Found the property of your dreams? What can you do to ensure that the property particulars are what you are told they are? In Malaysia, under the Torrens system, the person named as proprietor on the title of the property is deemed the legal owner. It is advisable that you conduct a title search at the land registry or land office to verify the particulars of the title of the property before you pay any money or commit to a purchase.
A lawyer can assist you to do so or you can conduct the search yourself. When you are satisfied that there is no impediment to the vendor transferring ownership of the property to you, you can then pay and proceed to secure the purchase.A word of caution, though. Before you do that, you should inspect the crucial terms of the offer to purchase, which you will be asked to sign when paying an earnest deposit. If you are uncertain what they mean, you should consult a lawyer before signing or making payment.
Official search or private search?
Previously, a register was maintained in the land office (or registry). Lawyers would conduct a manual search of the title, presentation book or correction note book maintained by the land office. The person conducting the search will note down details contained in those books.
Today, most land offices have computerised their system and printed title search results can be obtained upon payment of a fee. An official search certified by the registrar costs more than a private search. It may or may not be more accurate or reveal more particulars. It also affords a claim for compensation under the National Land Code for loss due to an error or omission in the certificate.
What does a search report reveal?
> Ownership and title detailsFirstly, the title search should reveal who the registered owner is.
If the owner is an executor, administrator or trustee you can then make provisions to ensure that that he has the authority to enter into the transaction. Particulars derived from the title search such as the title number, mukim and district can be verified against the information provided by the vendor.
The title search will also show whether the property is subject to restrictions in interest i.e. whether there are limitations endorsed on the title. A property which is subject to restrictions in interest will be endorsed with words like the land cannot be transferred, leased or charged without the consent of the State Authority. If there is such a restriction in interest, the vendor must obtain the consent to transfer in favour of the buyer.
> Status and tenure
The search result will also reveal the status of the title i.e., whether it is freehold or leasehold. A freehold title is a title in perpetuity whereas a leasehold title is for a specific tenure (eg 99 years).
It is prudent to ascertain the expiry date of the leasehold term, particularly if you intend to obtain a loan as banks are reluctant to finance properties that have a short lease of, say, 40 years or less.
The margin of financing as well as the tenure of the loan may be significantly reduced.
> Encumbrances including caveats
If the vendor previously obtained a loan on the security of the property, the title will most likely be encumbered by way of a charge to the bank. A search will reveal if the property is charged to a bank. A search will also reveal if a caveat has been entered. A caveat is a form of notice entered by a person who has an interest in the property. It gives notice to the world that the caveator has an interest in the property. If you are buying free of encumbrances, you would want to investigate why the caveat was entered and to insist that the vendor gets the caveat removed.
> Other information
A title search will also reveal the area of the land, whether there are conditions affecting the use of the property, whether anyone has taken a lease of part of the property or, whether anyone a registered right of way across the property.
Where a separate title has not been issued, a search will be conducted on the master title. But, this search will not show who owns the property or whether there are any encumbrances on the property. To ascertain this information, one would have to write to the developer of the property to obtain the information. In conclusion, it is crucial that a proper title search be conducted and the particulars be verified before you commit to purchase a property.
The writer, Susan Joseph, a lawyer practising at Messrs Azman Joseph & Associates, is a member of the Conveyancing Practice Committee, Bar Council, Malaysia. This column is for your information only. It does not constitute legal advice.
The article is refer from starproperty.
"Freehold is definitely GOOD and Leasehold no need to consider"
It quite norm that elder generation property buyer frequently preferred "Freehold good, Leasehold bad."
This have been quite a debate for many years, is Freehold the main concern and the must factor to be considered?
Here, whether a piece of property is freehold or leasehold may or may not matter depends on why you’re buying the property for.
Freehold vs Leasehold: The Fundamentals
Freehold means that you have the ownership of that property forever, and you can pass it on to whoever you want.
On the other hand, if your property is leasehold, the tenure is limited – usually by (the maximum) 99 years if you bought your property from the developer, and much less unless you’re getting an extension.
For the lease is approaching the end or owner want to get extension of lease, the owner will need to apply to the state government for an extension of the lease. If the application is approved, a premium is payable depending on the prevailing market value of the land.
There have been argument that leasehold properties capital appreciation is must lesser than freehold properties.
