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Conveyancing Personal Notes zz zzz zzzz zzzzzz zzz zzz zzz zzzz zzzz raeg aerg aer 3 aw5h 54h...

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Topic 1: Land Dealings & Conveyancing A. Conveyancing System Conveyancing is basically about the sales, transfers and dealings of immoveable property, as well as noncontentious (non-disputable) business. It is a legal field with high risks and high discipline actions for those who broke the rulings and requirements of their respective tasks.

B. Land Dealings S. 5 of NLC: - provides the definition of land including surface of the earth; earth below the surface; land covered in water; all vegetation and natural products etc. S.6 of CLA:- Does not permit the introduction of English principles of land law into Malaysia. However the general principles of equity may be applied as per S. 3 of CLA S.3 of CLA: - Rules of Equity can be imported if there is a lacuna or ambiguity of law Devi v Francis -

Mother of Francis sold part of the property to Devi with the condition that Devi shall have the priority to buy the property if the remaining property is being sold Mother transferred property to Francis and the latter notice Devi to vacate the property. Court held that S.3(1) of CLA may apply law of England and principles of equity where the facts justify

S. 206 of NLC: - Proper instrument are required to complete a dealing, after they are duly registered (except excluded dealings such as lien and rent) S. 340 of NLC: - Registration of title and dealings grant indefeasibility of title and / or interest

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Bona fide purchaser for value has good title

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Title acquired by the purchasers was defeasible notwithstanding that they were bona fide purchasers.

C. Liability and Restrictions Conveyancing lawyers have high risk of bearing professional liability for negligence or mistakes committed during the court of completion of work. Therefore a number of rules are implemented to guide and regulate their work

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Sale and Purchase of Land S. 84 of LPA 1976 -

Prohibits a solicitor acting for housing developer from acting for the purchaser as well.

O.7 of Solicitors Remuneration Order 2005/2016 -

Prohibits solicitor from acting for more than one party.

Bar Council’s Conveyancing Practice Rulings (may differ from actual practice) R.16: Vendor’s solicitor shall prepare the SPA unless contrary is prescribed, and he cannot charge for the supplying of the SPA (copies of SPA) R.17: Solicitor cannot have additional charge other than his scale fees.

Anti-Money Laundering S.14 of Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATAFA): - Legal firms being reporting institutions has the duty to report the competent authority of any transactions and proceeds linked to terrorism of unlawful activities hastily.

Stakeholders and Transitioning Bar Council Rulings 14.10 (updated as at 8 June 2015) (1) Solicitor to pay interest on monies held as stakeholder o A legal firm that receive a sum of money as stakeholder cannot earn the profit of interest by saving the monies as fixed deposit unless otherwise agreed. (2) Fee or acting as stakeholder o A solicitor is entitled to charge a fair and reasonable fee for acting as a stakeholder (3) Terms of stakeholding to be strictly adhered to. o A solicitor acting for 2 or more parties must strictly adhere to the terms of the stakeholding at all times. o No money or document held by solicitor shall be released prior to consent by relevant parties Lai Kee Ping v Tay Hup Lian -

A stakeholder is a trustee hence breach of stakeholding amounts to breach of trust

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Process of S&P -

There are 2 kinds of sale, namely: o Developer sale/ Direct sale: governed unde Housing Development Act, can be further divided into “sale and build” and “build and sale”. o Private sale/ Sub sale: Govern by contract as a private arrangement and agreement between the offeror and acceptor

Pre Contracting -

Generally, these are the common practice to be observed

Cost -

Advising clients on their estimate costs of the transaction such as professional fees Should include stamp duty as well as according to Stamp Act 1949 Advised them on the penalty for late payment of stamp duty (usually 30 days)

Conflict of interest -

Ensure that the contract being instructed to do is not in conflict Item 7 of Solicitor Remuneration Order 2006: if the opposite party wish not to be represented and chose the purchaser/vendor solicitor as the common solicitor, it is advisable to obtain statutory declaration from the opposite party that he agrees not to be legally represented

Possible difficulties -

Whether the property is subjected to land-acquisition, conditions imposed by Economic Planing Unit and etc. Make a land searches before commencement and before execute the final act to obtain particulars and title and any restrictions Enquire to Land Office as to any possible acquisition of land

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Then, depending on the type of clients, such as the possible things to keep in mind.

