deed of assignment meaning in malay

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https://www.propertyhunter.com.my/news/2021/01/7880/article/deed-of-assignment-and-grant-of-probate-why-are-these-legal-documents-important

Deed of Assignment and Grant of Probate: Why Are These Legal Documents Important?

Homebuyers will encounter a number of legal documents throughout the property buying and selling process. An important one is the Deed of Assignment, which facilitates a property transfer. Meanwhile, the Grant of Probate is necessary for estate administration – which is the administering of a deceased person’s will (and the property left behind).

During the home buying process, you will encounter a mountain of documentation that you will need to sign. Depending on what stage the land title is in, you may be asked to sign a Deed of Assignment. Or during the land title search, your lawyers may have discovered that one of the landowners is deceased and the remaining landowners are selling the property. Your lawyer would then ask them if probate had been taken out for the deceased landowner.

What is a Deed of Assignment?

It is a legal document that enables the transfer of ownership of the property from one party to another, for many types of property. In the law, a property may be defined as ‘things’ and ‘rights’ that can be owned or have a monetary value. It may also signify a beneficial right to a thing. Some of the most common forms of property include real estate, rental proceeds, shares, and intellectual property; just to name a few.

What are the common types of a Deed of Assignment?

 1. deed of assignment of transfer and loan.

These are two separate deeds commonly used in real estate. The deed of assignment of transfer is used when the property is sold before the  individual or strata title  has been issued. The seller would then assign the rights to the property over to the buyer, thereby giving them the proof of ownership to the property.

Whereas, the deed of assignment of loan is used by the bank to have the owner of the property assign their rights and interests in the property over to the bank as a security for the loan. This would also apply to joint purchasers who are taking a bank loan where each of them would assign to the bank their individual share of the property. For example, if two people jointly buy a property and take up a joint loan, each person would assign to the bank their 50% rights and interest in the property to the bank.

2. Deed of Assignment of Tenancy

When a number of tenants sign a tenancy agreement with the landlord for a certain rental period, and in the event where one of the tenants is unable to continue for the duration of the rental period, the landlord may sign a deed of assignment of tenancy with the tenant and their replacement. This is to assign the previous tenant’s interests and obligations over to the replacement tenant.

This is a better alternative to preparing and having all the existing tenants sign a brand new tenancy agreement.

3. Deed of Assignment of Rental Proceeds

This deed is commonly used by banks when a property that is used as security for a loan is also being rented out. The deed of assignment of rental proceeds entitles the bank to any income (from leases, rents, etc.) derived from the property once the owner defaults on the loan. For example, Company A takes out a loan from Bank A.

As security, Company A uses their factory premises which are currently being rented out to Company B as well as signing a Deed of Assignment of Rental Proceeds to Bank A. A few months down the road, Company A is unable to make the monthly repayments and defaults on the loan. Bank A can use the Deed of Assignment of Rental Proceeds to utilise the rental from Company B to offset the loan repayment as well as taking action against Company A for the balance of the loan sum.

The Deed of Assignment of Rental Proceeds may also be used between two private individuals or companies where a loan is involved.

What is the Grant of Probate?

To put it simply, the Grant of Probate is an official document that is sealed by the High Courts of Malaya and confirms that the person named on it (the executor) is entitled to deal with the estate – collect all the assets, pay all liabilities and debts of the estate and distribute the net balance to the beneficiaries.

What is the difference between a will and probate?

A will is a legal document that details what should happen to your property after your death, together with any other wishes, while probate is the legal process that gives a person, or a group of people, the authority to deal with the deceased’s assets. This process of settling a will is known as estate administration.

There are three forms of probate which depends on whether there is a  will or not .

a) Grant of Probate

This is where there is a valid will and an executor has been named and is willing to act. The executor would need to apply for the Grant of Probate of the will at the High Court, per S.3 of the Probate and Administration Act 1959 (“PAA 1959”)

b) Letters of Administration with will annexed

If there is a valid will but the executor is unwilling, unable to act, or no executor had been named in the will, then the person intending to be the administrator would need to apply for the grant of Letters of Administration with the will annexed at the High Court (S.16 of the PAA 1959).

c) Letters of Administration (if there is no will)

If there is no valid will (i.e. the deceased dies intestate), the person intending to be the administrator would need to apply for the grant of Letters of Administration (S.30 of the PAA 1959).

Disclaimer: This article is merely for educational purposes and cannot be regarded as advice, legal or otherwise. If in doubt, please seek the services of a lawyer for legal advice on how to obtain probate and administer the estate of the deceased.

How do you apply for probate for estate administration purposes? 

1. grant of probate.

To make an application for the grant in the High Courts, the following documents are required:

• Death certificate
• Executor’s identity card
• Identity cards of beneficiaries
• Original copy of will
• Land titles/evidence of property ownership
• Home loan statement (if applicable)
• Bank account details of the deceased
• Documentation of any other assets
• Documentation of any liabilities or debt

Generally, it takes between 3-6 months for the grant to be obtained from the High Court. Although in Kuala Lumpur, the courts have been known to issue the grant one month from the date of application.

 2. Letters of Administration with will annexed

The application process is similar to obtaining a grant of probate in the High Court, the difference being that because the executor is unwilling, unable to act or no executor had been named in the will, pursuant to S.16 of the PAA 1959, the following persons in the following order are allowed to apply and be granted the letters of administration:

• A universal or residuary legatee;
• A personal representative of a deceased universal or residuary legatee;
• Such person or persons, being beneficiaries under the will, as would have been entitled to a grant of Letters of Administration if the deceased had died intestate;
• A legatee having a beneficial interest; and
• A creditor of the deceased.

3. Letters of Administration

Obtaining the letters of administration is far more costly and time consuming as compared to obtaining the grant of probate. It generally takes anywhere from 6 months to over a year to obtain the letters of administration.

Depending on the size of the deceased’s estate, there are different ways for the administrator to obtain the letters of administration.

Estates that consist of Wholly or Partly Immovable Property, where the value exceeds 2 million

For these estates (land, house, office lot, etc.), the administrator will have to obtain the Letters of Administration at the High Court (S.30 of the PAA 1959). Furthermore, if the value of the estate exceeds RM500,000, the administrator is required to provide two sureties (guarantors) who have assets within the jurisdiction equivalent to the amount of the deceased’s estate (the sureties must also be residents in Malaysia) as security for the due administration of the estate, unless the court makes an order for dispensation.