Actually, there’s evidence that values of both freehold and leasehold properties appreciate at a similar rate for the first 20+ years.
However, nearing the end of its tenure, the value of a piece of leasehold property predictably stops going up. In this respect, freehold properties win in the longer run, as far as value appreciation is concerned.
Additionally, older leasehold properties are also harder to sell because of the uncertainty in the renewal of the lease (which is under complete discretion of the local authorities).
Also, bank loans are harder to come by for leasehold properties with shorter tenures. Even if you manage to get a loan, the margin of financing may be comparatively lower to that of freehold properties.
As with everything else, prices of property are determined by the sacrosanct law of supply and demand, and if freehold properties are more popular, naturally, they will fetch higher prices, both in the short run and the long run.
Location remains the biggest driver of demand in real estate, and you’ll see that some of the best locations in the Klang Valley are leasehold – for example: Bandar Sunway, (large swathes of) Petaling Jaya old town, Tropicana (near the golf course) and the Seputeh area in KL.
There is no doubt that the freehold status is a strong selling point for new projects. As such, developers understand the need to “make up” for the leasehold status of a new project that they want to launch. Therefore, for new projects at least, leasehold properties often give a better bang for the buck in terms of features, design, and concept when compared to freehold properties.
Finally, understand that freehold properties are limited in availability, and so the question of freehold vs leasehold will most probably be moot sometime in the future – simply because the buyers won’t get much of a choice. Actually as long as the whole area is same tenure leasehold, that shall not be an issue, unless the property you looking is the only limited leasehold in the freehold area, then that will be disadvantage on investment point of view.
So in the end, does it matter whether its Leasehold or Freehold?
If there is a comparison within same area, you should always opt for properties with freehold status. However, whether a property is freehold and leasehold should be secondary compared to other factors like different location, developer reputation, concept, amenities and upside opportunity.
Now with the price of houses being the biggest concern especially among first-time buyers, it’s a question of whether a piece of property is affordable and worthy, tenure like freehold or leasehold is no longer the main concern.
Also, freehold properties now is getting lesser and lesser. For developer properties, the sales package also take into the consideration as some giving more rebates and cash back. Some Guru have been teaching on multiple submission and cash out ideas which affect buyers view on the properties.
The extension of leasehold land is provided for under sections 76(a), 204B & 197 of the National Land Code (NLC) 1965. Section 76 (a) deals with alienation; section 197 details the procedures for a proprietor to surrender his/ her title to the State Authority and section 204B provides for certain powers to the State Authority to approve surrender and realienation.
Under the latest amendments to the NLC, which is yet to be enforced, there is a new provision under section 90A which specifically provides for the extension of leasehold land.
It is advisable for the owner to apply for the extension of lease before the expiry of the same. If the owner does not renew the lease and the lease expires, the land shall revert to the state government. The land is then available to any other persons who wishes to apply for ownership.
For Selangor, the formula for calculating the premium for the extension of leasehold land can be found in the Selangor Land Rules 2003 & Selangor Quarry Rules 2003.
The two options given by the Selangor government in their Guideline issued by the Selangor Department of Land and Mines (PTG Selangor), dated June 2011, for private residential ownership scheme are as follows:
In Selangor, the premium for lease extension for residential property is:
F: (1/4) x (1/100) x (Market Value of land) x (lease period – years remaining on the lease) x (land area). *Leases are usually renewed for a 99-year period.
As an example, let’s say you have a bungalow land with a land size of 7,000 sq ft in Petaling Jaya with about 45 years remaining on the lease. The premium that you would have to pay shall be as follows:
(1/4) x (1/100) x (220) x (99 – 45) x (7,000) = RM 207,900. After deducting the 30% rebate, it comes to RM 145,530 and this is what you would have to pay.
The above example is based on the assumption that the government has valued the land at RM 220 per sq ft.
The formula for the extension of lease for commercial and industrial land in Selangor is as follows:
F: (3/4) x (1/100) x (value of the land) x (term of new lease minus the balance of the existing lease)
For Kuala Lumpur
For Kuala Lumpur, the formula for calculating the premium for the extension of leasehold land can be found in the Federal Territory of Kuala Lumpur Land Rules 1995.
The formula for calculating the premium for the extension of lease for all categories of land use in Kuala Lumpur is as follows:
F: (1/4) x (category of land use) x (value of the land) x (1/99) x (term of new lease minus balance of the existing lease).
