Conveyancing practice - area of law with highest percentage of

practitioners in Malaysia*

Since there are more conveyancing

practices compared to litigators and
commercial lawyers, conveyancing
practices have produced

and the highest the highest number

number of of complaints
disciplinary received by the Bar
actions. Council from the
general public

the highest
number of PII
claims
*Jurisk (Sep 2012) Vol. 8 Issue 3
2
Beware of scam against conveyancing lawyers –
BC Circular 104/2016 dated 28/04/2016
Carried out by a syndicate - sub-sales of residential
properties – similar modus operandi [same names
repeated as purchaser/borrower /vendor & same agent
(Kumar/ John)]

Modus operandi – solicitor approached by

freelance real estate negotiator with documents
that a bank has approved loan to a
purchaser/borrower

Bank then appoints solicitor to prepare loan

documentation – solicitor relied solely on the
negotiator to collect documents from or submit
documents to relevant parties

Bank release loan sum – borrower defaults - bank

then discovers that sale and purchase transaction is
fraudulent - undertaking & confirmation from
developer was forged.
3
What can conveyancing lawyers do? Best practice

Extreme caution when dealing with agents or

third parties – ask for identification, name card,
MyKad, estate agent’s licence, etc, & verify.

Deal directly with developer or

vendor or the bank – do not
allow third party to collect &
deliver documents

Identify &
verify identity If in doubt &
of client or Ask for utility Due diligence
where practical,
developer or bills to prove at all time – use
conduct a site
vendor or that vendor is conveyancing
visit to verify
purchaser or residing at the checklist
that property
borrower, property recommended
exist.
by PII insurers

4
Praktis website – www.praktis.com.my under “Practice
Tools”

5
WQ 1 - Investigate identity of parties –

Solicitor acted for a vendor, V, in a sale of land to P.

V had produced to solicitor the original title and being a non-

citizen, her passport.

Passport number on title different and V produced a statutory

declaration that her old passport had been replaced with a new
passport.

Transaction was completed and purchase price paid to V.

R, the real owner, appeared with original issue document of title

and claimed that she did not sell her land to P. R sued the solicitor
who acted for the fraudster owner, for breach of duty of care (tort).

Does the solicitor who acted for the fraudster owe a duty of care to R, the
real owner of the land?
6
Meaning of conveyancing?

 Black’s Law Dictionary – Act of performing various functions relating

to transfer of real property such as examination of land titles,
preparation of deeds, mortgages, closing agreements, etc.

 In context of practice in Malaysia – Conveyancing includes sales and

transfers of immoveable property, leases & tenancies, charges,
debentures & other security documents, discharge of charge and other
non-contentious business .

7
WQ 2 –
Statutes often referred to in conveyancing?

 There is no specific legislation dealing with real property

transactions in Malaysia.

 Name ten (10) statutes often referred to by a conveyancer.

8
WQ 3 – Does common law or equity apply in
conveyancing based on Torrens system?

 NLC recognises only registered interests.

 S. 6 of Civil Law Act states English Law shall not apply to conveyance of
immovable property.

 Does common law or equitable principles apply in Malaysian Torrens

system of registration?

9
10
WQ 4 - Identify issues in a sale & purchase transaction

Held under
2 titles with
Identify the total area of Gordon, the
issues involved 150 acres. deceased’s eldest
son approached by
in this
Dennis Tan, who
transaction. wish to purchase the
Ho Chin Soon lands at RM50
(deceased) million.
owner of oil
Dennis wants to palm estate in
deposit Melaka Gordon and Dennis
RM100,000 in now at your office
cash with you as and both wants you
stakeholders, as to act for them in
sign of good the transaction.
faith.

11
Different stages in a real property transaction

Contract
• Includes • After
investigations, • After completion,
drawing up execution of includes
SPA* and SPA until registration
execution completion
Post-completion
Pre-contract

*SPA/S&P = sale and purchase agreement

12
Pre-contract stage
Identify
parties to
transaction

Investigate
SPA
parties

Investigate
Option
title

Survey &
inquiries

13
WQ 5 – Acting for parties

(a) Can a solicitor act for both vendor and purchaser in the same
transaction?

Solicitor acts for a purchaser in sale and purchase transaction and

vendor is not represented by a solicitor.

Vendor’s property charged to a bank.

(b) Can the purchaser’s solicitor act for the vendor in the discharge of
property from the bank?

