Malaysia Real Estate

surfbabe · Joined: 17 Jan 2006 Posts: 9

Hi,

I heard that it takes at least about 10 years to get a title deed for Malaysian private property. What are the legal implications of this? Does it mean that the property owner may lose his house in the event the developer goes bankcrupt? Is there a need to apply for a "Deed of Assignment" to protect my property from being confiscated in such an event? Are foreigners who purchase Malaysian property more vulnerable to such risks?

I am asking these questions in view of the recent news in the Electric New Paper about Singaporeans who may lose their terrace houses in JB.
The article is on the internet:
..newpaper.asia1.com.sg/news/story/0,4136,100428,00.html

Would appreciate it if someone can answer my question. Hopefully Noor can lend further insight into this issue.

Noor713 · Joined: 15 May 2005 Posts: 507 Location: Sri Hartamas

Hi surfbabe!

This is what I call an interesting topic to discuss! Cool

From the website, I understand its got nothing to do with the unissued individual title. Its all abt the developer and the solicitors handling the S&P and the buyers' loans.

First of all, if a foreigner (or a Malaysian) buys a property here, there should be no worries at all that the Govt will confiscate it in the event no individual issued even after 20 yrs! Yes, even if the developer has gone bankrupt! Cos..when it does, a Receiver will take over the project, pays off the developer's debts and the individual titles will be issued in due time. If you are the 1st buyer, you have the S&P Agreement to prove you are the beneficial owner and if you the subsequent buyer, you have the Deed of Assignment.

The website again....its all about Letter of Disclaimer from the bridging loan financier. The developer, Focus Development Sdn Bhd, has an existing bridging loan to finance the project and has obviously agreed on the conventional mode of loan repayment ie developer to pay off directly to the bank and NOT from the buyers. There is nothing wrong with this mode of payment actually! In this situation, solicitors (for S&P and loans) should obtain a Letter of Disclaimer from the bridging loan financier to ` disclaim their rights and interests on the said Property in any foreclosure proceedings in the event the Borrower (ie the Developer) defaults in any payments to the Bank....."

In this particular case, it beats my senses on the Solicitors' negligence. Hard to believe.....

Cheers!

woonlmmys · Joined: 15 Jan 2006 Posts: 20

Hi Noor,

Would like to ask the following :-

If a Receiver CANNOT be identified for the troubled developer, or that it's 'taking forever to identify such a Receiver', then what heppens to the property and the owner's claim to his property ?

Fore the second issue, I belived it is also related to the buyer's side :-

The Buyer, if he so chooses to be a Cash Buyer, should be aware that he or his solicitor is able to communicate with the Bridging Financier to settle his 'Partial Redemption Sum' directly with the Bridging Financier, and not pay everything to the developer, thinking that the developer will forward this amount later to the Bridging Financier.

After the Cash Buyer has paid the 'Partial Redemption Sum' directly to the Bridging Financier, he will get a Letter of Disclaimer from the Bridging Financier.

Normally, a Bridging Financier will not have any probvlems acepting this 'Partial Redemption Sum' from a Cash Buyer.

Noor, please check my understanding of this. TIA.

Noor713 · Joined: 15 May 2005 Posts: 507 Location: Sri Hartamas

Hi woonlmmys!

I would say its more to `take forever to identity...." Laughing

of course you can identity..IF you know how to go about it.... Wink

Ok..in the above senario, nothing will happen to your property...STILL YOURS...except it will take a longer time for the individual title to be issued..thats all.

Either you are cash buyer or otherwise, your S&P lawyer or loan lawyer should be able to know if the master title is being charged for a bridging loan thru a land search. If it is, to write in to the financier for a redemption statement cum Letter of Disclaimer is a normal procedure.

It is not for the buyer to choose the mode of payment of any redemption sum to the bridging loan financier. It all depends on the arrangements made between the bank and the developer as the borrower. Either directly from the developer or from the buyer. Anyway, in either case, buyers MUST get a Letter of Disclaimer.

Cheers!

woonlmmys · Joined: 15 Jan 2006 Posts: 20

Noor,

Thank you for taking time out to advise us. Our gratitude goes to you.

surfbabe · Joined: 17 Jan 2006 Posts: 9

Hi Noor!

The situation you described applies to cash buyers. But what about buyers who purchased the property on a bank loan? It further complicates matters as the bank (i.e. loan financier) is the one who pays the developer on behalf of the buyer while the buyer repays the bank in instalments. As such, the property legally belongs to the bank until it is fully paid up by the buyer. The title deed (if the loan tenure is more than 10 years) would be held by the bank. After the buyer has fully paid his dues upon maturity of the loan tenure, the title deed will then be transferred to the buyer. Until then, the property legally belongs to the bank. Am I right? In this case, what happens when the developer goes bankcrupt? Is the bank at risk or the buyer?

Thanks for taking the time to answer my queries. Smile

woonlmmys · Joined: 15 Jan 2006 Posts: 20

Noor,

To add to Surfbabe's question, who is the Legal Owner of this ' Master Title ' property now ? And how is this ownership affected if the developer winds up ?

Noor713 · Joined: 15 May 2005 Posts: 507 Location: Sri Hartamas

Hi surfbabe!

It applied to both cash buyers and loan buyers. A letter of Disclaimer is a must if property is on Master Title and charged for a bridging loan.

To your question, either the developer goes bankrupt before or after completion of project, neither you or bank will be at risk as the Official Assignee (Bankruptcy Department) will take over and will subsequently appoint a Receiver. Things will proceed as usual but will take a longer time for completion. Patience is all you need should that occurs.

Cheers!

Noor713 · Joined: 15 May 2005 Posts: 507 Location: Sri Hartamas

Hi woonlmmys!

The legal owner will still be the registered proprietor as per endorsed in the title. Not all developers are legal owners.

If the legal owner has been adjudicated a bankrupt, all proceeds of sale on the property will be forwarded to the Official Assignee.

Cheers!

Daryl Teo · Joined: 09 Feb 2008 Posts: 593

Noor713,

This is a very informative thread, found it while googling up some stuffs. What happens if the situation is when the purchaser's solicitor is appointed by the developers as in the cases of purchases made with the developer with free legal fees as is the norm. Is the developer's panel lawyer compelled by law to help the purchaser obtain the Letter of Disclaimer?

And can the Letter of Disclaimer be still obtained from the Bridging Loan Financier if the construction is already well into its progressive stages. If yes, does one go back to the developer's 'panel lawyer' to obtain the letter?

What about instances where the purchaser has already agreed to release the payments direct to the Bridging Financier without the Letter of Disclaimer? Can they now ask for the letter in retrospect by threatening to withhold further payents.

Lastly do u have the standard Letter of Disclaimer & possible to provide PDF link.

Hopefully u're still following this forum.

Thank u & warm regards,
Daryl Teo
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