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A primer on land ownership
11/05/2002 NST-PROP By Salleh Buang

Land ownership in Peninsular Malaysia is governed by the National Land Code 1965 (NLC), in force since January 1966.

Since the law is based on the Torrens System (where “the register is everything”) ownership is evidenced by having one’s name on the title. There are three routes to ownership. The first method is by “dealings,” such as by purchase and followed by transfer, which must be in the prescribed form followed by registration at the relevant land registry.

The second is through inheritance (from one’s parents or ancestors), and the third is by acquiring it through “alienation” from the State Authority.

The term “dealings” includes not only transfers, but also leases, charges, easements and liens, while “alienation” is the process by which state land is “disposed by way of alienation.”

Under the law as it stands today, there is no limit to the number of land titles or the size of land area a person can own. State policy, however, currently allows a person to own only one low-cost housing unit. Some people, however, still manage to own more than one unit of low-cost housing - by using their children’s and relatives’ names.

The NLC recognises two types of land ownership. The first type is “land held in perpetuity,” commonly referred to as “freehold land.” The second is “land held for a term of years,” commonly referred to “leasehold land.” The maximum term of the latter is 99 years.

Land ownership carries with it certain duties. Briefly, these are - (a) paying the annual quit rent to the State Authority (in default of which the land can be forfeited by the State Authority); and, (b) complying with all the express and implied conditions affecting the land.

“Express conditions” are those specially endorsed or expressed on the land title while the implied conditions are those stated in sections 115 (for agricultural land), 116 (for building land) and 117 (for industrial land) of the NLC.

Breach of any of these conditions, if not remedied in time, can result in forfeiture. Beyond that, the land can also be subject to certain “restrictions in interest” (e.g. the land cannot be sold or transferred without the consent in writing of the relevant authority).

Land ownership is protected by the NLC and guaranteed by the Federal Constitution. Under the NLC, if a person is registered as owner of a piece of land, his title (or interest) is “indefeasible.” Indefeasibility of title means that one’s ownership cannot be “challenged or questioned,” unless the case falls under any one or more of the circumstances mentioned in section 340(2) NLC - e.g. where there has been fraud, misrepresentation, or so on, when ownership is acquired.

Land ownership is guaranteed under Article 13 of the Federal Constitution. Simply put, this means that land cannot be compulsorily acquired or used by any one (even by the government) unless it has been acquired in accordance with the procedure laid down in the law (the Land Acquisition Act 1960) and “adequate compensation” has been paid.

What is “adequate compensation” is spelt out in detail in the First Schedule of the 1960 Act. The NLC also recognises and protects co-ownership of land (co-proprietorship). Co-owners who mutually agree to have their own separate documents of titles to their own “portions” can ask for partition. Likewise, an owner who owns several pieces of properties adjoining each other can ask for amalgamation.

Possession is not the same as ownership, despite the saying that “possession is nine-tenths of the law.” The NLC does not recognise the common law concept of “adverse possession,” something which is alien to the Torrens system.

As a result, if you occupy somebody’s land without his permission, you are a “squatter” and you remain so, no matter how long your illegal occupation might have been. According to established case law, a squatter “has no rights in law or in equity.” The principle applies equally whether you squat on state land or alienated land - the difference being that squatting on state land is a crime (for which you can be fined or sent to prison), while squatting on private land only gives rise to the tort of trespass (which will make you liable in damages).

Strange as it may seem, squatters of state land have, in the past, been “rewarded” by the authorities. Some were given temporary occupation licences (TOLs), whilst others were even more fortunate - they were given land titles in due time. Such benevolent actions by some State Authorities, prompted perhaps by political motives and possibly by humanitarian reasons, however, do not (and cannot) change or affect the letter of the law. Squatting on State land remains illegal under the NLC, and if the authorities see it fit, criminal prosecutions can be taken (though this has been very rare in the past).

Under the NLC, an owner of an agricultural land is allowed to build only one dwelling house (being his home) on that land, provided that it does not occupy more than one-fifth of the whole area of the land or two hectares, whichever is the lesser.

In many cases, however, the law does not reflect the reality on the ground. Family members have a tendency to stay close together, and when a piece of agricultural land in the kampung is large enough, in time other members of the same family tend to build their own dwelling houses on the same land. Whilst this state of affairs is clearly in breach of section 115 NLC, action has seldom (if ever) been taken against the registered landowner.

The NLC is a general law applicable to all alienated land in Peninsular Malaysia. Besides, the NLC, there is a specific law governing Malay holdings known as the Malay Reservation Enactment (one uniform legislation covering Perak, Pahang, Selangor and Negeri Sembilan and five separate legislations covering the remaining five states of Johor, Terengganu, Kelantan, Kedah and Perlis).

While in most of these Malay States, the term used is “Malay Reservation,” other terms or expressions exist as well - such as Malay Agricultural Holding (for Kuala Lumpur’s own Kampung Baru), and Malay Holding (in Terengganu). In Kelantan, only “natives of Kelantan” can own Malay reserve land. The basic objective of these laws is to restrict any form of “dealings” affecting these land by non-Malays.

Quite recently we heard of a proposal to allow leases of up to 30 years to non-Malays; but to-date, nothing further has been heard of it. Apart from this, certain State Authorities make it a policy (which they implement when approving development projects) of insisting that a certain percentage of the houses being built by the developer can be sold only to Bumiputra buyers. When sold, these properties will virtually for all purposes remain regarded as Malay reservation lands although the term “Malay reservation” does not appear endorsed on the land titles.


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