14
Investigate parties

Capacity
(Proprietor, beneficial owner, personal
representative, trustee, or agent)

NRIC search,
NRIC/Passport/Co. No. company search
Permanent address, address in bankruptcy
Malaysia, registered office. search/winding-up
search

GST registration if
Citizen or non- Income tax file
non-housing
citizen reference number
transaction

15
WQ 6 - Investigate parties – Power of attorney

Vendor in your office and

claims to be acting under
a PA granted by registered
proprietor.

List out steps or actions

you need to take before
determining that PA is
valid for the transaction

16
WQ 7 - Capacity - Power of attorney

Is a PA granted by X to Y
still valid on the death 0f X?

17
Investigate parties – Capacity - Personal representative

Is property still registered in

Vendor claim to be personal name of deceased?
representative of estate of
deceased proprietor. Or

Personal representative – means Transmitted to personal

the executor or administrator . representatives under s. 346
National Land Code?

18
WQ 8 – Sale by personal representative

19
WQ 9 - Investigate parties –
In a transaction involving sale of land

Solicitor acted for a vendor who is Chinese and whose name is

registered as proprietor of the land.

On a title search conducted by Purchaser’s solicitors, land is free

from encumbrances.

Deposit was agreed at 30% and balance 70% within 3 months.

SPA signed - balance purchase price paid on time - moneys
released to Vendor.

Registration of transfer rejected due to 2 caveats. - “Vendor” was

not real owner/proprietor - Vendor obtained replacement title by
fraud and had used a false identity card.

Is the vendor’s solicitor liable to the purchaser?

If so, describe briefly the liability.
20
WQ 10 - Investigate parties-Bankruptcy

Can a bankrupt sign a

sale and purchase
agreement to sell his
property and execute
an instrument of
transfer in favour of
the purchaser?

21
Investigate parties – Bankruptcy

 Doctrine of relation back – bankruptcy of a debtor shall be deemed to

have relation back to the time act of bankruptcy was committed.

 Under doctrine of relation back, OA’s title and rights over bankrupt’s
estates commence from time of act of bankruptcy.

 However, under s. 349(3) NLC - no land shall vest in the OA under any
adjudication of bankruptcy until it becomes registered in his name.

 Note the amendments made by the Bankruptcy (Amendment) Act 2017

[Act A1534 – Gazetted on 18/05/2017].

22
Investigate parties – Bankruptcy

 A charge created by bankrupt before any transmission was registered

by OA will pass good title and interest to the bank .[Hock Hua Bank
Bhd v Choo Meng Chiong & Anor [1999] 5 MLJ 312 (HC)]

 However, although OA had not been vested with legal title of

bankrupt’s property by transmission under NLC, land may be vested in
OA in equity - court declared that the transfer by bankrupt is void and
subsequent charges by the transferee were also void. [Pegawai Harta
Koh Liang Hee, Bankrap v. Koh Thong Chuan & Anor [1997] 2 CLJ
Supp 241 (HC)]

 So, if a title search shows that land is registered in name of

Vendor but a bankruptcy search on Vendor shows that he has
been adjudicated a bankrupt, how will you advise the purchaser ?

23
WQ 11 –
Investigate parties – Winding-up by the court

24
Investigate parties - approval required for company to
dispose property – S. 223 – Companies Act 2016

25
Investigate parties
Restrictions on non-citizens and foreign companies

A foreign company Part 33A NLC

includes a Malaysian - restrictions
company if 50% or in respect of
more of voting shares non-citizens
held by non-citizen and foreign
or foreign company companies.

A non-citizen is a
natural person who is
not a citizen of
Malaysia.

26
Approval of the State Authority – acquisition by non-
citizen or foreign company – s. 433B & s. 433E NLC.

Acquisition or Conveyance or

433E
433B
Note

Latest
amendments dealing requires disposal under s.
to NLC [NLC application to be 433E which
(Amendment) made by acquirer. requires
Act 2016], application to be
where made by the
acquisition by person conveying
a non-citizen or disposing.
of category of
land use under
industry now
requires
approval of Be familiar with the
State guidelines applicable in
Authority. each State

27
Government Policy – EPU replaced FIC
Latest EPU guidelines effective 01 March 2014

1. Transactions that Acquisition of residential

requires EPU Approval. unit by foreign interest
valued at RM1 million and
(RM20 million and above) above does not require
EPU approval

2. Transactions
that do not
require EPU Falls under
Approval. purview of State
Authorities.

3. Transactions
exempted from
EPU Approval. Go to
http://www.epu.gov.my

28
Investigate title
Conduct title search (private and official)
Encumbrances & Acquisitions & other
Qualified or final title Category of land use
caveats endorsements

If computerised register document of title

Check that conditions in manual issue document Dealings presented but not registered
of title are same

Express conditions (syarat nyata)

Check compliance Restrictions on usage

Restriction-in-interest (Sekatan kepentingan)

Consent to transfer, consent to charge, bumiputera lot, etc
29
Searches

 Private searches under s. 384 NLC – any person may inspect & take
notes of or extracts from register of title and any instrument of
dealing.