Client’s Relation to the Land Land Proprietor Foreign Persons

- Make land search to double confirm. - NLC SS. 384 & 385. Company - Whether company resolution is passed. - S. 152A: need resolution to register dealing with the land. - S. 433A NLC: foreign company = company with more than half the shares hold by non-citizen or a company incorporated out of Malaysia. - The same requirements for foreign citizens apply to foreign companies.

Emergency!!! Bankrupt/Winding

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Law v Jones: “subject to contract” indicates contract still in negotiation. However, if contract finalised thn offer no protection

industrial - Commercial/ units: only > RM3,000,000. properties - Residential specifications differ from state to state. (Generally only > RM1,000,000.) cannot purchase - They Properties for bumiputra, Malay reserve land, agricultural land etc. - Some properties has conditions from SA. - NLC S. 433B: foreign citizens may purchase land with SA approval, except industrial property which requires none.

Personal Representative/ Agent - Check whether there is such document empowering him. - Probate and Administration Act 1959 S. 60 (3): executor dispose the property subject to will - PAA S. 4: Power of Attorney must be registered in HC. - S. 60 (4): admin dispose with court permission (LOA). - NLC S. 346 (5): admin or executive can’t deal with the land until they are registered under this section. - S. 433F: foreign cannot execute POA. - Administrator (the letter of administration from court). - Executor (the will and probate).

- Bankruptcy Act 1967 s. 24 (4): upon bankrupt, the property vests in Director General of Insolvency. - S. 349 (1) NLC: DGI must apply to register in the Register. - S. 349 (3): until registered, land not vested in DGI. - Kwan Chiew Shen v Citibank NA: bankrupt pass good title until DGI register. - Hock Hua Bank v Choo Meng Chiong: charge created before the transmission by Registrar, pass good title to the bank. - ***Pegawai Harta v Koh Thong Chuan: the land vested on DGI by equity. - Insolvency Act S. 50 (1): can still deal with the land before the receiving order or bankruptcy petition is presented and served. - CA 2016 S. 472: any dealing after winding up commenced (order given) is void. - S. 292 (4) NLC: death of party do not invalidate the contract.

Do not assume, watch out for warning signs.

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Drafting Contract Type of Sale -

Determine whether it is HDA or non-HDA contract If the contract is governed under HDA, then it must be compliance with the Forms G,H,I or J Sell & Build: Forms G & H Build & Sell: Forms I & J

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Sub sale (private sale): Usually will follow standard precedent but it can also be tailored to the needs of parties Generally, the contract will be drafted by the Vendor’s solicitor for the approval of the purchaser and his solicitor. General clause including but not exclusive: o Deposit of 10% upon execution of SPA o Balance of purchase price to be paid within 3 months of execution as agreed by parties o Extension of time for payment of balance of purchase price will be charged with interest of 10%

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Law v Jones -

‘Subject to contract’ will indicate that the agreement is still pending agreement from both sides and it is therefore not binding. However, if there is a concluded agreement, the use of such term shall not exclude and deny the binding force of it.

Ayer Hitam Tin v YC Chin Enterprise: -

The use of ‘subject to contract’ will only conclude the contract once both parties had expressed their approval.

Kapital Raya v Bloom Ville: -

Court do not recognise the existence of an agreement to enter a contract. The ‘agreement to enter contract’ is essentially a mere negotiation. It indicates that both parties had yet to agree on the terms.

Undertakings -

Solicitors must be aware of the promise or undertakings that he is giving to client, as breach of undertaking becomes a cause of action for disciplinary actions and negligence suits. An undertaking is not necessarily containing the word “undertaking”

Bray v Stuart West -

Can sue a solicitor for breaching undertaking even if the limitation period has expired

Possible encumbrances -

Kindly advise your client whether the contract is agreed to sale and purchase by surrendering vacant possession of the land or subject to existing tenancy and so on.

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Power of Attorney -

S.4 of PAA 1949: PA is not valid unless registered in the High Court, marked by Senior Assistant Registrar of High Court and deposited in his office S.433F of NLC: PA executed by non-citizen or foreign company shall be void.

Post Contract Execution of Contract S. 210 NLC: natural person sign, company resolution and according to Constitution.