Estates that consist of Wholly or Partly Immovable Property, where the value is below 2 million

The administrator may make an application for distribution under the Small Estates (Distribution) Act 1955(“SEDA 1955”). The application may be made at either the Estate Distribution Unit of the Department of the Director-General of Lands and Mines (“JKPTG”) or the relevant Land Office (S.4, SEDA 1955). The Small Estates distribution generally costs less and is quicker than obtaining the letters of administration.

The estate administrator would be required to submit the following documents:

• Form A of Small Estate application
• Identity cards or birth certificates of beneficiaries
• Marriage certificate of decreased (if any)
• Evidence of assets
• Certified true copy of land title or official title search from Land Office
• Quit rent  and assessment receipt

Upon successful application, a hearing will be held in the High Court to determine the estate administration. The administrator and all beneficiaries must be present during the hearing. If the court is satisfied that the details of the application are accurate, the Distribution order will be issued.

Estates that consist of only Movable Property and is less than RM600,000

For these estates, if there is no person who is entitled to apply for the grant of probate or letters of administration – then the interested beneficiary may apply for summary administration through Amanah Raya Berhad (S.17 Public Trust Corporation Act 1995). The letters of administration issued would be in the form of a Declaration outlining the assets.

Generally, the process of administration of moveable assets through Amanah Rakyat Berhad would take around 4-6 months.

What happens after the Grant of Probate / Letters of Administration has been obtained?

Once the Court has granted the Probate or Letters of Administration, the executor or the administrator can then proceed to do the following:

a) Collect all the deceased’s assets;

• The executor/administrator may request for all financial assets or bank savings to be transferred to an ‘executorship account’ (except for EPF and insurance payouts, as both would go into the nominee’s account, if nominations have been made).

b) Pay off the deceased’s debts and liabilities (if any), and

• The executor/administrator must pay off any remaining debts or taxes before distributing the estate. This may include outstanding loans, bills, and taxes of the deceased.

c) Distribute the estate following the deceased’s will if there is one, otherwise to distribute the estate per the Distribution Act 1958.

• The executor/administrator should prepare an estate account accordingly and record all documents showing how properties and money were distributed. These documents should include:

1. Receipts showing debts and taxes paid; 2. Receipts for expenses made from dealing with the estate; and 3. Written confirmation from the beneficiaries stating that they have received their share of the estate.

In conclusion, it is smart to be aware of the various documents which you may encounter during the home buying process. If you are unsure about anything, always make sure to clarify any doubts with your lawyer and never sign off on anything that has not been thoroughly explained to you.

This article was first published as " Deed of Assignment and Grant of Probate: Why Are These Legal Documents Important? " on iProperty.com.my .

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Selangor, Kuala Lumpur and Johor Law Firm - Deed of receipt and reassignment in Malaysia by the lawyer

Deed of receipt and reassignment in malaysia.

Deed of Receipt and Reassignment is to be treated as the same process as Discharge of Charge except that this will not include the redemption of Original Title from the Bank. This is because when the Purchaser/Borrower bought the property, the Individual Title or Strata Title is yet to be issued so they will use Deed of Assignment by way of security in order to protect the beneficial interest of the Bank for the assistance given to the Purchaser/Borrower in purchasing the property. Normally, the Purchaser/Borrower will signed the Deed of Assignment documents together with Power of Attorney upon receiving the loan from the bank. These documents worked as a protection for the Bank to sign the Perfection of Charge documents on behalf of the Purchaser/Borrower (if the Purchaser/Borrower is missing or do not have money to pay the fees) once the Individual or Strata Title has been issued. Therefore, once the Purchaser/Borrower already signed this Deed of Receipt and Reassignment documents, it can be a proof that the Purchaser/Borrower already settled the repayment of the housing loan with the bank and the Power of Attorney given to the Bank earlier will also be revoked. Most importantly, once the Individual Title or Strata Title has been issued later, the Purchaser/Borrower must prove to the Perfection of Transfer’s solicitor that the loan is fully settled by showing this Deed of Receipt and Reassignment documents and Perfection of Charge should not be done anymore. As a result, upon the registration of the Purchaser’s name on the Title by Perfection of Transfer, the Purchaser/Borrower can collect the Original Title for their safekeeping and don’t have to forward the same to the Bank anymore. • Basic process for Deed of Receipt and Reassignment 1. Deed of Receipt and Reassignment documents signed by Purchaser/Borrower 2. Deed of Receipt and Reassignment signed by Bank 3. Stamp relevant documents at LHDN 4. Revoke Power of Attorney at High Court 5. Purchaser/Borrower can collect all Original Documents for their safekeeping • Documents needed for Deed of Receipt and Reassignment:- 1. Identity card of Purchaser/Borrower 2. Prove of settlement of the housing loan from the Bank (if any) 3. Other relevant documents • What type of property under Deed of Receipt and Reassignment - master title property Disclaimer All data and information provided on this site are for informational purposes only. HS LIM & CO makes no representations as to the accuracy, correctness, completeness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis. If you are in any doubt, please contact us for further information.

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Selangor, Kuala Lumpur and Johor Law Firm - Different between discharge of charge and deed of receipt and reassignment

Different between discharge of charge and deed of receipt and reassignment.

101 on Assignment and Novation Agreements

By aqila zulaiqha zulkifli ~ 6 january 2024.

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Aqila Zulaiqha Zulkifli

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As a general rule, parties to an agreement must perform their respective obligations set out therein. However, where such performance becomes unfeasible or impossible to perform, parties may consider novating or altering the agreement. The present article, shall focus on novation of the said agreement.

A novation of an agreement is summarized as when an agreement is made between two contracting parties to allow for the substitution of a new party for an existing one.

There could be two (2) classes of novation [1] , that is:

• where a new contract is substituted for an old one between the same parties; and
• where a new contract is substituted for an old one between different parties.

Novation is provided for in Section 63 Contracts Act 1950 as follows:

“Section 63 Effect of novation, rescission and alteration of contract

If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.

Several examples are reproduced below:

• A owes money to B under a contract. It is agreed between A, B and C that B shall henceforth accept C as his debtor, instead of A. The old debt of A to B is at an end, and a new debt from C to B has been contracted.
• A owes B RM10,000. A enters into an arrangement with B, and gives B a mortgage of his (A's) estate for RM5,000 in place of the debt of RM10,000. This is a new contract and extinguishes the old.

