SPA

A Sales and Purchase Agreement (SPA) is the agreement between the vendor and the purchasers. It lays out the considerations and terms for the transaction. The SPA is usually prepared by the vendor’s lawyer unless both parties give permission to the purchaser’s lawyer to prepare the document.

Malaysia Land Transfer Procedure

MOT (Form 14A)

An MOT (Form 14A) is a standardized form to register a title in the purchaser’s name at the Land Office under the National Land Code 1965. An MOT needs to be executed by both the vendor and purchaser before the transfer of the land can be completed.

Deed of Assignment

If the land title of the property has not been issued, a deed of assignment is needed to transfer the rights of the vendor to the purchaser. In the situation where the vendor has borrowed from a bank, there is usually an existing deed of assignment whereby the vendor transfers all of his rights to the bank. The vendor has to settle the loan in order to be reassigned the rights in the land by the bank.

Malaysia Land Transfer Procedure: The Duties of a Vendor’s and a Purchaser’s Lawyer

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The vendor’s lawyer will need to prepare the following documents and assist the vendor in executing those documents. The documents include the Sales and Purchase Agreement, the Memorandum of Transfer, and the Real Property Gain Tax Form or CKHT 2A.

On the other hand, the purchaser’s lawyer will assist the Purchaser to execute the SPA, prepare MOT to register the land under the purchaser’s name, prepare the Real Property Gain Tax Form for the Purchaser (CKHT 1A), and obtaining the relevant purchaser’s information.

A Reputable Agency Can Assist You In Malaysia Land Transfer

Overwhelmed with the land transfer procedure in Malaysia? Find a reputable land agency to assist you in handling a land transaction. Buying and selling a property doesn’t have to be difficult.

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