Renewal of lease for properties with strata titles (non-landed properties)
For the renewal of properties with strata titles such as condominiums and apartments, there is a new provision for this under the newly created section 90A(8) of the NLC, whereby the application may be made by the management corporation on the authority of an unanimous resolution, and such application shall be regarded as an application in respect of the alienated land and provisional block.
This basically means that the master title (that the condominium sits on) as well as all the strata titles of the individual units in that particular condominium must be renewed at the same time and the application shall be done by the management corporation concerned.
This article is refer from www.starproperty.my. Written by Christopher Chan.
Christopher Chan is an Associate Director and Registered Estate Agent with Hartamas Real Estate Group. He holds a Bachelor of Arts (Victoria University of Wellington, New Zealand), Post Graduate Certified Diploma in Accounting & Finance (CDipAF) (The Association of Chartered Certified Accountants (ACCA), UK), Master of Business Administration (MBA) (Edinburgh Business School, Heriot Watt University, Scotland) and is a Certified Residential Specialist (The National Association of Realtors, USA) and is a member of the Malaysian Institute of Estate Agents (MMIEA). He was an adjunct lecturer at UCSI University.
He can be reached at firstname.lastname@example.org.
Contributed by Stephen Chin
Refer from www.starproperty.my
From the very beginning of civilisation, Man has tried to understand nature and the world around him. He observed the skies, the land, the passage of time and developed theories on how to adapt to life and survive. Civilisations learned or perished from their mistakes.
Those who survive continue to refine their knowledge. Science was a lot more primitive then and unsurprisingly it is conflated with religious and superstitious practices.
Thus, every culture has its earth-science practice. The Western cultures have druidic practices and geomancy, the Middle Eastern cultures have ‘Ilm al-Raml or “science of the sands”, in Kazakhstan there is Kumalak, India has Vastu, and the Chinese have Feng Shui.
The term geomancy is linked to the idea of making divinations, and to some religions, considered a taboo. Chinese Feng Shui was translated as geomancy by 19th-century Christian missionaries in China because it was associated with local shamans and priests.
However, the right practice of Feng Shui does not have any religious, cultural or superstitious beliefs. It is practised in the Imperial Courts across many dynasties and treated as science for surveying landforms and making forecasts of weather, harvests and illnesses, based on observed natural patterns and mathematical calculations.
It has been in practice for over 5,000 years and even survived the purge of China’s Cultural Revolution.
The practice was given many names throughout history, and the one that stuck was “Feng Shui.” This came from a text on burial by Guo Pu where he was describing earth forces or “qi.” He wrote that they flow on solid ground and are stopped by bodies of water.
Strong winds can also disperse the forces. The task is to find a location that can collect and channel the energies appropriately. Therefore, when surveying landform one looks at the wind and water (or “Feng” and “Shui,” respectively).
Consequently, Guo Pu was credited as the Father of Feng Shui. His texts were merely a compilation of existing knowledge already in practice.
Unfortunately, in the present, the practice has been conflated with cultural and religious traditions. Little is explained about the scientific reasoning and mathematics behind the method.
It all became “appeasing the money god,” “not offending the grand duke” and placing religious items or trinkets like mirrors, pagodas, mythical creatures and what nots.
To truly understand the Feng Shui, one should make a visit to the Forbidden City in Beijing. The site was chosen according to proper scientific Feng Shui principles. The complex was constructed likewise. It was home to many emperors for over 490 years!
Look into the design and ornaments and there would be no hocus-pocus items used. You may find religious artefacts used for ceremonies, but they fall under a different ministry.
The stigma remains that “Feng Shui” is (a) a Chinese practice; (b) a Taoist tradition; (c) a superstitious practice; (d) not real science and is shunned by so-called modern thinkers.
I was once a sceptic until I met Prof Master David Koh. He hails from a few generations of practitioners and is one of the most respected in the industry. He questioned and challenged every teaching on Feng Shui, determined to uncover the scientific basis behind them.
He is an avid researcher, scouring books on mathematics, physics, geology, astronomy and so forth, to find evidence that can support the practice.
He was conferred a professorship by Jiaotong University and Tongji University in China.
Although Feng Shui practice is still banned in China, Professor Master Koh’s scientific approach won the approval of the academic community, and he decided to coin a new term to reflect the correct practice: Environology.