Attestation of Contract S. 211 NLC: by authorised ppl Albert Chew v Hong Leong Finance: no witness the signing = falsified attestation.

Register the Title/Interest S. 206: must be valid instrument. Taylor v Land Mortgage Bank: execution do not has effect until registration.

Procedure for Presentation for Registration S. 293(1)(a) of NLC:- prescribed registration fees S.293(1)(b) of NLC:- delayed registration fees after 3 months (if any) S.294(1) of NLC: Original transfer document duly stamped as per Stamp Act 1949 S. 294(1)(b) of NLC: If it is a lease/sub-lease/charge, it must be accompanied with CTC of the same duly stamped docs provided under S.309 S.294(3)(a) of NLC: Supporting documents required if the document is to be executed by a PA S.294(2) of NLC: Any other relevant documents depending on the type of dealing

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Chapter 2: Sale of property by developer A. Concepts and Terminologies - Housing Development (Control & Licensing) Act 1966 governs the sale of residential properties from developers (not between individuals where developers are not a party). - A private sale (contrary to a HDA sale) is negotiable on its terms and generally are not governed by HDA but the Contracts Act 1950, if it is a lawful agreement enforceable. - The HDA 1966 and HDR 1989 provides standards terms for SPA whenever a licensed housing developer is involved: o Schedule G: terms for SPA of house with land portion in sale for ‘sell then build’. o Schedule H: terms for SPA of house parcel or unit in sale for ‘sell then build’. o Schedule I: terms for SPA of house with land portion in sale for ‘build then sell’. o Schedule J: terms for SPA for house parcel or unit in sale for ‘build then sell’. - Syarikat Chang Cheng (M) S/B: variation of SPA term is void. - R. 11(4) HD(C&L)R 2002: purchaser solicitor can obtain a complete set of the contract of sale with copies, but to return it in 14 days if not executed. - R. 11(2): licensed housing developer cannot collect any money unless SPA prescribes it. - R. 11A: developer cannot make purchaser pay for consenting to Purchaser’s charge of rights to a financier for a loan. ***Definition -

Booking Fee: Normally 1% - 2% of the purchase price Balance of the 1st 10% purchase price: 10% minus the booking fee Differential Sum: difference between purchase price and loan obtained by purchaser Redemption Sum: balance of outstanding on Vendor’s loan.

B. Checklist of Steps to be Done - A conveyancing lawyer have to be aware of the type of SPA and Land and Building he is currently dealing with. - General practice are:Property with Individual Title and Without Encumbrance

Property without Individual Title and Without Encumbrance

Developer’s Solicitor

Developer’s Solicitor

− Prepare SPA Purchaser’s Solicitor

− Prepare SPA Purchaser’s Solicitor

− Attend and witness execution of SPA − Prepare Memorandum of Transfer –Form 14A − Stamp Proformas − CKHT Forms.

− Attend and witness execution of SPA − CKHT Forms.

Property with Individual Title and Charge

Purchaser’s Solicitor − Discharge of Charge upon balance of purchase price being paid by purchaser.

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Stating the Particulars (D’S)

Forward of SPA (D’S)

Forward of SPA (P’S)

Execution & Payment (P)

- Developer name, registered office address, license number. - Land and property details: o Approved Layout Plan o Approved Building Plan o Schedule of Payment of P.Prc. o Building Description.

P’S to furnish - Allow purchaser particulars: name, NRIC, address and execution. - Need to forward 5 sets, 1 for P, 1 for V, 1 for P’S, 1 for V’S, 1 for Financier.

- P execute docs. - P pays 1st 10% purchase price (after deducting any booking fee) - Pay solicitors fees.

Finalising Loan Agreement (P’S)

Stamping of SPA (P’S)

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- Finalize the loan agreement. (Normally = 3 months)

- P’S stamp the SPAs and give each party a copy. - Lodge a caveat at LO on the property and to remove any existing caveat.

APPROVAL OF LOAN

Ask Purchaser to furnish info. 1st 10 % purchase price/deposit Copy of Bill for fees. Make 1st Land title Search Company Winding Up Search Prepare 2 set of Form 14A. 5 set of Stamp Proforma CKHT forms Entry and Remove Caveats

Confirmation from Financier (P’F) - D’S execute MOT/14A when Financier confirm pay balance Purchase Price acc. to Schedule.

