State Authority’s Consent

STATE AUTHORITY’S CONSENT

Legally speaking, consent is defined as all authorizations, licenses, approvals, registrations, permits, waivers, privileges, acknowledgements, agreements, or concessions required to be obtained from or provided by any concerned authority for the purpose of setting up of the generation facilities and/ or supply of power.[1] With regard to acquisition of property, consent is required from the relevant State Authority. As a matter of fact, the registered owner of a property has indefeasible rights under Section 92 of the National Land Code 1965 (“NLC”).  These rights include the ability to transfer, charge, lease, surrender, and engage in other transactions permitted under Division IV of the NLC.

However, Section 76 of the NLC provides that the State Authority has the authority to impose conditions and restrictions on lands and properties as it sees fit.  Meanwhile, Section 5 of the NLC defines a restriction in interest (“Sekatan Kepentingan”) as a limitation imposed by the State Authority to deal with the land.  The owner of restricted interest land is not permitted to conduct any transactions on the land without first obtaining written approval from the State Authority.

A common misconception is that the State Authority consent is only required for leasehold properties. While leasehold lands always require the consent from the State Authority, some freehold lands may also have restrictions in interest that necessitate consent in order to deal with that particular land(s).

Before dealing with a property that has a restriction in interest endorsed on its title, a landowner must apply for the State Authority consent. Common land transactions require for the State Authority approval that include the following:

MOST COMMON DEALINGS:
  1. Consent to Transfer
      2. Consent to Charge

Consent to Transfer

When a property with a restriction in interest for the transfer of ownership is involved in a sale and purchase transaction, the Sale and Purchase Agreement entered into between the parties is usually a conditional agreement with a Condition Precedent clause. Such clause provides that the sale is conditional in which the Vendor is required to get consent by submitting a formal application to the relevant State Authority and accordingly to get the approval from that same State Authority. As such, the seller is responsible for the cost of the consent application.

Consent to Charge

When a borrower wishes to charge a property which is subjected to restriction in interest, the borrower is imposed by law to submit the application for consent to charge at the respective land office.  The application for consent to charge can be made concurrently with the seller’s application for consent to transfer ownership.  Although the application for consent to charge can be made later, any delay in obtaining consent will cause the loan to be delayed.  Accordingly, the borrower will be responsible for the costs associated with an application for consent to charge.

As land rulings in Malaysia vary from one state to another, the time taken to obtain approval from the relevant State Authority normally can be one or two months.  In the event a consent application is rejected by the State Authority for whatever reason, an applicant can file an appeal within the provided time frame to have such application to be reconsidered by the same State Authority.

Duration to Obtain State Authority’s Consent

A typical application for State Authority approval will take at least three months. However, as there is no guarantee on how long the approval process will be completed, and in the event the approval is delayed for whatsoever reason, therefore it is common for any Sale and Purchase Agreement to mandate a six-month period from the date of the Sale and Purchase Agreement with the option to extend the deadline. For that matter, the conditions precedent in the Sale and Purchase Agreement is fulfilled only once the State Authority’s approval is obtained, and as for that, the period to complete the Sale and Purchase Agreement shall then begin.

 Pre-requisite Documents for the Application of the State Authority’s Consent

  • A copy of the Vendor’s and Purchaser’s Identification Cards
  • A copy of Land Title
  • A copy of Sale and Purchase Agreement
  • A copy of Letter of Offer
  • A copy of Quit Rent Receipt for Current Year
  • A copy of Assessment Tax Receipt for Current Year

Undoubtedly, the consent of the State Authority is critical and required so to protect the interests of certain class of landowners in Malaysia.  For instance, in the case of Low-Cost House, the conditions imposed are intended to encourage home ownership among Selangor’s low- and middle-income groups.

Interested to know more about the above topic? Feel free then to contact us for more explanation!

 

Prepared by

Molina Binti Mohamad Dat

Nurul Izzatee Binti Jamaludin

 

References:-

Property Transactions Requiring State Consent

https://www.propertyguru.com.my/property-guides/complete-guide-to-foreigners-buying-property-in-malaysia-30975

Link: https://www.propertyguru.com.my/property-guides/state-consent-land-office-permission-buy-house-malaysia-18992

[1] Law Insider. (n.d.). Required Consents, Approvals and Waivers definition. https://www.lawinsider.com/dictionary/xxxxx-required-consents-approvals-and-waivers

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