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