Malaysia Land Law – A Broad Overview
Malaysia land law is, broadly speaking, governed by the National Land Code (Revised 2020) (Act 828) (the ‘NLC‘). The NLC regulates the operation of a register of original documents of land titles. The land register reflects legal title (ownership) and proprietary interests in land, and information and details in connection with the land. It has a ‘mirror effect’ ie. what is on the register cannot be denied. This concept is known as ‘indefeasibility of title‘.
The NLC is adopted by each Malaysian State and each State maintains its own registry of titles. In order for the NLC to operate as law in a territory, each State adopts the provisions of the NLC by way of the following legislation:
- In the states of Peninsular Malaysia, including the Federal Territory of Labuan (but excluding Malacca and Penang): the NLC
- In the states of Malacca & Penang: adopting the NLC via the National Land Code (Penang and Malacca Titles) Act 1963 (Act 518)
- In Sarawak, via the Sarawak Land Code (Chapter 81) (1958 Edition)
- In Sabah, via the Sabah Land Ordinance (Cap. 68)
The law in Sabah does not provide for ‘indefeasibility of title’. Malaysia land law may also be influenced by factors such as native customary law and Islamic principles.
The registry of land titles reveals all information relating to any specific land. This provides a potential purchaser (or interested party) of land with reliable and conclusive information about that plot of land. For example, if a title reflects that it is Malay reserved land, which means the land can only be owned by Malays, it gives notice to a potential buyer of this restriction; any dealing with such land by non-Malays will be rendered null and void.
Scope of this Post
This post will focus on the NLC as enacted in Peninsula Malaysia (including Malacca and Penang). Further, as the scope of this blog is restricted to agricultural land, documents of strata title (ie. title issued to owners of a building block / condominium, or a landed property part of a gated housing development, as a share unit /value) will not be addressed.
Types of Title
Freehold Title / Leasehold Title
- Leasehold title refers to land ownership for a fixed maximum period of time, usually 30 / 60 / 99 (most common) / 999 -years. The use of the land is confined to the purposes identified by the lease. When the lease period expires, title reverts back to the freehold title owner (the State or any legal person).
- Freehold title refers to an indefinite ownership of land ie. the ultimate, perpetual owner of the land.
Qualified Title (QT) / Final Title (FT)
- QT refers to land where the area of the land has not been finalised. A survey and mapping of the land needs to be conducted by the Department of Survey and Mapping Malaysia (Jabatan Ukur dan Pemetaan Malaysia (JUPEM.)) Until this is conducted, land area is mere provisional. FT can only be issued after a final survey of the land area has been carried out by JUPEM. With FT, there is usually reference to a Certified Plan (CT) with a CT number.
- Potential purchasers should therefore be cautious of QT land where the price of land is dependent on a base unit such as per square foot / per acre / per hectare. QT land generally cannot be subdivided, partitioned or amalgamated. Where QT land is large and vacant, the potential purchaser could engage their own land surveyor to conduct a proper demarcation and survey of the land.
Registry Title / Land Office Title
- Registry Title classification relates to land exceeding 4 hectares in area – reference to ‘daerah‘ is typically used. Land Office Title classification relates to land with an area not exceeding 4 hectares – reference to ‘mukim‘ is typically used.
- When referenced in connection with whether land is a freehold or leasehold title, 4 variations of title emerge:
- Registry Title, Freehold = Grant (Geran (GRN))
- Land Office Title, Freehold = Mukim Grant (Geran Mukim (GM))
- Registry Title, Leasehold = State Lease (Pajakan Negeri (PN))
- Land Office Title, Leasehold = Mukim Lease (Pajakan Mukim (PM))
Categories of Land Use
How the land is used is restricted to the category listed in the title document. There are 3 land use categories:
- Agriculture: includes the cultivation of any crop (including trees cultivated for their products), market gardening, the breeding and keeping of honeybees, livestock, reptiles, and aquaculture.
