by Faye Lim
Published January 27, 2017
In Malaysia, all land must be recorded in a register known as the ‘Register of Titles’.
The Register contains information about the title and past ownership of lands. It is maintained by an authority known as the ‘Registrar of Titles’, whose duties are set out under the National Land Code 1965.
Typically, land searches are carried out by purchasers who intend to buy property (or by lawyers who are engaged on their behalf to carry out the transaction).
The details and records of title are then used when drafting representations, warranties and/or additional clauses in sale and purchase agreements.
Proper use of land searches protects a person’s interest, and helps to avoid or mitigate the possibility of disputes over land. Consider then this issue: can a purchaser or his lawyer rely on the results of a land search, and if so, to what extent?
The Federal Court addressed this issue in Pendaftar Hakmilik, Pejabat Pendaftaran Wilayah Persekutuan Kuala Lumpur & Anor v Poh Yang Hong, a recent decision.
In this case:
Mr. P was interested in purchasing a land from Mr. A.
He conducted a private land search at the relevant land office.
His search showed that the land was already registered to a certain Mr. A, as its proprietor.
Mr. P paid the earnest deposit, then entered into a sale and purchase agreement with Mr. A for the land. Mr. P also paid the balance purchase price.
Mr. P had at that juncture, presented the memorandum of transfer and other documents for purposes of registration.
Matters then took a turn for the worse: pending the registration, he discovered that the same land, though held under a different title, was also registered to Mr. B!
Mr. P’s lawyers then conducted another land search at the land office. The results were the same: The land registered to Mr A, and held under the title GRN 232, Lot 349, Seksyen 71 was also registered to Mr. B, but under a different title number, i.e. PN 20992, Lot 349, Bandar Kuala Lumpur.
In summary, what had happened? In effect, Mr P had purchased land that had two records of title, where the same plot of land was registered to two different people.
Mr P. had suffered losses due to, among others, his reliance on the details of the land search. He commenced legal action against the relevant Registrar of Titles and Mr A and other parties. As it were:
He succeeded in the High Court against the Registrar of Titles. He obtained damages.
The Registrar of Titles appealed to the Court of Appeal against this decision. Mr. P succeeded again; the appeal was dismissed.
The Registrar of Titles then appealed to the Federal Court, the highest appellate court of Malaysia.
What was the Federal Court’s decision?
The Federal Court agreed with High Court and the Court of Appeal. It held:
the Registrar of Titles had failed to ensure that the particulars on the Register of Title were maintained;
the relevant bodies have a duty to ensure that the Register of Titles is in order;
if the Registrar of Titles fails to maintain the Register of Titles without reasonable explanation, the courts will not accept this as an act done in good faith; and
a failure to maintain the Register of Titles amounts to a breach of statutory duty and/or negligence, and results in a valid claim against the relevant Registrar of Titles.
The Federal Court decision fortifies the necessity of land searches.
Purchasers and their lawyers may thus confidently rely on land searches in the process of conveying land, as there is a clear cause of action (‘a basis to sue’) against the relevant party if land searches contain inaccurate details.
Land searches must be conducted at the time of presentation at the latest; i.e. this concerns either the presentation of the private caveat prior to the redemption of property, or the presentation of the memorandum of transfer for registration at completion. These are interesting topics in themselves, and I may write about them in future articles.