Chris Tan Chur Pim Managing Partner CHUR ASSOCIATES® advocates & solicitors ||| registered trade mark agent

What is a Caveat

• A caveat is a type of restraint on dealings which freezes the register so as to prohibit subsequent dealings with the land or an interest therein until the caveator has had the opportunity to establish his claim.

Types of

Caveat

Private caveat

Lien holders caveat

Trust caveats

Registrar’s caveat

TYPES of Caveat

• Registrar’s caveat – entered to prevent fraud and any improper dealings in the land. Also to protect interest of Federal or State Authority, minors, persons of unsound mind and owner who is not in the country.

• Private caveat – entered to protect the title or interests of persons seeking to deal with a land or disputing the title or interest in land pending registration or settlement of dispute. Most commonly used type of caveat.

TYPES of Caveat

• Lien holders caveat – entered by the lien-holder with whom the issue document of title has been deposited as security for a loan granted to the borrower proprietor to protect his interest in the land arising from a loan transaction.

• Trust caveats – intended to prohibit an dealings in respect of trust property and is entered by the Registrar on application of the trustee or the person by whom the land or interest is first transferred to trustees.

WHEN can a caveat be registered – CAVEATABLE INTEREST

(for private caveat) Section 323(1) of the National Land Code 1965 (NLC) provides that a person

or body can apply to enter a private caveat if he has caveatable interest. The categories of persons who can be permitted to apply to enter private

caveat are: • any person or body claiming title to, or any registrable interest in, any

alienated land or undivided share in any alienated land] or any right to such title or interest;

• any person or body claiming to be beneficially entitled under any trust affecting any such land or interest; and

• the guardian or next friend of any minor claiming to be entitled as mentioned in paragraph (b).

• Section 324 of the NLC:

the registrar is not required to enquire into the validity of the claims on which an application for entry is made.

The duty of the registrar in respect of an application for entry of a private caveat is purely administrative or ministerial.

• Most common form of caveatable interest are interests of a purchaser under a sale and purchase agreement with deposit paid and interest as a chargee whose charge has yet to be registered.

HOW to Register a Caveat

• Duly signed application Form 19B, attested, verified by the statutory declaration of the applicant or his advocate and solicitor and is accompanied by the payment of an appropriate fee supported with the relevant supporting documents such as copy of the sale and purchase agreement and applicant’s NRIC.

• A private caveat remains in force for a period of 6

years after which duration, the caveat will lapse and cease to have any effect.

WHEN and HOW to

remove a caveat

Withdrawal by caveator

Removal by Registrar

Removal by Court

• Withdrawal by caveator - can be done at any time by serving a notice in Form 19G on the Registrar together with the prescribed fees. The Registrar upon receipt of this notice shall cancel the entry of the caveat.

• Removal by Court - Anyone aggrieved by the existence of a private caveat can at any time apply to the Court for an order to remove the caveat. The Court may make a suitable order as it thinks just.

• Removal by Registrar o The caveatee can make an application using Form 19H

accompanied by the requisite fee and submit to the Registrar.

o The Registrar shall cancel the entry of the private caveat and note the reasons for cancellation and notify the registered proprietor of the same.

o The Registrar will issue a Notice of Intended Removal of the Private Caveat in Form 19C to the caveator informing him that the private caveat will be cancelled upon the expiry of 2 months from the date of the service of the Notice on him.

o Upon receipt of this notice, the caveator may apply to the High Court and obtain an order to sustain the private caveat and serve the order on the Registrar.

o The Registar in the situation where the caveator obtains an order for sustaining the private caveat cannot remove it.

Part 2

Tenancy Issues

TENANCY - THE BASICS

• Tenancy Or Lease

– Below 3 years : Tenancy

– More than 3 years : Lease

• Differences?

– Tenancy : Govern by tenancy agreement only

– Lease : Registrable interst on the Property title

TENANCY - THE BASICS

• Tenancy Agreement

– Contracts Act 1950

– Specific Relief Act 1950

– Distress Act 1951

• Lease

– National Land Code 1965

MALAYSIA is PRO-TENANT in Practice

TENANCY ACT PRO-LANDLORD LAW

Tenancy Issues

• Tenant defaults in payment of rental and what should landlord do? Terminate tenancy agreement and evict the tenant out ? or just demand the payment of rental?

• Tenant defaults in payment of electricity up to a huge amount and what should landlord do?

• Tenant refuses to deliver vacant possession and wish to continue staying after expiry of tenancy agreement

• Tenant wishes to continue staying on monthly rental basis? Does it work?

• Landlord refuses to return the utilities deposit and security deposit after expiry of tenancy agreement

• Landlord withhold the deposits to repair the premise • Landlord increase the rental • Landlord give notice to tenant for vacant possession within the

period of tenancy on the ground that landlord wants to sell the premise

Tips for Landlord:

• Register utilities under the tenant’s name to make tenant liable for the outstanding amount

• Conduct a background search on the tenants via Google and Facebook. • For an individual, a bankruptcy search can be done while winding up

search can be done on a company through the Official Assignee. • a search can also be done on a company via Companies Commission of

Malaysia where one can determine whether a company has been duly registered

• CTOS Search • Find out where the tenant works and the designation of him/her in the

company. This will give some clues as to the background of the person concerned.

• To have an alternative address of the tenant in the Tenancy Agreement apart from the demised premises e.g. hometown or work address. This is to enable the landlord to track the tenant if there is a necessity to do so.

LANDLORDS, PROTECT YOURSELVES!

Tips for the tenant:

• Can conduct a search on a title to ensure that the landlord is the actual registered owner of the property. There are instances where the landlord represented to the tenant that he/ she is the owner when it is not the case

Part 3

Mitigating Risks of Fraud/Scams in Land Dealings Malaysia

How does Land Fraud happens

Common Scenario:

• A person has misused the power and conveyed the property to the another based on power of attorney but in fact it was done without the knowledge of the registered proprietor

• A transferor is not the actual proprietor and forged the signature of the actual proprietor

• A transferor is not the actual proprietor and misrepresented that he was the actual owner

Mitigating risks of land frauds and land scams

• you may register restriction in property; sale of property couldn’t go through your consent

• before signing any S&P, always have a check on the legal firm

• Ensure your land titles are secured and safe. • Take the time to frequently visit your property • do not leave it unnecessarily vacant. • land fraud normally occurs to a property which is

vacant, unattended and normally long held by families

Position of Bona Fide Purchasers

• Differentiate between Case of Boonsom Boonyanit v Adorna Properties and Case of Tan Ying Hong v Tan Sian San

Adorna’s Case (Past)

OWNER 1ST BUYER

Transfer Land

Forgery by F

Federal Court

- 1st Buyer have Good Title

- “Immediate Indefeasibility”

- Owner suffered

Tan Yin Hong’s Case (Now)

OWNER

Transfer Land

Forgery by F

Federal Court - 1st Buyer no Good Title - Owner protected

- If 2nd buyer • Without notice of

Fraud/Forgery • Deemed. Bona Fide Purchaser • There Good Title • “Deferred Indefeasibilty” • Owner suffered

1ST BUYER 2ND BUYER

Transfer Land

Moving Forward…

• Full adoption of the Torrens System

(enforce the missing link – compensation)

• Land Transaction on Block Chain

(like Dubai)

christan@churassociates.com