A common misconception is that only leasehold properties are required to obtain State Authority’s consent when one acquires an immovable property. While it is certain that leasehold properties usually require approval from the State Authority, there are freehold lands that may have express restrictions in interest that require the State Authority’s consent too. In such circumstances, the State Authority may impose such restrictions in interest upon alienation of land as discussed in the case of Tanasekharan a/l Autherapady & Anor v Pengarah Tanah dan Galian Negeri Perak & Ors [2024] MLJU 865.

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Brief facts

The Applicants entered into a sale and purchase agreement with a property owner in Perak. Although the property being a freehold land, there was an undisputed restriction of interest on the property stating that the property could not be transferred or leased out without the approval of the Menteri Besar. The owner of the property applied for the Menteri Besar’s approval to transfer the ownership of the property to the Applicants. However, the application was rejected without being given any reasons for the decision. Hence, the filing of a judicial review by the Applicants to quash the decision of the Menteri Besar mainly on the ground that there is no restriction to sell for a freehold land and it was not a Malay Reserve land.

The Court had dismissed the application for the judicial review based on the following grounds:

1. 1) The Applicants were fully aware of the restriction on the property and yet, still proceeded with the transaction before any response or approval was obtained. The document of title that expressly showed “Tanah ini tidak boleh dipindah milik atau dipajak tanpa kebenaran Menteri Besar” required a prior written approval of the Menteri Besar before any transfer or lease can be made and this was within the Applicants’ full knowledge of the restrictions since an application for consent was submitted and pending even after the agreement was concluded.
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3. 2) The Menteri Besar had acted under its prerogative powers in approving or rejecting the consent application. The Court continued to consider on the issue relating to the duty to give reasons, where the Court continued to assess several approaches. Here, the Court stated that it is within the State Authority’s prerogative power in granting the approval and it has no duty to give reasons for rejecting the Applicant’s application as it was not required to do so under any laws.
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5. 3) Section 120 of the National Land Code mentioned clearly that the State Authority may impose the express conditions and restrictions in interest upon alienation of land, which shall be determined at the time when the land is approved for alienation.

To conclude, when express conditions and restrictions in interest are stated clearly on a document of title, the written consent approval from the State Authority to transfer or lease out the property is mandatory regardless of the property comprised of a freehold or leasehold property. Pursuant to section 120 of the National Land Code, the State Authority may alienate a land subject to its express conditions and restrictions in interest. Failure to obtain such approval may result in a non-registration of title for the property.

About the author

Ainie Ajiera binti Rosman
Associate
Real Estate
Halim Hong & Quek
ainie@hhq.com.my

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