"Property Transactions: When State Authority Consent is Required"

Property Transactions:
When State Authority Consent is Required

BY TEOH JACKLINE

The State Authority Consent is required when the State Authority places a restriction in interest in the Land or Property. In the scenario, the Land or Property cannot be sold or transferred without the approval of the State Authority.

Section 5 of the National Land Code 1965 states that a restriction in interest is any limitation imposed by the State Authority on any of the powers conferred upon a registered proprietor to deal with his land by way of a transfer, lease, charge, easement, tenancy, or statutory lien over his land, as well as his powers to subdivide, partition or amalgamate his land. The effect of a restriction in interest is that it limits the rights and powers of a proprietor to deal with his/her land or property freely.

How to know your Land or Property is under restriction in interest?

1. It will be stated in the title under Sekatan Kepentingan – the most common example of restriction in
   interest is “Tanah ini tidak boleh dipindahmilik, dipajak atau digadai tanpa kebenaran Jawatankuasa Kerja Tanah”

A proprietor can find out whether his/her land or property is subjected to a restriction in interest where the restriction will be clearly stated in the title. If the title is not in your custody, a land search can be conducted and the same status will be stated in the land search.

SAMPLE 1 FROM TITLE:

SAMPLE 2 FROM LAND SEARCH:

Referring to the sample of land search above, restriction in interest will be stated under “Sekatan Kepentingan” in the land search. It means that the Land or Property shall not be transferred, leased, or charged without the approval of State Authority’s consent. In other words, prior to the transfer of the Land or Property from the owner to the Purchaser, prior to the charge of the Land or Property by the
Purchaser in favour of the Purchaser’s Financier, or prior to the lease of the Land or Property from the owner to the lessee, the State Authority’s Consent has to be obtained.

In the event that the Proprietor wishes to deal with the Land or Property, the Proprietor must make an application for consent. Each land office has its own requirements in connection with the application for State Consent and in some states, some required to submit for e-consent online, or some required to submit for e-consent online followed by manual submission of application. Hence, it is important to identify the state of respective land office of the Land or Property in order to find out the process and requirements. Moreover, the application form is also differ from each land office. Thus, the Proprietor must identify the state of land office of his/her Land or Property ahead. The respective state of land office can be identified by looking at the round chop of the Title as below: 

KL LAND OFFICE: 

Form - https://www.ptgwp.gov.my/portal/documents/20182/48024/jadual_17_local.pdf/f1abea9d-85ff407c-a036-5872d21f215e
Website - https://www.ptgwp.gov.my/portal/web/guest/awam-landing-page

SELANGOR LAND OFFICE:

Form - https://www.selangor.gov.my/petaling.php/pages/view/11?mid=157
Website - https://smartbox.selangor.gov.my/

PENANG LAND OFFICE:

https://ptg.penang.gov.my/index.php/en/services/citizen/online-form-download?device= 

In conclusion, it is important to conduct land search at the relevant land office and the analysis of the title, prior to the execution of sale and purchase agreement. This is because the process to obtain the State Authority consent will take between 1-6 months depending on the procedure and requirements of each land office. If a proprietor wishes to deal with the Land or Property, he/she must first obtain the consent of the State Authority. Failure to obtain consent to deal with the Land or Property will render any transaction entered by the Proprietor void and unable to be registered. Hence, it is important to monitor the progress of the application for state authority consent in order to comply with the strict timeline in the sale and purchase agreement to avoid any delay.

Teoh Jackline
Associate
Real Estate & Banking and Finance
Halim Hong & Quek
jackline.teoh@hhq.com.my