Novation requires the consent of all parties as a new contract is substituted for an existing contract and a former party is discharged. Whether there was is no written consent, to novation may, however, be inferred from conduct and not only by way of express words [2] .

Unlike assignments (See our article on Assignment of Debt in this link ), a novation is not to assign or transfer a right or liability. Rather, it is to extinguish the original contract and replace it with another [3] .

The effect of it is that the original contract between parties need not be performed. It is a practical way to rescue a transaction amicably between parties and to avoid a situation where a party to the agreement is stranded without recourse or is forced to resort to litigation to recoup it’s losses.

[1] See the High Court case of Malaysian International Merchant Bankers Bhd. V. Datuk Mohd. Salleh & Anor. [1988] 1 CLJ Rep 786. [2] See the High Court case of Malaysian International Merchant Bankers Bhd. V. Datuk Mohd. Salleh & Anor. [1988] 1 CLJ Rep 786 . [3] See the High Court case of H & R Johnson Tiles & Anor v H & R Johnson (M) Bhd [1998] 4 MLJ 13

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Deed of Assignment or Deed of Novation: Key Differences and Legal Implications of Novation and Assignment Contracts

Novation and assignment stand out as pivotal processes for the transfer of contractual rights and obligations. These legal concepts allow a party to the contract to adapt to changing circumstances, ensuring that business arrangements remain relevant and effective. This article explores the nuances of novation and assignment, shedding light on their distinct legal implications, procedures, and practical applications. Whether you’re a business owner navigating the transfer of service contracts, or an individual looking to understand your rights and responsibilities in a contractual relationship, or a key stakeholder in a construction contract, this guide will equip you with the essential knowledge to navigate these complex legal processes.

Table of Contents

• What is a Deed of Novation? 
• What is a Deed of Assignment? 

Key Differences Between Novation and Assignment Deeds

Need a deed of novation or assignment key factors to consider, selecting the right assignment clause for your contract – helping you make the right choice, what is a deed of novation.

Novation is a legal process that allows a new party to a contract to take the place of an original party in a contract, thereby transferring both the responsibilities and benefits under the contract to a third party. In common law, transferring contractual obligations through novation requires the agreement of all original parties involved in the contract, as well as the new party. This is because novation effectively terminates the original contract and establishes a new one.

A novation clause typically specifies that a contract cannot be novated without the written consent of the current parties. The inclusion of such a clause aims to preclude the possibility of novation based on verbal consent or inferred from the actions of a continuing party. Nevertheless, courts will assess the actual events that transpired, and a novation clause may not always be enforceable. It’s possible for a novation clause to allow for future novation by one party acting alone to a party of their choosing. Courts will enforce a novation carried out in this manner if it is sanctioned by the correct interpretation of the original contract.

Novation is frequently encountered in business and contract law, offering a means for parties to transfer their contractual rights and duties to another, which can be useful if the original party cannot meet their obligations or wishes to transfer their contract rights. For novation to occur, there must be unanimous consent for the substitution of the new party for the original one, necessitating a three-way agreement among the original party, the new party, and the remaining contract party. Moreover, the novation agreement must be documented in writing and signed by all involved parties. Understanding novation is essential in the realms of contracts and business dealings, as it provides a way for parties to delegate their contractual rights and responsibilities while freeing themselves from the original agreement.

What is a Deed of Assignment?

A deed of assignment is a legal document that facilitates the transfer of a specific right or benefit from one party (the assignor) to another (the assignee). This process allows the assignee to step into the assignor’s position, taking over both the rights and obligations under the original contract. In construction, this might occur when a main contractor assigns rights under a subcontract to the employer, allowing the employer to enforce specific subcontractor duties directly if the contractor fails.

Key aspects of an assignment include:

• Continuation of the Original Contract: The initial agreement remains valid and enforceable, despite the transfer of rights or benefits.
• Assumption of Rights and Obligations: The assignee assumes the role of the assignor, adopting all associated rights and responsibilities as outlined in the original contract.
• Requirement for Written Form: The assignment must be documented in writing, signed by the assignor, and officially communicated to the obligor (the party obligated under the contract).
• Subject to Terms and Law: The ability to assign rights or benefits is governed by the specific terms of the contract and relevant legal statutes.

At common law, parties generally have the right to assign their contractual rights without needing consent from the other party involved in the contract. However, this does not apply if the rights are inherently personal or if the contract includes an assignment clause that restricts or modifies this general right. Many contracts contain a provision requiring the consent of the other party for an assignment to occur, ensuring that rights are not transferred without the other party’s knowledge.

Once an assignment of rights is made, the assignee gains the right to benefit from the contract and can initiate legal proceedings to enforce these rights. This enforcement can be done either independently or alongside the assignor, depending on whether the assignment is legal or equitable. It’s important to note that while rights under the contract can be assigned, the contractual obligations or burdens cannot be transferred in this manner. Therefore, the assignor remains liable for any obligations under the contract that are not yet fulfilled at the time of the assignment.

Choosing Between Assignment and Novation in a Construction Contract

Choosing between a deed of novation and an assignment agreement depends on the specific circumstances and objectives of the parties involved in a contract. Both options serve to transfer rights and obligations but in fundamentally different ways, each with its own legal implications, risks, and benefits. Understanding these differences and considering various factors can help in making an informed decision that aligns with your goals.

The choice between assignment and novation in a construction project scenario, where, for instance, an employer wishes to engage a subcontractor directly due to loss of confidence in the main contractor, hinges on several factors. These are:

• Nature of the Contract:  The type of contract you’re dealing with (e.g., service, sales) can influence which option is more suitable. For instance, novation might be preferred for service contracts where obligations are personal and specific to the original parties.
• Parties Involved: Consent is a key factor. Novation requires the agreement of all original and new parties, making it a viable option only when such consent is attainable. Assignment might be more feasible if obtaining consent from all parties poses a challenge.
• Complexity of the Transaction: For transactions involving multiple parties and obligations, novation could be more appropriate as it ensures a clean transfer of all rights and obligations. Assignment might leave the original party with ongoing responsibilities.
• Time and Cost: Consider the practical aspects, such as the time and financial cost associated with each option. Novation typically involves more complex legal processes and might be more time-consuming and costly than an assignment.

