deed of assignment malaysia

Transferring a Property NOT pursuant to a sale – can it be done?

by Donovan & Ho (BD) | January 19, 2022 | Real Estate

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We often receive queries from individuals where a property was jointly purchased with loved ones or business associates, or even with an ‘ex’ and subsequently, one party wishes to transfer their portion of the property so there will now be just one owner. Another common scenario is where a husband / parent wishes to transfer the property to his wife or children while still alive.

In this article, we explore some frequently asked questions relating to situations that do not involve a sale of the property.

What are the documents needed to effect such a transfer?

An “MOT”, also known as “Instrument of Transfer”, is the legal instrument prescribed by the National Land Code 1965, which is used to effect the transfer of property with individual title or strata title. For a property without individual title or strata title issued, a Deed of Assignment (by way of transfer) is used to effect the transfer of the property.

Is a Sale and Purchase Agreement needed if no money is changing hands?

A Sale and Purchase Agreement (SPA) is not needed if no money is changing hands. However, it can be useful to have a simple SPA drawn up on a ‘friendly-party basis’ to capture the transfer, especially for the future disposal of the property to a bona fide third party purchaser.

What if the property is still subject to bank loan / charged to the bank?

If the property is still charged to a Bank, the outstanding loan must first be fully redeemed with cash OR from a completely new loan facility. Getting a new loan could mean a new (and lower) loan interest rate, but it will also involve additional legal fees and stamp duty (0.5% on the borrowed amount) on the loan documents.

The solicitor will then simultaneously register both the bank charge documents (for the new loan) and the MOT at the land office. It is also likely that the bank will insist for an SPA to be signed.

What is the time needed for such a transfer?

The whole process might take between 3 to 4 months, or more, depending on the tenure type of property, i.e. freehold or leasehold, whether there is a loan to redeem, or whether a developer is involved the property where the strata title is not yet issued.

Will state authority consent be required for such a transfer?

For a leasehold property, state authority consent will be required for the transfer. The state authority consent will take between 2 to 3 months depending on the location of the property.

What is the stamp duty involved in such a transfer?

You are also required to pay for the stamp duty to effect the transfer. The rates of stamp duty under the Stamp Act 1949 are as follows: –

• First RM100,000                                                 –           1%       
• Next RM400,000                                                 –           2%         
• Next RM500,000                                                 –           3%       
• Amounts above RM1,000,000                           –           4%

The stamp duty will be based on the property’s current market value which will be valued by the Inland Revenue Board and not based on original purchase price .

However, there are full or partial stamp duty exemptions if the transfer is done between spouses, parents and children:

Be mindful that transfers between siblings, friends, boyfriends and girlfriends, or grandparents are subject to the full stamp duty rate.

Will the transferor need to pay RPGT on such a transfer?

Under the Real Property Gains Tax Act 1976 (RPGT Act), there is a 100% RPGT exemption in the transfer of property between family members by way of love and affection between spouses, parents and children. The transferor is deemed to have received “no gain and suffered no loss” and not subject to any RPGT.

Apart from the above, any forms of transfer between siblings, friends, boyfriends and girlfriends, or grandparents are not entitled to apply for the RPGT exemption.

What is the RPGT implication to the transferee / recipient in the subsequent disposal?

The transferee should be aware that he is deemed to have acquired the property at the acquisition price that was previously paid by the transferor . Therefore, upon subsequent disposal by the transferee , he might be exposed to significant capital gains, especially if the property was previously owned by the transferor for a long amount of time.

It is always advisable to seek professional legal advice to first determine your exact situation after conducting the updated searches and a review of your documents, in order to assess the multiple variable factors and costs that would apply to your specific situation.

This article was written by  Shawn Ho  (Partner) & Suzanne Fam   (Senior Associate) from the property & tax  practice group of Donovan & Ho.   Shawn leads the  corporate  practice group of Donovan & Ho, and has been recognised as a Notable Practitioner, whilst the firm has been recognised as a Notable Firm for Corporate and M&A by Asialaw Profiles 2020 and 2021.  We are also ranked as a Recommended Firm by IFLR1000 2020 and 2021.

