Strata Title vs Master Title: Why Should You Care?

When planning to purchase a house, there are many details you need to take into account. One of these details is the title attached to your desired property. You might’ve seen the public service announcement (in Bahasa Malausia) released by JKPTG about Strata Titles and been left with even more questions about types of ownership in Malaysia. So here we are to show you everything you need to know about Strata and Master Titles, and why it matters.

What is Strata Title and Master Title?

A title, or title deed, indicates the owner of a property. In most cases, every property during the stages of development and construction will be under a single Master Title.

Strata Title is the separate property deed for each unit in a sub-divided property (multi-storied building or a number of buildings on a piece of land that have common facilities administered by a management committee). These can include: apartments, condominiums, townhouses, etc.

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Who’s the Owner?

Under a Master title, the developer is the land holder, and has the right to control all the transactions concerning the land — namely, selling it.

Under a Strata title, though, the purchaser of the property is the land holder.

In theory, the Master title would ideally be sub-divided into smaller titles after completion of construction and before selling to homebuyers. To transfer ownership, then, would require the standard MoT (Memorandum of Transfer) and ta-da! The purchaser is now the rightful owner of the property. However – the reality is that many developers sell their properties while they are still under Master Title. This means that the developer is the rightful owner. This instance requires a DoA (Deed of Assignment) to be filed at the High Court instead of a MoT at the Land Office. A DoA assigns the rights of a property to the purchaser.

Note: A MoT may still take place months or years after the initial transaction if the purchaser requests it of the developer. This is risky, though, as in some cases the developers have gone bankrupt during the process which breeds complications.

This is Why it Should Matter to You:

Without the Strata Title it will be difficult to:

– Get financing from banks (most will reject loan applications if the property is more than a decade old and still under Master Title)
– To conduct sale and purchase transactions on the individual unit in the property (all transactions must be approved by the developer)
– To properly maintain the property because management committee cannot be formed
– To carry out the inheritance process
– To prove latest ownership (without going through a tedious process of digging up all the past SPAs and DoAs up until the original sale)

In light of this, the government have begun to enforce the Strata Title (Amendment) Act 2013 as of 1st June 2015 to safeguard the right and interest of the buyers. Now, Strata Title can be issued to property buyers together with the issuance of vacant possession.

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When buying a property, it’s important to check the title deed as a homebuyer since it can make a huge impact on your financials in the long-term. Always make sure to check the status of the property with the developer as well as the title indication in the Sale & Purchase Agreement.

Check out the rest of our guides on our blog and Facebook to educate yourself and make the home buying process easier for you.

Images: highrises.com, homedsgn.com, owendunn.com