Charges

Charges are registrable security transactions under the National Land Code (NLC).

Liens are recognized as dealings under the NLC.

Jual Janji (Malaysia) is recognized by courts as a contract of sale, though not by the NLC.

Mortgages are based on English Law.

Land Charge (Gadaian) differs from Company Charge.

A charge is a transaction where a registered land proprietor conveys it as security for debt repayment to a third party.

S 5 of the NLC defines "charge" as a registered charge, cross-referencing with S 243.

Every charge under the Act takes effect upon registration, per S 243 of the NLC.

The chargor is the land/lease owner; the chargee is the third party/bank.

First-party charge: chargor is the borrower; third-party charge: chargor isn't the borrower.

A charge constitutes an interest in land.

MBF Finance Bhd. v Teguh Consolidated Sdn. Bhd. held that the chargor must comply with the registered charge, allowing the chargee to recover sums due if the chargor doesn't comply.

Chargee has interest but not the land title; mortgagor conveys land title to the mortgagee.

Charges allow application for an order for sale (auction) following NLC procedures, while mortgages allow it following contractual terms.

Both chargor and chargee names appear on the land title; the chargor holds the title, and the chargee has the interest.

Mortgages require the mortgagee to return the land upon full loan payment.

Charges involve the chargor issuing a discharge of charge after full payment, returning the title.

Charges have equitable rights.

Kimlin Housing Development Sdn. Bhd. v Bank Bumiputra Bhd. distinguishes between mortgage in common law (rights vested in the mortgagee) and statutory charge in NLC (rights derived from NLC provisions, enforceable via court proceedings).

Powers of charging are under S 241 of NLC, with restrictions in S 241(3).

Syariah principles must comply with NLC per S 241(5), involving financial institutions under S 241(6).

Titles owned by individuals/companies (S 43), land under final/qualified title (S 77), land/parcel under strata title (S 256(1)(c) & S 260(1)(c)), land registered under Land Office/Registry (S 77), alienated land not more than 99 years (S 76) can be charged.

Creating a charge involves Form 16A or 16B, subject to s 241(3) & (4).

S 241(6) allows second and subsequent charges, with the first registered charge having repayment priority.

IDT is held by the first registered charge; S 244(2) allows Registry to use IDT to register subsequent charges.

Priority can be postponed using Form 16C, with charges ranking in order specified from the registration date per S 247(2).

"Tracking" and "consolidation" affect charge priority but are enforceable only under S 245 and S 246.

Restriction on consolidation: S 245; tacking of further advances: S 246.

R & I Securities v Golden Castle Finance states that unregistered charges lack NLC protection and rights under Part 16.

The chargee enjoys indefeasibility of interest under S 340(1).

Real and personal rights of chargee include order for sale, taking land possession, and appointing receiver.

Express agreements are between chargor and chargee.

Implied agreements are under S 249, 250, 251 & 218(2).

Other relevant provisions include S 218(2), 215 & 216, 244.

Unregistered charges are generally invalid, but equitable charges are an exception.

Oriental Bank v Chup Seng Restaurant (Butterworth) Sdn. Bhd. notes that charges must be registered for enforcement but recognizes equitable charges for executed but unregistered charge instruments.

Malayan Banking Bhd. v Zahari bin Ahmad [1988] recognizes loan agreements and deeds as equitable charges where no separate title/charge exists.

Bank Pembangunan dan Infrastruktur Malaysia Bhd. v Omar Hj Ahmad validates equitable third-party charges despite attestation errors if an antecedent agreement exists.

Remedies include order for sale, taking possession, and appointing receiver.

ss 253-269 NLC govern order for sale with Form 16D (s 254) or 16E (s 255).

Chargee can enforce remedy by sale on default grounds, with procedures varying by title type (RT: ss 256, Order 83 Rules of Court 2012; LOT: s 260 Land Administrator).

Foreclosure is selling land via auction to secure debt payment from the chargor.

S 253 of NLC outlines provisions for chargee to obtain land sale on breach, with bidder defined as a natural person, corporation, or single body, excluding the chargor.

Kandiah Peter v Public Bank Bhd. clarifies that applying for an order for sale isn't commencing an action but enforcing a statutory remedy.

Kimlin Housing Development Sdn. Bhd. v Bank Bumiputra requires chargor to proceed with law from NLC.

Notice must be given in Form 16D within a month, or Form 16E where the principle is payable on demand. Statutory requirements must be met for an order of sale. The chargor has opportunity to show cause to the contrary and has the right to pay before the hammer to stop a sale.

S 254 of NLC specifies serving Form 16D for breach, requiring remedy within one month, and warning of proceedings for sale.

S 255 allows Form 16E notice for sums payable on demand, permitting immediate application for sale if unpaid within one month, waiving Form 16D.

Co-operative Central Bank Ltd v Meng Kuang Properties Bhd validates notices lacking precise sums if the chargor has a reasonable opportunity to comply.

Standard Chartered Bank Malaysia Bhd v Tunku Mudzaffar Bin Tunku Mustapha mandates correct personal service and correct receiver of the notice.

Service of wrong notice won't bar chargee's application per Jacob v Overseas Chinese Banking Corp, Ipoh, referencing S 62 of the Interpretation Act 1967.

Co-operative Central Bank Ltd. v Meng Kuang Properties Bhd. denies order for sale due to chargee negligence in demanding default interest.

Perwira Affin Bank Bhd v Saad Bin Abdullah & Anor invalidates Form 16D if not based on charge terms.

For registry title, the High Court processes orders for sale; for land office title, the Land Office does so.

Order 83 of Rules of Court 2012 applies to High Court cases. S 256(2) of NLC mandates court applications follow civil procedure law.

Form 16G is used for Land Office applications. S 260(2) mandates applications to the Land Administrator in Form 16G.

UAB v Elgi Marka Sdn Bhd restricts court jurisdiction to Land office title land.

Low Lee Lian v Ban Hin Lee Bank Bhd. [1997] defines cause to the contrary.(i) bringing his case within any of the exceptions to the indefeasibility doctrine in s 340 NLC 1965 (ii) demonstrate that the chargee had failed to meet the conditions precedent (iii) grant of an order for sale would be contrary to some rule of law or equity.

Limited application, illustrated by purchasers paying full price and taking possession, creating an equitable estate, making enforcement unconscionable

The court will always cancel the auction made by LA if the auction does not comply with Section 257(1) of