Our corporate practice group advises on corporate acquisitions, restructuring exercises, joint venture arrangements, shareholder agreements, employee share options and franchise businesses, Malaysia start-up founders and can assist with venture capital funds in Seed, Series A & B funding rounds. We also advise on property transactions and real-estate related tax planning. Feel free to  contact us  if you have any queries.

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Assignment of Debt – What You Need to Know

By aqila zulaiqha zulkifli ~ 23 june 2023.

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Aqila Zulaiqha Zulkifli

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Occasionally, to ensure liquidity and to reduce financial risk, a creditor may assign its rights to a debt repayment to another party. Such an arrangement is known as the assignment of debt.

An assignment generally means the transfer of contractual rights and liabilities to a third party without the concurrence of the other party to the contract. [1] The assigning party is known as the assignor, whereas the recipient party is known as the assignee.

Once an assignment occurs, the assignee stands in the exact position as the assignor and has the legal right to a debt, other remedies therein, and even the power to discharge the debt. The debtor must then, make all payments to the assignee, and not the assignor. In fact, if the debtor pays the assignor without the consent of the assignee, the debtor may risk having to pay the assignee all over again. [2]

An assignment of debt is governed by Section 4(3) of the Civil Law Act 1956 (the “Act”) (cited with approval in the Federal Court case of UMW Industries Sdn Bhd v Ah Fook [3] , in which, the elements of a statutory assignment of debt can be summarized as follows:

• the assignment must be in writing under the hand of the assignor (and not, i.e the agent of the assignor);
• the assignment must be absolute and not by way of charge only; and
• the express notice in writing must have been given to the person liable to the assignor (i.e the debtor).

The effect of a statutory assignment is that the assignee possesses the legal right to the debt and the right to sue the debtor in respect of the debt without needing to join the assignor. [4]

However, rest assured, an assignment that is not in compliance with Section 4(3) of the Act is not automatically invalid. A non-statutory assignment could still be valid in equity [5] , though the assignee would have to join the assignor in the proceeding, either as a plaintiff or defendant [6] . This is to ensure a just disposal of the action, by ensuring that all relevant parties are before the Court so that the assignor would not make a claim against the debtor in respect of the same debt.

As such, in conclusion, before accepting an assignment of debt, it is prudent for an assignee to ensure that the elements in Section 4(3) of the Act abovementioned are fulfilled. If the assignment is meant to be absolute, such terms should be clearly reflected in the deed of assignment, or the assignee runs the risk of being crippled in a legal proceeding to recover the debt in the absence of the assignor.

[1] United General Insurance Co Sdn Bhd v Progress Credit Sdn Bhd [1988] 2 MLJ 297

[2] malayawata steel berhad v government of malaysia & anor [1980] 2 mlj 103, [3] [1996] 1 mlj 365, [4] mbf factors sdn bhd v tay hing ju (t/a new general trading) [2002] 5 mlj 536, [5] khaw poh chhuan v ng gaik peng & ors [1996] 1 mlj 761 (fc), [6] chan min swee v melawangi sdn bhd [2000] 7 clj 1.

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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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Law On Transfer of Property Between Family Members In Malaysia

Property Transfer By Way Of Love and Affection

We believe many people out there are thinking about transfer of property between family members by way of love and affection, ie without any payment of money or monetary consideration.

So how do you transfer property between family members in Malaysia?

Some common scenarios are as follows:-

• the parents wish to give properties to their children; or
• husband needs to transfer half share of the matrimonial house to the wife.

Memorandum of Transfer/Deed of Assignment

There is no requirement to sign a Sale and Purchase Agreement in such situation but there is necessity to sign the Memorandum of Transfer (MOT) where the property in question has title or Deed of Assignment where the property in question has no title or is under master title.

The consideration stated in the MOT or Deed of Assignment would be “love and affection” or “ kasih sayang ” in Bahasa Melayu.

The MOT or Deed of Assignment still has to be stamped. However, such transfer of property between parent and children or married spouses is subjected to exemption.