Environology today is a recognised subject at the universities. Locally, a group of architects under the auspices of Pertubuhan Akitek Malaysia (PAM) has completed courses on Environology so that they can apply sound principles in their design and offer an added service to their clients.
I am working with them to formulate a series of courses for the general public and to promote this branch of science among architects.
For my series of articles, I aim to continue exploring Professor Master David Koh’s work and extend a legacy he created. Hence, we will talk about Environology – the science and logic of the environment. Our interaction with our environment determines our harmony, prosperity and health, and it is about time we take this subject to a higher level.
About the Contributor
Stephen Chin is a consultant and director at Environology dot com Sdn Bhd.
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Be aware of the traps that may cost you your mortgage application
By Yuri Azrani
We have all heard of the horror stories from our uncles, our colleagues or from just about anyone wanting to buy a home. They show up at the bank with all the relevant documents and, BAM! Loan application rejected.
They are left wondering what went wrong.
Many things in your daily life could ruin your credibility, and once that’s gone it won’t be easy securing a loan.
Pay attention to these common factors that affect your loan ability and you may just save yourself from a slew of rejected applications.
1. Late payment of bills will affect your credit score
A credit account or credit card can be the best thing ever when you’re on a spending spree, but this could also be your bane at the end of every month.
Regardless of how heartbreaking it can be, you MUST pay your credit card bills on time.
Why does this matter? Because this will be a major determinant of your credit score.
The score system tells how well you manage your credit accounts. The lower your score, the less trustworthy you are to loaners and banks.
On-time bill payments will influence your score; the sooner you pay the better.
2. You have more credit cards than you can afford
Having many credit accounts to your name may increase your spending power, but it could destroy your loan ability.
Each time you apply for a loan, the lender will most likely conduct a credit inquiry. This gives the lender a rough estimate on how well you manage your debts.
Seeing mountains of credit accounts tied to your name alone may just frighten the lenders enough for them to reject your loan application.
3. Try not to spend over your credit limit
Credit utilisation gauges how much of your credit limit is used. A general rule of thumb is don’t spend more than 30% of your limit. So if your limit is RM10,000, try not to spend more than RM3,000.
Be a tad more frugal. Spending more than 30% can raise alarm bells when you apply for a loan.
4. Old is gold when it comes to your credit accounts
Just like your old car that has seen better times, you may be thinking about getting rid of that old credit card or account.
Stop right there. Hold on a bit longer to those accounts. One huge factor in a good credit score is your credit history, essentially how long you’ve managed that account.
The longer you maintain an active credit account, the more responsible you seem to the lenders. Old is gold when you show you can manage long-term loans and are able to make repayments.
5. You jump from job to job too soon
Variety is the spice of life, but take your time at your job. Hopping from job to job or employer to employer too soon can pose a threat to your loan application.
Banks and other lending agencies place a high stake on job stability, observing an applicant’s working consistency and gauging the security of their loans. Some banks even impose a condition that a person must be tied to a workplace for at least three years.
6. Consistent Rejection
As vague as it sounds, this is quite a common occurrence. Just like trying to get a boyfriend/girlfriend during your younger days, there is no doubt you’ve had to deal with the dread of rejection. In terms of loans, consistent rejection in a short amount of time may pose a major long term issue.
If you’ve been rejected by a lender several times before, this could jeopardise your future attempts as well. See it from the eyes of the lender, if a large percentage of your loan applications ended in failure, wouldn’t the current lender be weary of you as well?
It is advised to wait for some time after being declined before applying for another.
7. Being a guarantor for someone financially unsound
Relationships are the most meaningful things in life, but never let the maintenance of these relationships inhibit your goals. Before being a guarantor for another person’s loans, make sure he or she is trustable enough to handle that responsibility.
A guarantor is just what its name says, a guarantor co-signs a loan with the original applicant. The guarantor is responsible for assuring the payment is reimbursed. In any case the applicant does not manage to make the payment, this could harm your credibility in future transactions or loans.
8. Faulty Documentation
Papers, forms, documents, files, these are the modern day essentials in every transaction, even from the day you were born your name was written on a piece of paper. If anything goes wrong with those papers, it could wreck your life.
Same goes with loan applications, make sure every detail is spot on, double, or even triple check to assure you’ve got your facts right. Small mistakes, typos etc. can play a major role in hindering your progress as it might cause your information to be void.
