©The Star (Used by permission)by Susan Joseph
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 tenureThe 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 informationA 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, 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.