The transfer of property between parent and children or married spouses attract no gains tax because the recipient/transferee is deemed to have acquired the property in question at the same price as acquired previously by the donor/transferor. So there is no gain. However, note that it is still necessary to file the relevant CKHT forms with the Inland Revenue.

The professional fee will be based on the monetary consideration or the market value of the property in question. Where the consideration is for love and affection, the professional fee chargeable will be based on the market value of the property in question.

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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.

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RIGHTS OF ASSIGNORS AND ASSIGNEES TO SUE UNDER AN ABSOLUTE ASSIGNMENT AND ASSIGNMENT BY WAY OF CHARGE USED AS A SECURITY FOR LOAN

“In consideration of the Facility granted to the Assignor upon the terms and conditions contained in this Agreement, the Assignor as beneficial owner hereby absolutely assigns all of the Assignor's rights and title to and interest whatsoever in the Property including all rights and interest of the Assignor in the Sale and Purchase Agreement to the Bank.”

In this respect, one is often faced with the question of whether an assignor can found an action against the developer without involving the assignee. Likewise, can the assignee sue the developer directly without involving the assignor? The law in this area is at least settled after the date of coming into force of the Civil Law Act 1956 ("CLA") which is 7 April 1956 for West Malaysia and 1 April 1972 for East Malaysia as s 4(3) CLA provides that if the assignment is a statutory assignment under that section, then the assignee can sue the developer/debtor directly without the concurrence of the assignor which means the assignor cannot sue the developer/debtor directly without the concurrence of the assignee unless it is an assignment by way of charge. Position of the English law prior to 1873 In fact, s4(3) CLA is similar to s 25(6) of the English Supreme Court of Judicature Act 1873 . It is, therefore, relevant to examine the English position of an assignment and English authorities before and after the 1873 Act as courts in West Malaysia shall apply the common law of England and the rules of equity as administered in England on 7 April 1956; for Sabah as administered in England on 1 December 1951 and for Sarawak as administered in England on 12 December 1949 subject to local circumstances. (See s 3 CLA.) In England prior to 1873, common law and equity were administered in different courts – the common law courts (the Court of Exchequer, Court of Common Pleas and the Court of King’s Bench) would enforce legal rights and the court of equity (Chancery Court), equitable rights. Hence, common law courts would only recognise legal rights, but not an assignment of legal choses in action save in the case of bills of exchange, bills of lading and stocks and shares in incorporated companies. It follows that in the case of assignment of equitable choses of action, the assignee could always bring an action in the Chancery Court in his own name if it is an absolute assignment of equitable choses or by joining the assignor if it is a non–absolute assignment of equitable choses in action. On the other hand, an assignee of a legal assignment of rights, whether absolute or not, could not sue the debtor at common law since there is no privity of contract between the two – a legal principle, albeit the assignor could always sue the debtor for the recovery of the debt in the common law courts. There would be no problem if the assignor agreed to sue, but in most cases he would not be bothered after having assigned his legal rights over the debt. However, equity has always allowed the assignment of both legal and equitable choses of action. Thus in the case of an assignment of legal choses of action, the action had to be brought in the name of the assignor but equity would compel the assignor to lend his name to the assignee in the proceedings. As a result, a legal assignee had to go to two courts in order to enforce an assignment of legal choses of action – the court of equity to compel the assignor to lend his name to sue the debtor and the court of common law to commence the action against the debtor in the assignor’s name. Position of the English law after 1873 The old courts of common law and equity were then abolished by the English Supreme Court of Judicature Act 1873 which established in their place a single Supreme Court of Judicature comprising now a High Court with three divisions – King’s Bench, Chancery and Family. Each of these divisions could now administer both law and equity, but the latter is to prevail in the event of a conflict. This has brought a significant change in the position of an equitable assignee who can now enforce an equitable assignment in any of the courts unlike prior to 1873 when he could only do so at the Chancery Court. As regards the assignee of legal choses in action, now he need only to commence one legal action in any of the divisional courts by joining the assignor as a co–plaintiff. However, if the assignor refuses to be so joined, the assignee will still have to sue the assignor as a co–defendant with the debtor. The cause of action against the assignor would still be invoking the equitable jurisdiction to compel the assignor to lend his name to the assignee and the common law jurisdiction to enforce the legal rights against the debtor in the assignor’s name. Hence, even though the 1873 Act fused the administration of law and equity, it did not really fuse law and equity per se as the oft–quoted saying goes, “the two streams have met and now run in the same channel, but their waters do not mix.” Statutory Assignment under s4(3) CLA Apart from abolishing the old courts of common law and equity, the 1873 Act also introduced a statutory assignment. S 25(6) of the 1873 Act has now been replaced by s 136 of the Law of Property Act 1925 which is similar to our present s 4(3) CLA. In simple terms, an assignee of a valid statutory assignment can now sue the debtor in his own name. This is effectual in law to transfer to the assignee from the date of notice of assignment the legal right to a debt or chose in action, all legal and other remedies and the power to give a good discharge for the same without the concurrence of the assignor. However, for the Clause to create a statutory assignment under s 4(3), four conditions must first be satisfied, namely (1) the assignment is in respect of a debt or other legal chose in action; (2) the assignment must be in writing under