Most importantly, stating false information or lying on your documents is a despicable act that could end your career if exposed and is borderline illegal. Be truthful in your papers and be the honest person your parents always wanted you to be.
9. You’re not making enough money yet
Say you’re applying for an RM300,000 loan which comes up to a monthly payment of RM1.500, all while your monthly income only hovers at RM2,000. Without a second thought, the lender declines your application.
When you apply for a loan, income will be a major determinant. The lender will evaluate whether or not your income is sufficient to make the monthly payment while also taking your personal needs into account. This is because the lender needs assurance that you can manage the payments and so that you don’t starve to death. Be patient, get that pay raise and soon enough you’ll be able to.
10. Maybe you’re growing old
Age can be another factor in loan applications. The closer you are towards retirement, there is a chance lenders may not approve of your loan. Once you hit retirement there’s no steady income, in turn there’s no guarantee for the lenders.
Refer from Starproperty.my
Having a low income does not mean you cannot afford a property. A fresh graduate could start purchasing a home as early as three to six months upon graduation, according to Harith Faisal, property investor and author of Hipster Hartanah.
His definition of hipsters come from Generation Y, commonly known as middle-class youngsters who choose to live in luxury and take pride in being offbeat.
In his talk at StarProperty.my Konvensyen Hartanah, Faisal shared the insights on how young hipsters can purchase their first property.
“Securing a down payment of RM10,000 is crucial in buying a first home, which would make up 10% to 15% of the price of your home.
“The time wasted not securing a house is also value wasted over time,” said Faisal.
He advised that one should always live according to their financial limit and never overspend.
“Financial freedom occurs when one’s passive income could be used to cover monthly dividend for a property and also being free from debt,” said Faisal.
“Most youngsters live by the rule of “You only live once” (Yolo) and spend their salary on wants instead of needs.
“But the true formula in purchasing your first home is to live by the rule of save, invest and spend afterwards, as well as save, invest and make property an asset.
“We need to invest because of the inflation rate in Malaysia that keeps increasing,” said Faisal.
There are lots of ways to invest, from property investments, stock exchange, business to bank trust funds.
According to Faisal, it is important to have a minimum of two sources of income from the investments.
He shared his personal journey in property investment, which started off as a property investor by purchasing a sub sale property at the age of 24 when he was a fresh graduate. He now strived to educate the younger generations on property purchasing.
His talk, titled “Hipster Hartanah: Bajet Orang Muda Beli Rumah Pertama”, has attracted numerous visitors at the exhibition.
Konvensyen Hartanah was also the first fair to feature StarProperty.my’s Win A Home (WAH) Contest.
Refer from Starproperty.my
WHAT happens when you unknowingly purchase a sub-sale property from someone who has been declared a bankrupt?
According to the Insolvency Department, 82,383 individuals (69.3% of them men) were declared bankrupt by the courts in 2016.
And the number of bankruptcy incidents arising from defaulting on instalment payments for car, housing and personal loans is increasing.
Speaking at the recently-held Konvensyen Hartanah organised by StarProperty.my, advocate and solicitor Datuk Nazri Mustafa said finding the right lawyer was crucial when buying property, especially when it involves sub-sale property.
A sub-sale purchase is when you buy from the current owner of the property or the pre-existing owner, normally in the form of a completed property.
“Sub-sale purchases usually occur through printed and online advertisements or auctions,” said Nazri.
He said the transaction should not be settled by verbal agreement with real estate agents.
“Go through lawyers. They will assist in the process of purchasing a property with proper checks and documentation.
“There have been plenty of cases in which sub-sale property sellers were found to be bankrupt. In such cases, you would need a lawyer to verify if the seller is a bankrupt,” added Nazri.
According to the Insolvency Department, once a person is declared bankrupt, the Director-General of Insolvency (DGI) will take possession of all documents and assets of the individual, including bank accounts and properties. Subsequently, the person-in-charge will administer and investigate all affairs related to the bankruptcy.
The DGI then has the right to sell all assets, from which the proceeds will be distributed among the creditors. This basically means liquidating everything that the individual owns.
“When a seller is bankrupt, he would need to get the approval of the DGI before selling his property.
“All of this involves a large workload of legal proceedings and you would want to have a good lawyer by your side when buying such properties,” said Nazri.
Refer from StarProperty.my