 Official searches under s. 385 NLC – Registrar shall issue to applicant

a certificate of search under his hand and seal.

30
WQ 12 – Private search

 TK Sdn Bhd decided to purchase piece of land from KR Sdn Bhd, who represented
that they are the registered proprietor of the land.

 Solicitors for TK Sdn Bhd conducted a private search which shows that KR Sdn
Bhd is the registered proprietor of the land which is free from encumbrances or
restrictions in interests.

 On the basis of this search result, KR Sdn Bhd signed the SPA and paid 10%
deposit (RM555,000) and applied to lodge a private caveat on the land.

 Private caveat was rejected by PTG for the reason that KR Sdn Bhd is not the
registered proprietor of the land which has not been alienated by the State.

 Can KR Sdn Bhd claim compensation from PTG for loss or damage by
reason of the error or omission contained in the private search?

31
Survey & other inquiries

Whether need to conduct land

survey (area) or boundary
verification survey

Whether any proposed plans

for acquisition.

Whether planning Access

permission will be granted Whether any
for intended use buildings/structures or
squatters
32
Option

Option granted earlier? Earnest money paid?

If granted earlier – Time period to exercise option? Time
period to execute SPA.

• If option not granted earlier, consider whether to grant or

obtain option for more time to investigate.

• Option period.

• Consequence if failure to exercise option.

• Consequence if option exercised and vendor refuse to

proceed with SPA.

33
WQ 13 - Option

On 29/07/2009, V granted an option to your client

to purchase land from V and your client exercised
the option on 02/09/2009 (within the option
period).

V did not accept SPA drafted by you and refused

to sign SPA and to transfer the property.

Negotiations took place for many years and finally on

30/08/2017 (after more than 8 years), your client sued
V for, inter alia, specific performance.

Limitation Act 1953 - an action founded on a contract

shall not be brought after expiration of 6 years from date
cause of action accrued.
Is your client’s claim barred by limitation period?

34
35
SPA

HDA transactions
regulated under Act 118
& 1989 Regulations)

SPA prescribed under

1989 Regulations
(Schedule contract of
sale)

Purchaser’s solicitors entitled to complete set of

SPA (original, duplicates & all annexures) from
housing developer, free of charge, subject to
undertaking to return if not executed by purchaser
within 14 days [Reg. 11(4)]

36
 Housing Development
(Amendment) Regulations 2015
[“HD(A)R 2015”]
01/07/2015
[P.U.(A) 106]

© Andrew Wong & Co 37

Sale by developer of any parcel intended to be held under
separate strata titles [s. 6 Strata Management Act 2013 (Act 757)]

Developer shall not sell Developer = residential,

any parcel or proposed commercial or industrial or
combination of such uses.
parcel

Validity of contract of sale Unless a schedule of

will be an issue. parcels has been filed
with COB

Failure to do so is an offence.

Will affect application for DL/AP.

© Andrew Wong & Co 38

Rationale behind Schedule of Parcels (SP) –
Essentially to address 2 major issues.

To avoid dispute on
what are parcels and
what is common
property in a
development area.
To avoid non-payment
of strata survey fees
necessary for the
subdivision of
building(s) or land(s)
into parcels to be held
under separate strata
titles.

© Andrew Wong & Co 39

Illustration of dispute –
Prestaharta Sdn Bhd v. Ahmad Kamal Md Alif & Ors [2016] 4 MLRA
573, CA.
Defendant acquired 149 CA - there was no
units & the resort facilities law prohibiting
from Danaharta and DMC in a housing
operated the resort. development.
Dispute
lasted for
Plaintiffs (purchasers of Purchasers knew
than 6 years
other units) claimed that when they bought
the resort facilities are part their units that it
of common property. was a holiday resort
cum condominium
& that resort
HC – resort facilities are facilities are
part of common property. excluded from
common property.
In 1992, purchasers acquired units in
Riviera Bay Condominium, Melaka,
and all signed DMC which provided Purchasers cannot
that some resort facilities would not approbate &
form part of common property. reprobate.