the hand of the assignor; (3) express notice in writing of the assignment must be given to the debtor, trustee or other person from whom the assignor would have been entitled to claim the debt or chose in action; and (4) the assignment must be absolute and not purporting to be by way of charge only. S 4(3) CLA further provides that such an assignment is subject to equities having priority over the assignee, that is, the assignee takes the assignment subject to any defects in the assignor’s title and all other claims the debtor may have against the assignor. The assignment takes effect from the date of receipt of the notice of assignment by the debtor, an exception to the postal rule that acceptance takes effect upon posting. (See Holt v Heatherfield Trust Ltd [1942] 1 All ER 404.) As regards condition (1), the “debt or other chose in action” must be one that is existing at the time of assignment, albeit the debt is payable later. ( Earle v Hemsworth [1928] All ER 602.) Also, the debt must be of an ascertained amount and it was held in Jones v Humphreys [1902] 1 KB 10 that whilst an assignment of so much of an income which “ shall be necessary and requisite for payment to you of the sum of 22l.10s. ” might define the sum, “ any further or other sums in which I may at any time hereafter become indebted to you " is too indefinite and would fall outside the ambit of s 25(6) of the 1873 Act as an assignment by way of charge. As respects condition (2), in order to be within s 4(3), the assignment has to be in writing under the hand of the assignor. In other words, if an agent signs the assignment, then this will be outside s 4(3). ( Wilson v Wilson 1880 5 Ex D 155.) Whilst s 4(3) does not prescribe the exact form of assignment, the assignment must still be one of absolute assignment and not by way of charge. Condition (3) requires an express notice of assignment in writing to be given to the debtor ( Bank Bumiputra Malaysia Bhd & Anor v Lorrain Esme Osman & Ors [1987] 1 MLJ 502) even if the parties knew that he could not read and oral notice has been given ( Hockley and Papworth v Goldstein [1920] 90 LJKB  111) so that the debtor knows to whom he must now pay the debt. Consent from the debtor to the assignment is not necessary. ( Tan Ah Chim & Sons Sdn Bhd v Ooi Bee Tat & Anor  [1993] 3 MLJ 633.) The date of assignment must also be stated correctly, ( Stanley v English Fibres Industries Ltd (1899) 68 LJQB 839) albeit if no date is given at all, the notice is still not defective. ( Van Lynn Development Ltd v Pelias Construction Co Ltd [1969] 1 QB 607) The notice will also be bad if the amount of debt has been stated incorrectly. ( W F Harrison & Co v Burke [1956] 2 All ER 169.) Though s 4(3) does not prescribe a particular form of notice, where there is doubt, the notice should also specify that the assignee was to receive the money for itself as principal, not to account of or on behalf of the assignor or as its agent. ( United Overseas Bank Ltd v Singapore Engineers Ltd   [1966] 2 MLJ 267.) Upon receipt of the notice, the debtor must make all payments of the debt to the assignee and not the assignor and if he pays the assignor without the consent of the assignee, he may have to pay the assignee all over again. ( Malayawata Steel Berhad v Government of Malaysia & Anor [1980] 2 MLJ 103, even though it involved an equitable assignment. See also Malaysian International Merchant Bankers Bhd v Malaysian Airlines Sytem Bhd [1982] 2 MLJ 59.) Condition (4) is perhaps the most important, that is, the assignment must be absolute and not by way of charge. Generally, the requirements of an absolute assignment are: (1) the assignment must be in respect of the whole and not part of the debt ( Jones v Humphreys Ibid.); the assignment must not be conditional and (3) the assignment must not be “by way of charge” and labels ( BP (Sabah) Sdn Bhd v Syarikat Jubrin Enterprise (sued as a partnership firm & Ors) [1998] 4 MLJ 715) are not important in construction. Thus the oft–repeated question is if the assignor has a right to redeem the loan, is the assignment an absolute assignment? In this respect, it has been held more than a century ago that an assignment of a debt to secure a loan given to the assignor with the assignor’s right to reassignment upon redemption has been held to be an absolute assignment without affecting the absolute character of the assignment. ( Tancred v Delagoa Bay Ry [1889] 23 QBD 239 and Hughes v Pump House Hotel Co. [1902] 2 KB 190.) This applies equally to the assignor under the Clause. An assignment by way of charge is different as it only entitles the chargee to the right of repayment without involving a transfer of title to the chargee. For example, in Durham Brothers v Robertson [1898] 1QB 765 where the assignment only states that it is a security for advances “ until the money with added interest has been repaid ” and silent on the point of reassignment to the assignor with notice to the debtor, it was held that such an assignment is not absolute but one by way of charge because the debtor would not be able to know when the loan has been repaid and when the assignment has ceased since such an assignment ceases upon repayment and not upon reassignment. If the assignment fails to meet the above conditions of s 4(3), then the assignment will be an equitable assignment in which case the assignee has to join the assignor as a co–plaintiff or as a co–defendant, as the case may be, but the assignor is entitled to sue direct. Locus Standi Hence, where there is an absolute assignment under s 4(e), only the assignee can sue the developer/debtor, but not the assignor since the latter has already assigned all his rights and has no more right to sue. This works fine in a factoring agreement where the assignee factor can sue the debtor directly to recover the debt as the assignor creditor will not be interested in suing the debtor since he has already obtained the loan from the factor by divesting all his rights in the debt. ( The Chartered Bank v Rashid Bin Mohadmed [1986] 2 MLJ 219.) Likewise, if the assignor defaults in his loan repayment, the absolute assignee bank can always dispose of the property by way of assignment to a third party with notice to the developer and without the concurrence of the assignor borrower. However, the assignment if given by a company requires registration as a charge under s 108(3)(e) of the Companies Act 1965 because it is an equitable mortgage (see Chuah Eng Khong v Malayan Banking Berhad [1998] 3 MLJ 97 and Ng Wei Teck Michael & Anor v Oversea–Chinese Banking Corp Ltd [1998] 1 SLR 55); otherwise the charge will be void against the liquidator and any creditor of the assignor. (s 108(1) Companies Act 1965 .)