- Industrial: land used for commercial establishments such as warehousing, shipping, transporting, storage, and packaging.
- Building: includes residential or commercial developments.
The category of land use will be reflected on the document of title. Only 1 category can be identified. A potential purchaser intending to buy agricultural land, for instance, should therefore exercise caution and avoid activities that may fall under a different category, like the building of a warehouse or storage facilities. A landowner can, however, apply to the State Authority to alter the category of land use for a fee.
- Category reflected as Nil (Tiada)
Some lands title documents will reflect a “Nil” category. These are usually title documents issued a long time ago when the town or village zoning plan was unclear. This type of land is valuable as the use of the land is unrestricted and may constitute a combination of the 3 pre-defined categories.
In some states however, land without category and/or specific conditions (see below on ‘Conditions’) multiples of the highest rent rate payable in the state. Such an amount could be more than the value of the land itself. This may force the owner to apply for a conversion of the category of land use from Nil to a pre-defined category, to reduce the holding cost.
Conditions & Restrictions
Express conditions and restrictions in interests must be reflected in the document of land title. For implied conditions, reference should be made to the provisions of the NLC.
The State Authority may subject the land to any “express conditions and restrictions in interest” that complies with the law, as it thinks fit. Any condition or restriction in interest must be reflected on the title document. If it is indicated as ‘Nil’ then no express condition or restriction in interest applies.
In relation to agricultural land, the express conditions may include:
- requiring (or prohibiting) the cultivation of a particular crop or a description of crops e.g. rubber, palm oil, coconut, padi, nipah, saga, fruits or vegetable;
- restricting the dates during which agricultural activity can be conducted indicate a particular crop that can be cultivated on the land or a prohibition of any particular crop.
- limiting the area used for any building structure
- common express condition is ‘Long Term Cultivation (Orchard)’ (Tanaman Jangka Panjang (Dusun)).
- the state government in certain states may allow the application for additional conditions to be imposed on agricultural land (eg. in Pahang conditions may relate to the erection of telco towers and building workshops / food stall / advertisement boarding and general stores).
The NLC provides for implied conditions affecting land, and specific ones for each land category. Implied conditions relating to agricultural land are contained in Section 115 of the NLC. As the condition is implied, these will not be stated in the document of title.
For example, in relation to agricultural land generally:
- no building can be erected on the land other than a dwelling house for the owner/employed staff (provided it does not occupy more than 1/5 of the whole area or 2 hectares, whichever is the lesser), or buildings in connection with the agriculture activity and welfare facilities (eg. sanitary / medical / education).
- where the land is held under QT, it is an implied condition that only a temporary building can be erected unless the approval of the Land Administrator is obtained.
- cultivation of the land must commence within 12 months, there will be full cultivation of the land within 3 years and the land must be continuously cultivated.
Further implied conditions, and exceptions to the conditions, are provided for in the NLC.
It must be noted that any implied condition inconsistent with an express condition cannot be relied upon. Express conditions stand paramount – Section 115(3) NLC.
Restrictions In Interests
Restriction in interest is a limitation imposed by the State Authority. It can be on any of the powers of the landowner, or powers of dealing with the land, and any like limitation imposed under any previous law.
The most common restriction is the land cannot be transferred, leased, or charged unless the State Authority’s prior consent is obtained. Another example relates to Malay reserve land.
** A Note to Readers – For the Avoidance of Doubt
This blog post serves to, from the outset, raise various points of consideration that a potential purchaser of agricultural land may wish to take note of or by way of general information. It does not purport to provide any legal advice/opinion on the subject matter, nor does it suggest that such information should be relied upon as a whole or in part.
Please engage a qualified lawyer to advise on dealings with land and ensure that a thorough due diligence of matters relating to the property to be purchased is conducted.
Co-Written by Lilian Lee, Carmen Lai, Mike Lee and edited by Ken Teoh