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NLC 2001 amendments
09/07/2001 NST-PROP By Salleh Buang

It has been quite some time since the National Land Code 1965 (NLC) was amended. The last time it went through this exercise was in the aftermath of the country’s economic slowdown that led to the setting up of Danaharta. Some amendments had to be made to provide the necessary legal infrastructure for that statutory body.

This time, most people thought that the proposed amendments was necessary because of the recent announcement by the Prime Minister regarding the relaxation of existing rules for foreign citizens and companies to buy residential properties in the country. Proceeding along that assumption, people believed that the amendments would focus only on Part 33A of the NLC, which deals with “restrictions in respect of non-citizens and foreign companies”.

I was pleasantly surprised to find that the proposed amendments indeed covers a much wider scope. One could say that the present exercise represents a significant update of the law, if not an overhaul of an otherwise unwieldy legislation. Space constraints do not allow me to mention everything that the government hopes to amend. I will instead focus on some major issues of interest to the business community and the legal fraternity.

Under the proposed amendments, the State Authority will be able to make rules, in accordance with the directions given by the National Land Council to:-

(a) exempt certain disposals of land and land dealings from the requirements of sections 433B and 433E (i.e. the approval of the State Authority);

(b) exempt any non-citizen and foreign company or any class thereof from Part 33A; and

(c) remit or exempt any levy payable under sections 433B and 433E.

The objective of these rules is obvious. They pave the way for the implementation of the new policy (permitting non-citizens and foreign companies to buy residential properties over RM250,000) announced by the Prime Minister.

Another significant change in the law is that in future the State Authority will be in a position to make fresh alienation of State land in the form of final title-unlike the position at the moment where alienation inevitably takes the form of a qualified title. This is done by deleting paragraph (ba) of section 79(2). The current practice of having qualified titles in continuation of final titles will also cease. This is done by deleting the words “or qualified title in continuation of final title” in section 135(1).

Effective from this amendment, after a piece of land has been subdivided, action can be taken to prepare, register and issue final titles. This proposal should bring cheer to both the developers and purchasers. This new policy of issuing final titles instead of qualified titles will also benefit co-owners who wish to partition their land. Under the proposed amendments, upon partition, final titles (not qualified titles as is done today) will be prepared, registered and issued. This is done by deleting the words “or qualified title in continuation of final title” in section 140(1).

Likewise, the new policy will benefit owners of contiguous lots of landed properties who wish to amalgamate them into one title (usually as a prelude to carrying out a development project). Under the proposed amendment, upon amalgamation, a final title (not qualified title as is done today) will be prepared, registered and issued. This is done by deleting the words “or qualified title in continuation of final title” in section 146(1).

To give effect to this major shift in policy, a new section 183A is created. This new provision states that “Notwithstanding that an application made under subsection (1) of section 183 is for the issue of qualified title in continuation of existing final title, the Registrar or Land Administrator, as the case may be, may, where it appears just and expedient, prepare, register and issue final title in respect of sub-divisional portion”. The legislative intent behind this new section is obvious. It gives equal benefit to existing applications made by developers, submitted to the State Authority before the amendment becomes law.

For developers, another piece of good news is that amendments will also made to the existing law affecting surrender and realienation. The existing section 204B is amended so that in future contiguous lots under final titles, qualified titles or a combination of both types, can be surrendered together for the purpose of realienation. Needless to say, when the new subdivided titles are realienated, the new law will permit the Registrar or the Land Administrator, as the case may
be, to issue them in the form of final titles.

Yet another significant change in the law will affect the existing procedures relating to land charges and orders for sale when chargors default and chargees (bankers and finance companies) institute foreclosure proceedings. These amendments affect several provisions of Chapters 2 and 3 of Part 16 of NLC- which set out the remedies available for chargees. This is one area of the law which bankers and their legal advisors should study closely, as the changes affecting current practice are quite substantial.

For legal practitioners, attention should be drawn also to section 322, which deals with private caveats. Under the amendment, a private caveat can be made to bind either the whole land or the whole undivided share of the land or interest therein. Whilst the amendment thus takes cognizance of the judicial stand taken some time ago, it goes further by providing that where the caveat is to protect a claim in respect of a part of the land only, the person who enters that partial caveat has no right to withhold consent to any dealings which do not affect his claim. This is stated in a brand new provision, subsection (5A).

To accommodate the new changes in section 322, amendments will also made to section 323.

The same crucial words are added (in the appropriate places) to subsections (1) and (2). Beyond that, the existing subsection (3) is repealed, its place taken over by a brand new subsection (3). Under the amended law, apart from paying the prescribed fee and making the necessary statutory declaration (as required now), a person who wishes to enter a partial caveat must also furnish a description or plan for the purpose of identification.

Taking a broad view of the proposed amendments, one could say that there is something for everybody- for the small landowner, the big-time developer, the Registrar and Land Administrator, the chargor and the chargee, the practising lawyers and their clients.

Whilst the proposed amendments are indeed welcomed, it is a pity that there is no law to make the land offices jettison their old ways and galvanize them into providing a speedy, efficient and effective service able to match the demands and expectations of the paying public.

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