But problems arise if during the currency of the absolute assignment, the assignor has a dispute with the developer particularly in relation to late delivery and defective workmanship. The assignor will find that he has no locus standi to sue the developer and has to run to the assignee to persuade the latter to personally sue the developer or sue in the name of the assignor. In most cases, the assignee bank will be reluctant to do so and it is always a time–consuming process to get the assignee to agree to this course of action, much to the advantage of the developer. The above legal position was well settled by the Malaysia’s highest court in Nouvau Mont Dor (M) Sdn Bhd v Faber Development Sdn Bhd [1984] 2 MLJ 268 and Hipparion (M) Sdn Bhd v Chung Khiaw Bank Ltd [1989] 2 MLJ 149 which held that a clause such as the Clause (above) is an absolute assignment under s 4(3) CLA notwithstanding that the assignment would later be converted into a legal charge under the National Land Code 1965 (“NLC”) upon issuance of the individual title. However, it is common knowledge in the housing industry that this is unfair to the assignor if the assignee refuses to sue the developer, a fortiori during the boom years of the nineties when thousands of apartment and condominium units without individual strata titles were sold in Malaysia, and loans were secured by loan agreements and assignment with clauses of assignment not dissimilar from the one in Nouvau Mont Dor . Also, it takes years before strata titles are issued when the assignments are then converted into a legal charge under the NLC which would then confer the assignor now a chargor the right to have direct recourse against the developer. As a result, many High Court judges attempted to circumvent s 4(3) by holding that such assignment is outside s 4(3) CLA by applying a different construction to the principle laid down in Nouvau Mont Dor which is whether an assignment is an absolute one is to be gathered only from the four corners of the instrument itself even though the clauses of assignment were similar to the one in Nouvau Mont Dor . Further, some judges were of the view Nouvau Mont Dor had been overruled by the later Federal Court case in Chooi Siew Cheong v Lucky Height Development Sdn Bhd & Anor [1995] 1 MLJ 513 which held that when construing a document, one must look at the “surrounding circumstances” and not at one clause in isolation. By doing so, the judges were able to hold that the assignment is by way of charge which entitles the assignor to sue the developer in his own name.