© Andrew Wong & Co 40

 Contents of schedule of parcels

Location plan, storey

plan & delineation plan

Legend of all parcels, all

common property & all
accessory parcels

In the case of accessory parcels,

legend to specify the parcels
they are made appurtenant to

Certificate by architect or
engineer that buildings are
Schedule of parcels to be capable of being subdivided
exhibited at all times in a conspicuous
position in developer’s office and at Certificate by licensed
such place where a sale is conducted. land surveyor that
buildings are capable of
being subdivided
© Andrew Wong & Co 41
HDA contract of sale to state name of solicitors acting for
developer or purchaser
New G & H contract of sale

Now required to state name of solicitors

acting for Developer or Purchaser (if none
state so).

Also required to state name of developer’s

solicitors who shall hold the last 5% of purchase
price as stakeholders for the developer for 8/24
months after date of vacant possession.

© Andrew Wong & Co 42

WQ 14 – Appointment of solicitors in a HDA transaction

• Developer has appointed your legal

Developer’s panel firm into its panel of lawyers for a
housing development scheme.

• Developer wants you to act for the

purchasers.
Acting for purchasers
• Can you act for any purchaser in that
housing development?

• Developer will pay your fees for acting

Solicitors’ for the purchasers.
remuneration • Can you be paid by developer when
acting for a purchaser?
43
 Housing Development (Control & Licensing)
(Amendment) Regulations 2015
P.U.(A) 106 dated 01/06/2015, came into force
on 01/07/2015.

A new Schedule H contract of sale.

Under new clause 27(1)(b), developer shall let

purchaser into possession of the parcel upon,
inter alia, the issue of a separate strata title to the
parcel by the appropriate authority.

© Andrew Wong & Co 44

WQ 15 – solicitor paid booking fee as stakeholder

• Developer wants the

Your housing developer
client has not applied for
APDL and legally cannot
sell.
But developer approached
by many interested
purchasers who wish to
pay booking fees.
purchasers to pay
booking fees to you
as solicitors to hold
as stakeholders and Can a solicitor hold
when APDL is issued booking fees as a
contract of sale can stakeholder?.
be signed with
purchasers and
booking fee shall be
part of 10% deposit.

© Andrew Wong & Co 45

46
SPA

Non-HDA transaction

No prescribed
format

Vendor’s solicitor shall prepare and

supply SPA unless otherwise mutually
agreed with the purchaser . No charge
for supplying SPA.
[BC Ruling 2015 – 16.01(7)]

47
During negotiations and correspondence

• Always “Subject to a formal

Negotiations of terms contract” until final draft has been
agreed by both parties

Letters and • All letters, correspondence or

communications issued or sent
correspondence - out on a law firm’s letterhead must
14.02 BC Rules & be signed by an advocate &
Rulings 2015 solicitor having a current
practising certificate.

48
Non-HDA SPA – date, parties and preamble

Date of SPA • Usually dated after all parties have signed.

• Description of Vendor (state capacity to

sell, e,g. as proprietor, as administrator or as
Parties trustee)
• Description of Purchaser

• Description of property
Preamble (Whereas) • Existing encumbrances, if any
• Intention of parties

49
Non-HDA SPA – Main terms and conditions

Application of
Sale and purchase
Completion Documentation
consideration price/balance
purchase rice

Delivery of
Inspection of possession, Real Property
Default
property apportionment & Gains Tax
passing of risk

Representations,
warranties and Compulsory
Variation Time of essence
undertakings of acquisition
vendor

Costs &
Successors bound Mediation clause Notice
disbursement

50
WQ 16 – Consideration and purchase price – Ringgit or Ringgit
Malaysia

What is the official currency of Malaysia?

51
Sale and consideration

“In consideration of the sum of Ringgit One Hundred Thousand

(RM100,000.00) only (including a sum of RM10,000.00 earlier paid by the
Purchaser to the Vendor as earnest money) hereinbefore or now paid by the
Purchaser to the Vendor, as deposit and part payment towards account of the
purchase price herein (“the Deposit”), the Vendor hereby agrees to sell and the
Purchaser hereby agrees to purchase the Property on an “as is where is basis”, with
vacant possession and free from all caveats or encumbrances* but subject to the
restrictions-in-interest and conditions of title (whether express or implied), at a
purchase price of Ringgit One Million (RM1,000,000.00) only (“the Purchase
Price”) upon terms and conditions hereinafter contained.

52
Completion – Completion Period & Extended Completion
Period

 3.1 Payment of Balance Purchase Price

 The balance of the Purchase Price in the sum of Ringgit Nine Hundred
Thousand (RM900,000.00) only (“the Balance Purchase Price”) shall be paid
by the Purchaser to the Vendor’s Solicitors, as stakeholders upon the terms of
stakeholding specified in Clause 4, within three (3) months from the date of
this Agreement (“the Completion Period”).