If the intention is merely to transfer the rights of the subcontractor’s work to the employer without altering the subcontractor’s obligations under a contract, an assignment might suffice. However, if the goal is to completely transfer the main contractor’s contractual role and obligations to the employer or another entity, novation would be necessary, ensuring that all parties consent to this new arrangement and the original contractor is released from their obligations.

The legal interpretations and court decisions highlight the importance of the document’s substance over its label. Even if a document is titled a “Deed of Assignment,” it could function as a novation if it transfers obligations and responsibilities and involves the consent of all parties. The key is to clearly understand and define the objective behind changing the contractual relationships and to use a deed — assignment or novation — that best achieves the desired legal and practical outcomes, ensuring the continuity and successful completion of the construction project.

Understanding the distinction between assignment deeds and novation deeds is crucial for anyone involved in contractual agreements. Novation offers a clean slate by transferring both rights and obligations to a new party, requiring the consent of all involved. Assignment, conversely, allows for the transfer of contractual benefits without altering the original contract’s obligations. Each method serves different strategic purposes, from simplifying transitions to preserving original contractual duties. The choice between novation and assignment hinges on specific legal, financial, and practical considerations unique to each situation. At PBL Law Group, we specialise in providing comprehensive legal advice and support in contract law. Our team is dedicated to helping clients understand their options and make informed decisions that align with their legal and business objectives. Let’s discuss!

Authored By Raea Khan

Director Lawyer, PBL Law Group

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What is Perfection of Transfer?

In summary, it is the process transferring ownership of property from the vendor to the purchaser by registering the property title in the name of the purchaser.

There are instances where the individual title is not yet issued at the time of purchasing the property and hence cannot be transferred into the name of the new owner. An example of this is when purchasing a unit in a new development from a property developer where the developer who owns the property holds the entire property under a master title.

In such cases, the entire plot of land where the development project is built will need to be subdivided into individual parcels where a strata title will be issued for each parcel. This allows purchasers to own individual units in the development project which was previously held under one master title by the developer.

What is strata title?

Strata title (also referred to as subsidiary title) is a title that is issued as a result of subdivision of a building. Where a building has been divided into multiple individual parcels, the strata title is the evidence of ownership of such parcels by the purchasers.

Why do I need to attend to the perfection of transfer?

When buying a unit in a new development from a developer where strata title is not yet issued, the sale is done by a Sale and Purchase Agreement (SPA) and with an undertaking from the developer to apply for strata title and subsequently transfer the strata title into the name of the purchaser.

By virtue of the SPA, the Purchaser acquires an in personam right meaning that the Purchaser acquires the right to the property against the vendor personally but not against the whole world.

This is so because in Malaysia, we follow what is known as the Torrens System where only the registration of ownership in title at the land office constitutes conclusive evidence of ownership of property. Thus, where title is not yet issued, registration of the name of the purchaser on the title cannot be performed.

If the purchaser subsequently sells the property before strata title is issued, the Deed of Assignment acts as evidence that the right has been assigned to the new owner.

Back to the question of “what is perfection of transfer?” – it is simply the act of completing (or perfecting) the transfer of the title into the name of the purchaser as the new owner when the strata title is issued.

The perfection of transfer grants the new owner an indefeasible title that is registered in his name at the land office. This tells the whole world that he is now the registered legal and beneficial owner of the property as per the National Land Code. The new title will also reflect any encumbrances or restrictions on the property, such as charges that were registered prior to the transfer.

Brief description of the perfection of transfer process

1. issuance of the strata title.

When strata title is issued, you will be duly notified of this by your developer or alternatively, you may be notified of this by the lawyer who attended to your SPA.

This marks the beginning of the perfection of transfer process. At this stage, you may appoint a lawyer to attend to the perfection of transfer – you may appoint the same lawyer who attended to your SPA or you may appoint any other lawyer of your choice.

Your developer will require a Letter of Authorisation notifying them that you have appointed a lawyer to act for you. The Letter of Authorisation will allow your lawyers to liaise with the developer and obtain the necessary documents.

*if there is a restriction in interest (a.k.a. “sekatan kepentingan” in BM) on the title, the consent of the State Authority will be needed before any transfer or charge can be registered. Usually, the developer is responsible for applying for consent and will require the purchaser to assist with filling up the application form and providing the necessary documents. The application for consent may take up to 3 months depending on the requirements of the land office.

2. Preparation and execution of the Memorandum of Transfer (MOT)

The MOT is the document that sets out the details of the transfer. Your lawyer will assist with preparing the MOT in the required format stipulated by the National Land Code.  The MOT is then signed by both the transferee (purchaser) and the transferor (developer).

3: Adjudication of the MOT

Before the MOT can be registered, it must be adjudicated and stamped at the Inland Revenue Board (IRB/LHDN). Adjudication is the process where the amount of ad valorem stamp duty payable is ascertained to fulfil the requirements of the Stamp Act 1949. Stamp duty that is calculated based on the value of the property is known as stamp duty ad valorem . When the adjudication is complete, the Inland Revenue Board Malaysia (IRBM) will issue a Notice of Assessment requiring stamp duty to be paid.

4: Payment of stamp duty and stamping of MOT:

Upon receiving the Notice of Assessment, payment of the stamp duty must be made within 30 days from the date of the Notice failing which a penalty will be charged. After payment is made, the MOT will be stamped at the stamp office to indicate that the stamp duty has been paid. If stamp duty ad valorem has already been paid on the Deed of Assignment, you will not need to pay for this again.

5: Registration of the MOT  

Registration is done by presenting the MOT at the land office for registration. The land office will review the transfer documents to ensure that it complies with legal requirements and the appropriate stamp duty has been paid. Once the transfer has been registered, the land office will issue a new title in the name of the new owner.

Where the purchaser has taken a loan to pay for the property, the MOT will be forwarded to the Bank’s solicitors for perfection of charge.

The perfection of transfer may be completed within 3 – 6 months. Where the State Authority’s Consent is required, this process may take longer.

What are the documents required for the perfection of transfer?

• Copy of the purchaser’s NRIC or passport
• Copy of the strata title (obtained from the developer)
• Copy of latest quit rent and assessment receipt
• Copy of latest and TNB bill for the property
• Copy of latest receipt for maintenance fees
• Copy of Deed of Assignment (if applicable)
• Copy of SPA
• Other relevant documents as may be requested for by your lawyer or the developer

What is perfection of charge?