Return Executed SPA and Payment (P’S) - P’S forward 1 st 10% purchase price and forward executed document to execute

Preparation of Charge (P’F)

Discharge of Vendor’s Charge (F’S)

1. Purchaser - Financier send Letter of Offer or Facility Agreement to offer loan. - Request from P/ the original SPA (1 out of 5), and NRIC. - Forward Bills and fees needed to prepare charge instrument, Form 16A of NLC. 2. Purchaser’s Solicitor - Confirm with P’S via Letter of Enquiry that MOT is executed by Vendor and Purchaser and had been presented for registration. - Request Undertaking from P’S to forward valid and registrable MOT, quit rent and assessment receipt for the year and others. 3. Developer’s Solicitor - Confirm with D’S if differential sum settle by P.

- If the land is charged by D to D’Financier, the P’F will request the name and address of the Vendor Chargee/Vendor Bank. - Request D’Financier to forward the Redemption Statement cum Letter of Undertaking to upon release of Redemption Sum:o deliver to F the original IDT, o duplicate of registered charge, o executed instrument of discharge, Form 16N o Refund redemption sum if discharge not registrable. - Request D’s undertaking to o refund if cannot transfer o To forward documents above when D’F forward to D. o to forward quit rent and assessment receipt o Forward registration fee to register Discharge.

Reply (P’S)

L.O. (P’F)

- Reply that MOT signed & presented for registration. - Undertake to forward the docs. - Forward MOT and remove caveat. - Fees for removal cv

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Form 16N MOT & Charge Withdraw Cvt. QR & AR. M&A of D Resolution of D

Follow Up (P’F)

Aftermath

Follow Up (D’F)

- P’F pay acc. To Schedule - CCC issued, keys to P.

- Forward IDT, duplicate of registered Chg., QR&AR.

Follow Up (D’F) - Send the docs to D. - D send to P’F. RS & LOU.

Reply (D’S) - Request necessary from D’F. - Reply to P’F to forward upon receipt of D’F Redemption Statement cum Letter of Undertaking, & V undertaking.

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Chapter 3: Regulation of Housing Developers A. The Governing Statute -

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Mainly, the statutes in regulation are: o Housing Developers (Control & Licensing) Act 1966 [HDA 1966]; and o Housing Development (Control & Licensing) Regulations 1989 [HDR 1989]. HDA S. 1(3): HAD is only applicable to peninsular Malaysia, not Sabah nor Sarawak. HDA S. 3: provides definitions for the following:Terms Housing Development

Licensed Housing Developer Housing Lot Housing Accommodation Purchaser

Definition A project to develop, construct or cause to construct more than 4 units of housing accommodation (build and sell), or the sale of housing lot to construct such housing accommodation (sell and build). A housing developer licensed under S. 5 of HAD 1966 to perform or to undertake housing development. A land which has been assigned with a lot number and is having the category of ‘Building’ regarding its land use. Buildings constructed mainly for human habitation, or partly habitation partly business. Who purchases from the licensed housing developer.

Significance Includes both type of SPA regarding land and housing. Not all housing developer are permitted. Not all lands are subjected to HDA. Diversify type of housing. Some purchasers are not protected

B. Rules Governing Licensed Housing Developers -

S. 5: all housing developers must be licensed. S. 7B: for the purpose of SS. 8, 8A, 11 & 12, licensed housing developer includes those whose licensed expired. Therefore, it is a general requirement that all housing developers prior to engaging themselves in housing development project must be registered.

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It is trite law that separate agreements of selling land and constructing housing accommodation between the same parties, shall together be bound by HDA.

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City Investment v Koperasi Serbaguna: 1st SPA concerns of buying lots to build house. A 2nd SPA sells vacant land to build bungalows. H: this is governed by HDA as the land sold to hold housing accommodation. Cheong Soo Leong & Ors v H’ng Ah Ba: 1st SPA entered to buy the land, 2nd SPA entered

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1 The developer promised to build houses on the land, to construct semi-detached house. ○

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therefore are housing developers. ○2 Court granted specific performance of SPA and set off balance purchase price with the liquidated damages. Daiman Development v Mathew Lai Chin Teck: booking pro forma is a binding contract and its breach is actionable.

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