 3.2 Extension Of Time

 Notwithstanding the provisions contained in Clause 3.1, the Vendor shall grant
to the Purchaser an extension of time of a period of one (1) month (“the
Extended Completion Period”) to pay the Balance Purchase Price, provided
that the Purchaser shall pay to the Vendor interest on the Balance Purchase
Price or the amount still due to the Vendor, at the rate of eight per cent (8%)
per annum, calculated on a daily basis from the day next following the expiry of
the Completion Period until the date of actual payment, such interest to be
tendered together with the Balance Purchase Price or the amount still due, on
or before the expiry of the Extended Completion Period.
53
WQ 17 - Extension of time

1. You act for Vendor

2. Client wants the purchaser to make an application for extension of

time, if purchaser cannot pay within the Completion Period. No
automatic extension.

3. He also wants a mechanism whereby he is ensured that he will receive

payment of the late interest when transaction is completed without
any hassle.

Draft an alternative clause for extension of time to cater for client’s

instructions.

54
WQ 18 - Application of purchase price

1. You act for Purchaser.

2. You have proposed that in the event that the Balance Purchase Price or
any part thereof has been paid to the Vendor’s Solicitors, the Vendor’s
Solicitors shall only be authorised to pay the Balance Purchase Price to
the Vendor upon the registration of the instrument of transfer in
favour of the Purchaser.”

3. Vendor’s solicitor cannot agree on release of balance purchase price

upon registration of transfer as it will take too long and client will not
agree.

Suggest an alternative term of stakeholding by Vendor’s solicitor to

protect the purchaser’s interest.

55
Documentation – Execution of instrument of transfer

“5.2 Execution of Instrument of Transfer

(a) Simultaneously with the execution of this Agreement, the Vendor shall
execute a valid instrument of transfer in respect of the Property in favour
of the Purchaser, which is fit for registration (“the Instrument of
Transfer”).

(b) The Instrument of Transfer shall be prepared by the Purchaser’s

Solicitors and shall be deposited with the Purchaser’s Solicitors, together
with a certified true copy of the issue document of title, for the purposes
of adjudication and payment of the stamp duty thereon, and the
Purchaser’s Solicitors shall hold the Instrument of Transfer as
stakeholders, upon the terms of stakeholding that the Purchaser’s
Solicitors shall not present for registration or caused to be presented for
registration, the Instrument of Transfer until the payment of the Balance
Purchase Price, unless the Purchaser shall have obtained a loan from the
Financier in which event the Purchaser’s Solicitors shall be empowered
to deliver the Instrument of Transfer to the Financier’s Solicitors, when
Clause 3.4 (a) has been complied with by the Purchaser.”
56
WQ 19 - Real property gains tax

You are now acting for a company in

What is the real property gains tax
the sale of a property which the
rate applicable to the disposal?
company acquired on 15/05/2014.

57
Real property gains tax
[Responsibility of acquirer (purchaser) w.e.f. 01/01/2015]

Withhold and
remit to DG Otherwise
entire purchaser shall
consideration; or remit payment
to DG within
the 60 days in
3% of CKHT 502
Failure –
purchase
an offence
price
&
(whichever
purchaser
is lower)
Unless purchaser may incur
receives from an
vendor, copy of increase of
CKHT 3, within 10%
Within 60 60 days from
days from acquisition
date of
acquisition

58
Real property gains tax – example

“6.3 Sum required to be paid over to the DG under section 21B of RPGT Act

As the Vendor is a Malaysian citizen and has held the Property for more than five
(5) years, the Purchaser shall not be required to retain or pay over to the DG a sum
not exceeding three per cent (3%) of the Purchase Price pursuant to section 21B of
the RPGT Act, provided that the Vendor shall within ten (10) days from the date of
disposal deliver to the Purchaser a signed copy of CKHT3, failing which the
Purchaser shall within sixty (60) days after the date of such disposal pay that
amount to the DG, unless an extension of time has been granted by the DG for
that amount to be paid. “

59
WQ 20 - Real property gains tax

If the Vendor is a Malaysian citizen and has held the Property for less than five (5)
years, the Purchaser shall be required to retain or pay over to the DG a sum not
exceeding three per cent (3%) of the Purchase Price pursuant to section 21B of the
RPGT Act.

Draft an alternative clause or additional clauses to cater for this situation.

60