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Fine-tuning public auction
22/03/2003 NST-PROP By Salleh Buang

When the National Land Code, 1965 was amended recently, many thought it was merely to effect a shift in policy announced earlier by the Prime Minister.

What the PM had in mind was to make things easier for foreigners to buy landed properties; to make it attractive for them to stay longer; and to increase their investments.

When the full text of the amendment exercise was made known, people realised that it covered a wide range of matters - not just foreign acquisitions, but also new provisions for the issuance of final titles, the Estate Land Board, partition, amalgamation of land and sub-divisions, and public auctions.

The focus of this article is on the procedures affecting public auctions at both the High Court and the Land Office, with a view to determining how far these procedures have changed.

Section 257, which deals with foreclosure proceedings affecting Registry titles in the High Court, has been amended.

Under the amendment, a bidder at the public auction must satisfy “the officer of the Court” that he has, at the time of the sale, money equivalent to 10 per cent of the reserve price.

If this bidder then succeeds at the public auction, he must complete the purchase “not later than 120 days” from the date of the sale. The amendment states very clearly that “no extension” shall be given. If the bidder fails to complete the purchase, his deposit “shall be forfeited” and disposed off in the manner specified under the new section 267A of the Code.

Section 259, which deals with the “procedure at sale” affecting Registry titles, has also been amended. Under the amendment, the chargee is required to certify in writing that the full purchase price has been received by him. Only when that has been done will the purchaser be able to obtain from the court, a certificate of sale. The certificates, which will be in Form 16F, will be registrable by the purchaser as if they “were an instrument of dealing”.

Section 262, which deals with an enquiry before the Land Administrator when foreclosure proceedings are taken in respect of Land Office titles, has also been amended.

Under the existing law, only chargors and chargees themselves are “entitled to be heard, or to adduce evidence, at any enquiry under section 261”.

Accordingly, under the existing law, they are the only people “entitled to apply for a postponement or change of venue ... or to receive notice ... of any cancellation, postponement or change of venue”.

Under the amendment, they both can now appoint an authorised person or body to act on their behalf.

Section 263, which deals with foreclosure proceedings affecting Land Office titles in the Land Office, has also been amended. The amendments here reflect those carried out to section 257 mentioned earlier.

In a sense, sections 257 and 263 set out “parallel procedures” for the purpose of achieving the same purpose - the former affecting Registry titles and the latter affecting Land Office titles.

The recent amendments also inserted a new provision to the Code - section 264A. Under this new provision, the chargee with the concurrence of the chargor, can apply for a postponement not exceeding three months or cancellation of an order for sale by the Land Administrator. The Land Administrator has discretion to approve or reject the application.

Section 265, which deals with the public auction of Land Office titles, has also been amended. Under the amendment, the Land Administrator can now do a number of things if a second public auction is still unsuccessful.

He can try a third auction, either at the same reserve price or at a new reserve price. He can also withdraw it from the sale and refer the matter to the High Court.

A new paragraph (4A) is also inserted in section 265, requiring the chargee (after receiving the full purchase price from the bidder at the auction) to certify in writing this fact. Only upon that being done will the purchaser be entitled to get his certificate of sale from the Land Administrator.

An entirely new provision, section 266A, has also been introduced. Under this new section, the chargee is now required to prepare a statement of all payments due to the State Authority and the local authority and expenses incurred in connection with the sale by public auction.

Under another new provision (section 267A), it is now provided that where the purchaser fails to pay the balance of the purchase price within the stipulated date, his deposit shall be forfeited.

Section 268A now describes in detail the manner in which the purchase money shall be applied by the chargee. It also requires the chargee to submit statements of accounts of the payments received and paid out to the Registrar of the Court or to the Land Administrator, as the case may be.

Finally, section 301 has also been amended. Under the new provision, where the land sold at a public auction is subject to restrictions in interest, the consent of the State Authority is not necessary to give effect to any certificate of sale issued to the purchaser. This means that if the property cannot be sold successfully at a public auction, but is instead sold through private treaty, consent is still required if the land is subject to such restrictions in interest.