The High Courts in Loh Hoon Looi & Ors v Viewpoint Propertues (Sabah) Sdn Bhd [1995–4 MLJ 804], Lim Hock Lai v Hwa Kwong Development Sdn Bhd [2001] 5 CLJ 515, Max–Benefit Sdn Bhd v Phuah Thean An & Anor [2001] 1 MLJ 553 and Sakinas Sdn Bhd v Siew Yik Hau & Anor [2002] 5 MLJ 498 all held that whether an assignment was an absolute one would depend on the aim of the transaction, and if it was intended as a security for a loan, it could not be absolute and therefore the assignor was entitled to sue in his own name! Another judge in Pak Ki Yau & Anor v Kumpulan Promista Sdn Bhd [1999] 6 MLJ 220 held that as repayment of the loan as well as the execution and registration of the subsequent charge is an uncertain event, the result of which had made the assignment conditional and not absolute!

In Chan Min Swee v Melawangi Sdn Bhd [2000] 7 CLJ 1, the judge went even further to hold that even if the assignment was not absolute, the assignee bank must still be made a party to the action either as a co–plaintiff or a co– defendant on the ground that the assignee bank has an interest in the matter. The court also held that a letter of consent with reservation of rights from the assignee bank is not a good consent for the assignor to sue in his name.

To further protect the assignor purchaser, the Court of Appeal in Phileo Allied Bank (Malaysia) Bhd v Bupinder Singh Avatar Singh & Anor [1999] 3 MLJ 157 held that as an absolute assignment is an equitable charge or mortgage, the assignee bank could only dispose of the property by way of a court order pursuant to Order 83 of the Rules of High Court (“RHC”), triggering off a deluge of foreclosure cases being filed in the courts. Finally, the Federal Court put an end to all these upon appeal in Phileo Allied Bank (Malaysia) Bhd v Bupinder Singh Avatar Singh & Anor [2002] 2 MLJ 513 which reinstated the law in Nouvau Mont Dor and also held that the RHC could not extend into an area of substantive law and in the absence of any statutory provisions or common law requiring the equitable mortgagee to obtain a court order to realise its security under an absolute assignment of rights to land, the court should recognise the contractual rights of the parties. Hence, the assignee bank is once again entitled to foreclose the property by way of public auction without a court order. ( Ngoi Thiam Woh v Maxwell, Kenion, Cowdy & Jones (sued as a firm) & Anor [2002] 3 MLJ 341.) However, this still does not solve the problem of the poor assignor purchaser who is still incompetent to sue the developer. But his position has improved substantially if he is a homebuyer when Parliament passed the Housing Developers (Control and Licensing) Amendment Act 2002.The 2002 amending Act seeks to insert a new section 22C in the Housing Developers (Control and Licensing) Act 1966 which has the effect of overriding s 4(3) CLA and the decision of Nouvau Mont Dor if it involves a homebuyer who is a purchaser of a housing accommodation or has a dealing with a licensed housing developer under the 1966 Act. This new section will allow the assignor homebuyer to sue the developer directly unless a contrary intention is expressed in any assignment between the homebuyer and his financier in which case the prior written consent of his financier must first be obtained. This section operates “notwithstanding anything contained in any written law or any rule of law” and applies retrospectively to every assignment. Conclusion In conclusion, it cannot be gainsaid that a statutory assignment under our s 4(3) CLA is a common security for a loan if there is no individual title to the property, but not an assignment by way of charge. Therefore, there is a need for the legislature to look at the predicament of an assignor purchaser as particularised above just as what it did for the assignee under s4(3) CLA and a homebuyer under the Housing Development (Control & Licensing) Act 1966.