Perfection of charge is required when the purchaser has used a loan from the bank to finance the purchase of the property. It is the process of registering the name of your lending bank on the strata title as the chargee of the property. This process is done along with the perfection of transfer.

When taking out a loan to purchase the property, the lending bank will require a charge to be registered on the title in its name as security for the loan. This will give the bank the right to sell the property should the purchaser default on the loan repayment.

The bank is responsible for the perfection of charge and will appoint its own lawyers to attend to the matter. As such, the purchaser will forward the MOT to the bank’s lawyer for registration of the charge.

The perfection of transfer process involves transferring ownership from the developer to yourself whereas the perfection of charge involves transferring that ownership to the bank who paid for the property.

Brief description of the perfection of charge process

The lawyer will prepare the charge document (Form 16A) together with Annexure which will be signed by both the purchaser and the bank. These documents are then submitted to IRB/LHDN for stamping and finally it is presented at the land office for registration. When the new strata title is issued, the original document of title is to be forwarded to the bank for safe keeping.

Do I need to attend to the perfection of transfer and perfection of charge?

Some of the complications may arise should you delay or refuse to attend to the matter:

• You may face some difficulty in selling your property as the developer will have to transfer the strata title to the new owner. The purchaser may also face some difficulty obtaining a housing loan where the property they intent to finance does not have the strata title in the name of the vendor.
• This may delay the formation of the management corporation for stratified properties such as apartments and condominiums. You will not have a right to attend of vote at the annual general meeting of the management corporation if your name is not registered in the strata title.
• Possible issues in relation to inheritance/succession – your next of kin may deal with a lengthy process involving the developers for the transfer of title.
• The developer may impose a fee for storage of the strata title

How much stamp duty do I need to pay for perfection of transfer?

If the property was purchased from an individual owner under subsale, stamp duty ad valorem would have been paid on the Deed of Assignment. As such, no further stamp duty needs to be paid on the transfer. Stamp duty only needs to be paid once on a purchase and transfer.

If the property was purchased directly from the developer, stamp duty ad valorem may be payable on the transfer and the amount payable is prescribed by the Stamp Act 1949. Stamp duty is calculated based on the sale price of the property as stated in the SPA.

From time to time there may be certain stamp duty exemptions available to purchasers for medium and low cost properties. First-time home buyers may want to look out for such exemptions which will help in saving money.

What are the fees involved for perfection of transfer?

Your lawyer’s professional fees for the perfection of transfer are provided under the Solicitors Remuneration Order (SRO). The applicable legal fees for transfer are prescribed by Schedule 1 of the the SRO:

As per the SRO, the applicable fee shall be 25% of the scale fee above if the solicitors attending to the perfection of transfer are the same solicitors that previously attended to the sale and purchase agreement / loan documentation. If new solicitors are appointed to attend to the perfection of transfer, the applicable fee shall be 50% of the scale fee above.

You may refer below for an estimate calculation of the fees involved for perfection of transfer:

In conclusion, the process of perfection of transfer can be a rather daunting and lengthy process therefore it is always advisable to engage a professional to attend to it as this ensures that the transfer is properly completed your rights and interests are protected.

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Malaysia – Statutory Assignment Vs Equitable Assignment.

December 4, 2023 by Rohin Pujari

This article attempts to provide a brief overview of the differences between statutory assignment and equitable assignment. The actual application of the general rules described here would be subject to the applicable distinct facts and circumstances.

What is Assignment?

An assignment is a transfer of rights or liabilities such as those that arise under an instrument, chose in action[1], or debt. An assignment can either be a statutory assignment or an equitable assignment.

In Malaysia, an assignment complying with Section 4(3) of the Civil Law Act 1956 was described as a ‘statutory assignment’ and an assignment not complying with Section 4(3) of the Civil Law Act 1956 was a ‘non-statutory assignment’ i.e., an equitable assignment.[2] The conditions of a statutory assignment are as follows:[3]

(a) it must be absolute and did not purport to be by way of charge only;

(b) the assignment was in writing under the hand of the assignor; and

(c) express notice in writing thereof had been given to the debtor or trustee.

Meanwhile, an equitable assignment gives the assignee a right enforceable only in equity. The mode or form of assignment is absolutely immaterial provided the intention of the parties is clear.[4]

Rules that Govern Assignments

(a) Notice

Written notice is an essential part of a statutory assignment. Therefore, it is ineffective unless strictly accurate – accurate, for instance, as regards the date of the assignment and the amount due from the debtor.[5]

However, notice is not necessary to perfect an equitable assignment. Even without notice to the debtor the title to the assignee is complete, not only against the assignor personally, but also against the persons who stand in the same position as the assignor, as, for instance, his trustee in bankruptcy, a judgement creditor or a person claiming under a later assignment made without consideration.[6]

In regard to the form of notice, as mentioned earlier, a statutory assignment must comply with the form of notice required under Section 4(3) of the Civil Law Act 1956, whilst for an equitable assignment, no particular form is required to constitute a valid equitable assignment.

Additionally, it must be noted that although notice is not required for equitable assignments, an assignee must give notice to the debtor in order to get priority over other assignee(s). In this regard, the Federal Court in Public Finance Bhd v Scotch Leasing Sdn Bhd (In Receivership) (Perwira Habib Bank Malaysia, Intervener) [1996] 2 MLJ 369 explained in detail about the importance of notice:

“ We need to say a few words more about the great desirability of giving notice of assignment of a debt by an assignee to the debtor, even though absence of such notice does not affect the validity of the equitable assignment as between the assignor and the assignee. If notice is not given, the assignee must give credit for any payment made to the assignor by the debtor. This rule means that, by extension, even if the assignor assigns once more the debt to another person in fraud or otherwise on the earlier assignee, and that other person gives notice to the debtor; and if the debtor pays that other person or the second assignee, then the earlier assignee must still give credit to the debtor for his payment thus, for the debtor cannot be blamed for doing lawfully in ignorance of the title of the earlier assignee who has failed to give notice of the assignment to the debtor. Notice to debtor is for the protection of the assignee himself. It is this effect of what the debtor does lawfully as described that dims the view of the true role of the nemo dat rule in the resolution of disputed claims to a same debt. The money paid to the ‘second assignee’ can, of course, be recovered by the earlier assignee on the nemo dat principle. ”

(b)  An assignee takes subject to equities

For both statutory assignment and equitable assignment, the assignee takes ‘subject to equities’, that is, subject to all such defences as might have prevailed against the assignor.

The general rule, both at law and in equity, is that no person can acquire title to a chose in action…from one who has himself no title to it.[7] In other words, the assignee can be in a no better position than the assignor was prior to the assignment.[8]

(c)  Rights incapable of assignment

Some choses in action are not assignable, and not every right which arises under or out of a contract can be assigned.[9] An example of rights incapable of assignment is where the nature of the contract is intended to be personal, therefore, it will be meaningless if it is assigned to another person.

Effect of Assignment

A statutory assignment has the sole intended effect of facilitating an assignee to sue in his own name directly irrespective of whether the chose in action is an equitable chose in action or a legal chose in action.[10]

Meanwhile, the effect of an equitable assignment depends on whether the assignment is absolute or not. An absolute assignment of an equitable chose in action entitles the assignee to bring an action in his own name.[11] But a non-absolute assignment of an equitable chose in action does not entitle the assignee to sue in his own name but requires him to join the assignor as a party.[12]

For further information, please contact:

Nur Izzatie Azlan, Azmi & Associates

[email protected]

• ‘Chose in action’ is a known legal expression used to describe all personal rights of property which can only be claimed or enforced by action, and not by taking physical possession (Associated Tractors Sdn Bhd v Woo Sai Wa [1997] 5 MLJ 441 (High Court)).  
• MBF Factors Sdn Bhd v Tay Hing Ju (T/A New General Trading) [2002] 5 MLJ 536 (High Court).  
• Ibid.  
• Williams Brandt Sons & Co v Dunlop Rubber Co [1905] AC 454 (House of Lords).  
• Leong, A. P. B. (1998). Cheshire, Fifoot and Furmston’s Law of Contract (2nd ed.). Butterworths Asia, at page 861.  
• Guest, A. G. (1984). Anson’s law of contract, at page 400.  
• Meagher, R. P., Heydon, J. D., & Leeming, M. J. (2022). Meagher, Gummow and Lehane’s Equity Doctrine and Remedies (4th ed., p. 284). Butterworths LexisNexis.  
• Guest, A. G. (1984). Anson’s law of contract, at page 402.  
• Lim Chon Jet @ Lim Chon Jat & Ors v Wee Ai Hua & Anor [2022] 6 MLJ 243 (Court of Appeal).  

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Without making any detailed elucidation of the laws pertaining to assignment in this country, as it is assumed that all who are considering this short work would possess the minimum knowledge of the law pertaining to assignment, it is proposed that this short work would leap straight to the question at hand: Prohibition of Assignment and the Law. A. The law prohibitive clauses against assignment 1. Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd ( 1994) 1 AC 85 (1993) 3 All ER 417 [House of Lords] It was held that there was no reason of public policy not to give effect to the prohibition clause against assignment of the subject contract, the legitimate commercial purpose of which was to ensure that the original parties to the contract were not brought into direct contractual relations with third parties.

page 430 “In the face of this authority, the House is being invited to change the law by holding that such prohibition is void as contrary to public policy. For myself I can see no reason for doing so. Nothing was urged in argument as showing such prohibition was contrary to public interest beyond the fact that such prohibition renders the choses in action inalienable. Certainly in the context of rights over land law does not favor restrictions on alienability. But even in land law a prohibition against the assignment of a lease is valid. ¦In the case of real property there is a defined and limited supply of the commodity and it has been held contrary to public policy to restrict free market. But no such reason can apply to contractual right: there is no public need for a market in choses in action. ” [emphasis added]

It is advocated that perhaps the wisdom of the state of law as adumbrated by the House of Lords in Linden Gardens Trust Ltd’s case can be better appreciated under the illuminating light of section 41 of the Contracts Act 1950. Although in the pari materia provisions of section 40 of the Indian Contracts Act 1872 the provision appears to have generally been interpreted to apply to contracts requiring personal skill

It is submitted that:

i. Any dealings related to any choses in action that would eventually manifest in a registrable right in land is of the nature where the intention of the parties is that, the obligation should be performed by the Vendor in the favour of the identified Purchaser only unless otherwise provided. ii. That if the contract unequivocally expresses the intention that the obligations and rights contained in the contract is to be executed and enjoyed by the stated parties, there is no reason including any public policy reason not to give effect to such expressed intention.

It is also argued that the promise of the creditor of a choses in action to abstain from assigning the choses in action in question without the consent of the debtor can be perceived as a form of valuable consideration for the promise of the debtor to deliver the obligation forming the choses in action. The basis of this observation finds footing in section 2(d) of the Contracts Act 1950 where is reads: “ when at the desire of the promisor, the promisee promises to abstain from doing something such act or abstinence is called a consideration for the promise. ” As a corollary where the creditor is the promisee his agreement to abstain shall be deemed reciprocal promise as provided in section 2(f) of the Contracts Act 1950. It follows therefore such a condition subsequent undertaking in a contract to restrain from acting in a particular manner or fashion that is not tainted with the objection of public policy would be valid and can be strictly enforced. 2. Hendry v Chartsearch Ltd (The Times) September 1998 [Court of Appeal] It was held that where there is a clause requiring consent, consent should not be unreasonably withheld. It was a fatal consequence to the validity of the assignment at hand as the consent of the debtor was not sought. It was irrelevant that on the facts the consent could not have been unreasonably withheld. 3. Tom Shaw & Co v Moss (1908) 25 TLR 190 at 191 Darling J (a prohibition clause) “could no more operate to invalidate the assignment than it could interfere with the laws of gravitation.” 4. “If a contract provides that the rights arising under it shall not be assigned, a purported assignment of such rights is not only a breach of that contract but is also ineffective in the sense that it does not give the assignee any rights against the debtor". an assignment of the benefit of a contract which is expressed to be not assignable may be binding as a contract" ( The Law of Contract, G.H. Treital (10th Edition) at page 639 5. “If there is a provision in a contract prohibiting the assignment of the rights arising there under, it appears that any purported assignment of such right will be in valid as regards the other party to the contract” paragraph 90–200 Halsbury’s Law of England Vol. 6 (Fourth Edition– Reissue 1991) 6. Isabela Madeline Roy & Ors V Sarimah Low bte Abdullah & Ors (2005) 2 MLJ 521 [High Court] Faiza Tamby Chik J at paragraph [5] at page 525