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DEED OF ASSIGNMENT: EVERYTHING YOU NEED TO KNOW.

A Deed of Assignment refers to a legal document in which an assignor states his willingness to assign the ownership of his property to the assignee. The Deed of Assignment is required to effect a transfer of property and to show the legal right to possess it. It is always a subject of debate whether Deed of Assignment is a contract; a Deed of Assignment is actually a contract where the owner (the “assignor”) transfers ownership over certain property to another person (the “assignee”) by way of assignment. As a result of the assignment, the assignee steps into the shoes of the assignor and assumes all the rights and obligations pertaining to the property.

In Nigeria, a Deed of Assignment is one of the legal documents that transfer authentic legal ownership in a property. There are several other documents like a deed of gifts, Assent, etc. However, this article focuses on the deed of assignment.

It is the written proof of ownership that stipulates the kind of rights or interests being transferred to the buyer which is a legal interest.

Read Also: DIFFERENCE BETWEEN TRANSFER OF PROPERTY THROUGH WILLS AND DEED OF GIFT

CONTENTS OF A DEED OF ASSIGNMENT

Content of a Deed of Assignment matters a lot to the transaction and special skill is needed for a hitch-free transaction. The contents of a deed of assignment can be divided into 3 namely; the introductory part, the second (usually the operative part), and the concluding part.

• THE INTRODUCTORY PART: This part enumerates the preliminary matters such as the commencement date, parties in the transaction, and recitals. The parties mentioned in the deed must be legal persons which can consist of natural persons and entities with corporate personality, the name, address, and status of the parties must be included. The proper descriptions of the parties are the assignor (seller) and assignee (buyer). The Recitals give the material facts constituting the background to the current transaction in chronological order.
• THE SECOND PART (USUALLY THE OPERATIVE PART): This is the part where the interest or title in the property is actually transferred from the assignor to the assignee. It is more like the engine room of the deed of assignment. The operative part usually starts with testatum and it provides for other important clauses such as the consideration (price) of the property, the accepted receipt by the assignor, the description of the property, and the terms and conditions of the transaction.
• The testimonium : this shows that all the parties are involved in the execution of the deed.
• Execution : this means signing. The capacity of the parties (either individual, corporate bodies, illiterates) is of great essence in the mode of execution.  It is important to note that the type of parties involved determines how they will sign. Example 2 directors or a director/secretary will sign if a company is involved. In the same way, if an association, couple, individual, illiterate, family land (omonile), firm, unregistered association, etc. is involved the format of signature would be different.
• Attestation : this refers to the witnessing of the execution of the deed by witnesses.

For a Deed of Assignment to be effective, it must include a column for the Governor of the state or a representative of the Government where the property is, to sign/consent to the transaction. By virtue of Sec. 22 of the Land Use Act, and Sec. 10 Land Instrument Registration Law, the Governor must consent to the transaction.

Do you have any further questions? feel free to call Ibejulekkilawyer on 08034869295 or send a mail to [email protected] and we shall respond accordingly.

Disclaimer: The above is for information purposes only and should not be construed as legal advice. Ibejulekkilawyer.com (blog) shall not be liable to any person(s) for any damage or liability arising whatsoever following the reliance of the information contained herein. Consult us or your legal practitioner for legal advice.

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