“There is no complete documentation of such assignment and there is no approval of such transaction from the Datuk Bandar. Section 6.04 of the agreement provides that the agreement is binding upon the permitted assigns.”

at paragraph [6] at page 526

Therefore there was no valid assignment as the Datuk Bandar had not given consent. In the present case, the solicitors conveyed a premature request to the Datuk Bandar for an assignment to be created. That request was rejected. The condition precedent had not been fulfilled. If an assignment is a conditional one, it is unenforceable (see Malayawata Steel Berhad v Government of Malaysia & Anor (1977) 2 MLJ 215)

7. Lam Hong Hardware Co Sdn Bhd v Incacon Sdn Bhd & Ors (EON Bank Intervener) 4 MLJ 531 [Court of Appeal] Mokhtar Sidin JCA at paragraph [35]:

“Di dalam rayuan ini sekarang, fasal 17 Articles of Documents jelas melarang responden pertama menyerahhak apa–apa bayaran kepada pihak ketiga tanpa kebenaran bertulis daripada responden ketiga. Dengan itu, suratikatan serahhak di antara responden pertama dan pencelah tanpa kebenaran bertulis adalah tidak sah.”

The learned judge sustained his lordship’s finding by referring to: i. Chitty on Contracts (26th Edition) Vol 1 para 1413 ii. Legal Problems of Credit and Security (2nd Edition 1998) RM Goode at page 123 iii. The case of United Dominions Trust (Commercial) Ltd v Parkway Motors Ltd (1955) 2 All ER 557. It is imperative when considering this case that the dissenting judgment of Abdul Aziz Mohamad JCA be considered in the proper light. His lordship at paragraph [59] at page 553 argued that the fact of the assignment preceded in date the contract to be assigned; the deed purporting the assignment was not restricted by the prohibition clause in the contract to be assigned. It is submitted with respect the argument advanced by his lordship should be considered in the following light: the deed purporting the assignment is a contingent contract and will not be enforceable until the condition precedent event upon which the contingent contract rests materializes (see section 33 of the Contracts Act 1950). This means that despite the fact that the deed in question being dated prior to the contract being the subject matter of the assignment, it became enforceable and as a corollary in existence only after the subject matter of the deed crystallizing. In such instance the purported assignment must be subjected to the prohibition contained in the main contract to be assigned. It is believed that it would be most persuasive to argue that if the subject matter of a contingent contract represents the conditions precedent for the enforceability of the contract, that contingent contract cannot be deemed to be in existence until the complete formation of the subject matter. In short this means that the assignment in this case came into operation upon the making of principal contract to be assigned. In this regards, the assignment must be subjected to the prohibitions contained in the principal contract meaning consent is required for the proper and legal completion of the purported assignment. B. Consent for assignment in non–commercial housing development contract It is humbly believed that there are practical necessities to retain the prohibitive provisions in non–commercial housing development contracts against assignment of rights contained therein by the a purchaser. The asserted practical necessities are as follows (which is not represented in anyway to be exhaustive list): 1. When a deed of assignment is duly endorsed as consented by the Vendor of a non commercial housing development contract the Purchaser would accrue the following benefits:

a. If the deed purports an absolute assignment the Vendor cannot attempt by way of their letter of undertaking issued in the favor of the sub purchaser’s financiers to contract out of some of their statutory enforced contractual obligations. It is a well known fact that there are recalcitrant developers who are of the stand and believe that they are not obligated to apply and secure the state’s consent to transfer in the favor of the assignee (where the parent title upon which such property is erected is subjected to restriction in interest of the consent to transfer being secured from the state authority) as provided in non commercial housing development contract which are statutorily prescribed by the Schedule G and H of the Housing (Control & Licensing) Regulations 1989. Such obstinate developers would merely undertake to apply for the state’s consent in the favor of the assignee and not obtain or secure However with an absolute assignment being 'consented’ by the developer any purport by the developer to contract out of such or similar obligations would be dismissed for a want of direct knowledge of the absolute assignment. However it is also conceded that any purport by developers to rest their consent conditional to the agreement by the assignee to vary the contract to the extent as envisaged in the above would be void for being affront to public policy. The logic is simple the statutorily prescribed sale and purchase agreements are the creation legislation that is intended to protect the public from irresponsible developers and therefore any attempt to circumvent such intend will be an attempt to fly by the face of parliament and probably summarily reject by the courts. b. With the act of endorsement of the consent of the developer the assignee of the non commercial housing development contract can rest assured that his interest in the property would survive the insolvency of the developer or the appointment of a receiver and manager of the developer. In such instance the assignee would not have to bear the onerous burden to establish the deed purporting the assignment was duly served on the developer. Any service of a copy of the deed duly endorsed by the developer would be undisputable documentary evidence of service and consent. Such documentary evidence would also be corroborated by the ordinarily letters of consent issued by the developer and the various steps undertaken to comply the various conditions imposed by the developer.

2. The procedure of the assignment requiring the consent of the developer accords a developer of a stratified development to seek the regularization of the maintenance fund and sinking fund accounts of defaulting purchasers. The continual diminishing of the quality of maintenance and up keeping services of stratified development in Malaysia must be perceived as a genuine concern. The hitherto general chorus of dissatisfaction of the up keeping of stratified development has primarily emanated from the residents of such stratified development without the self reflection by the same residents that a developer is merely a quasi trustee of the management corporation prior to its statutory incorporation pursuant to the provisions of the Strata Titles Act 1985. Without sufficient collection and payment by the residents to the maintenance and or sinking fund, the developer appears to bear no burden to incur the cost and debt of such maintenance out of their pocket. In such instance it is therefore wise to fervently utilize every instrument or means that is available to ensure the coffers of the developer to maintain, up keep and repair a stratified development is sustained at a healthy level. It is conceded that at this juncture there would exist the irresistible temptation to jettison the entire submission contained here with the argument of the existence of deceitful developers manipulating of the available funds for their benefit. Such developers do exist and perhaps many may be tempted to suggest rampant but alas this is not the focal point of this work. 3. If the purported assignment were 'perfected’ without the prior consent of the developer (subjected to the final act of deliver of a copy to the developer) and the developer having applied and secured the consent to transfer in the favor of the assignor of the non–commercial housing development contract; What would be the position of the parties? On the one hand the developer after having completed its executory obligation under the contract of securing the state’s consent, would place the developer in a position to be prepared deliver a 'valid and registrable’ instrument of transfer (I too like Mr. SY Kok frown upon the use of the word memorandum when the recognized dealings in land contained in the National Land Code 1965 are in fact instruments to effect the relevant dealings) in compliance with the statutorily prescribed sale and purchase agreement in the favor of the assignor and therefore under no further similar obligation to the assignee (as it has been executed in the favor of the assignee prior to the assignment). On the other hand the assignor would be probably advised that he has assigned all rights to the statutorily prescribed sale and purchase agreement to the assignee and therefore all rights in the property that would manifest into registered proprietary right in land should be pursued as against the developer. This complex prospect envisaged here is only applicable to parent titles subjected to restriction in interest, but certainly it must be considered from the point of view that as a matter of the state’s policy all present alienation of land are leasehold and generally subjected to the restriction in interest against transfer, sale and or lease without the state’s approval. In short if the consent of the developer were prior secured before the any steps are initiated to purport finality in the assignment save service to the developer, such vexing instances would not arise. It would also be most prudent to apply this concern with equal credence to the interest of financiers–assignee in the context of the subsequent right to a legal charge over the land in question. 4. Firstly it is submitted that the ratio of the case of Hendry v Chartsearch Ltd (The Times) September 1998 [Court of Appeal] being that where a contract contains prohibitions of assignment; such consent to allow a purported assignment cannot be in all instance unreasonably withheld would find similar support favor or footing in the local common law. Therefore this would mean that a purchaser of a non–commercial housing development contract would not encounter any unreasonable objection to the proposed assignment.. It is conceded that there are recalcitrant developers who elect to impose unreasonable conditions to 'permit’ the proposed assignment but such elections would probably fall within the limits of reasonability. This would mean to accrue the benefits that would be secured if the right of assignment of a non–commercial housing development contract is subjected to prohibitions, can only be repetitively enjoyed if such prohibitions is maintained. Many may label this perverse presentation of fact but a fact it is nonetheless. 5. It is believed that the usual form of deed of assignment that is utilized in Malaysian Conveyancers would invariably contain the element of novation as envisaged in section 63 of the Contracts Act 1950. However it is not known whether many who rely on such boilerplate clauses in deed of assignment is able to comprehend the difference between an assignment and a novation. The severely painful consequence of not be able to comprehend the difference, when drafting an instrument of assignment, between the both is best illustrated by the fairly recent cases of TT Martech Sdn Bhd v Wing Construction Sdn Bhd (M) Sdn Bhd (2004) 8 CLJ 685. The formality for the effect of a novation is that the agreement to novate must be a tripartite agreement involving the original debtor and the creditor of the choses in action and the intended party agreeing to substitute in the place of the debtor to deliver the choses in action to the creditor ( G Ramchand v Lam Soon Cannery Co Ltd (1954) MLJ 239 at 241). Hence it is advocated when the developer endorses its consent on the deed of assignment that the developer becomes a party to the deed thus resulting in the compliance with the formality of the novation. Without the formality of the novation being complied with the purported novation will not of legal validity and that would result in the assignor of a non–commercial housing development contract to remain liable for the obligations under the same. Imagine after selling of a property you remain liable to the maintenance fee of the property! Shocking? But true. (Perhaps for the doubters the wisdom of the effect of the case of Isabela Madeline Roy & Ors V Sarimah Low bte Abdullah & Ors (2005) 2 MLJ 521 can and should now be valued under a different light.) It is also important to consider that present regime of provision of the statutory sale and purchase agreement does implicitly impose the requirement of consent prior to an assignment that would result in the legal effectiveness of the novation implication of the proposed conveyance. For the benefit for those who finds this argument difficult a simple manner to comprehend this is that a in a non–commercial housing development contract, especially more for stratified development, there are reciprocal obligations that are imposed on the purchaser pending the formation of the management corporation and expiry of the initial period, such as payment of maintenance and contributions to the apportioned fire insurance policy and other outgoings of the strata building. These are obligations that cannot be assigned – obligations cannot be assigned.. obligations can only be novated. C. Consent for assignment for other commercial contracts Unless persuasive arguments are advanced to discover valid and prevailing public interests to render any stated prohibitions in any specie of commercial contract against assignment to be contrary to public interest, there is presently no basis to suggest that the present state of the law pertaining prohibitions against assignment should be overhauled. The concept of laissez faire if accepted should be embraced without limitation save and unless such freedom resulting in the encroaching of the rights of the general public. And more importantly in private commercial contracts made between two or more sui juris and consenting legal entities there appears to be no public interest reason whatsoever why the parties thereto cannot insist that the promises contained in the contract that is made is to be performed specifically by the parties to the contract. After all who can deny that in the modern world the majority commerce are decided base on the bedrock of relationship or acquaintance. Even genuine price orientated contracts would rest on the existence of a relationship. If so then contracts constructed base on relationship of the parties necessitates the performance of the parties to the contract. This is an economical reality that again necessitates the finding of a legal standing and consequence of such relationship. D. A final word One should always contract with his eyes wide open. Ignorance of the effect so–called boilerplate clauses, which usually would include prohibition clauses against assignment and novation would not rectify a invalid assignment. Ill–conceived assignment is of the real probability of resulting in significant financial losses. The cases of Incacon and TT Martech (above) are frightening but nonetheless real and more importantly very recent examples; there are likely many more; hidden and probably unknown cases of such instance that is biding its time – waiting for the correct moment to detonate. If all goes well then the folly would be forgotten and swept under the carpet, however if the undesirable should occur then price would be paid – a very heavy price which would usually be an arduous financial obligation or loss. Lastly in the cases of assignment of non–commercial housing development contracts, it would be most prudent to ensure that the consent of the developer is properly endorsed on the deed of assignment to ensure the compliance of the formalities of the element of novation contained therein failing which the legal consequence can be for a want of better words rather unintentionally amusing. Contract is not an easy subject being very much alike the game of “Reversi” it may take the shortest of period to understand the basics but to tame this great creature of the law it is an undertaking of a lifetime.

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