Master titles, Individual titles and Strata Titles | The three categories of land ownership

Want to buy real estate? Do you know what kind of ownership you will receive? We detail the differences between strata ownership, master ownership and individual ownership, and how they can affect you as an owner.

Buying a property is not as easy as buying a convenience store. The type of property you purchase will determine the type of ownership you will receive as well as your rights.

Legally, property ownership is represented by land ownership. Without it, you will not be able to sell, transfer or use the property as collateral in financial transactions.

In Malaysia, there are three categories of land ownership (or titles): 

1. Master title
2. Individual title
3. Strata title

1. PURPOSE OF MASTER TITLE

The masters title is an ownership document granted during the property's construction and development period. Typically, they are registered in the name of the owner and/or developer. 

Units in a development will be sold individually or as part of a strata ownership scheme. The master title will retain ownership of public areas and shared facilities such as playgrounds, swimming pools, and outdoor areas. For the purpose of you as buyer of a separate units, we will focus on the difference between individual and strata ownership by answerinf the below questions:

1. What is  Strata Management Tribunal (TPS)?
2. What is a Strata title and why it is important to the homeowner?
3. What is the indivdual property title?

Individual ownership is a type of ownership document that is granted to you when you become the single owner of a parcel of property. It is usually devoted to real estate, such as semi-detached (semi-D) residences, terrace houses, and bungalows. 

In a nutshell, it describes the boundary of the property, different property terms and the name of the property owner. 

Individual ownership can be applied and issued once the developer has completed the construction of the entire development to register ownership of this independent parcel of land and related parts of the property.

The length of your ownership is determined by the type of land you possess: 

If it is a freehold property (freehold tenure),  then it is the landlord's(your) personal property, and the property is yours permanently. 

If the property is leasehold, the individual's ownership is transferred to you based on the length of the lease. For example, if the lease is for 99 years, you must either handover the land to the state government or pay the lease extension charges when it expires. 

If it is a Bumiputera lot(land), the individual's ownership is determined by the land's terms and conditions (freehold or leasehold).

What is a Strata Title property?

The owner or developer of the property owns the land under strata ownership. 

Swimming pools, gyms, elevators, and lounge rooms are communal areas that are not owned by individual strata unit holders. The Strata Management Act 2013 (SMA) protects and enforces the upkeep and management of this common property, and it is implemented by an authority known as the Building Commissioner (COB). 

You will have to pay binding/sinking funds and maintenance fees if you live in a strata property. If you do not pay, building management has the right to lawfully take your flat, auction off your goods, and take legal action against you.You will also lose your right to vote at the Management Corporation's Annual General Meeting (AGM).

 It's important to know your rights as a property owner in Malaysia. Here, we list ways to find out if your building is managed properly by the management, general problems in apartment / condominiums and your rights as a strata owner:

1. Whether your strata property is managed by JMB or MC in charge?
2. What are the issues facing the life of the strata and how to solve them?
3. When should the strata be issued?

The Strata Ownership Act of 1985 requires developers to apply for strata ownership on behalf of the buyer. When a strata title is issued, the person who owns it has the right to utilise it as an individual.

 

According to the Strata (Amendment) Act 2013, strata ownership must be awarded after the vacant possesion of the property. Once the developer informs homeowners that the vacant possesion documents are issued, the owners should accept their strata ownership, as well as house keys and ownership certificates.

How do you go over the strata ownership issuance? 

Simply, homeowners can contact local land authorities, such as the Selangor State Land and Mines Office, or conduct an online search on the e-Land system using the property details provided by the in the Master title(document that the developer should be able to provide a copy of).Alternatively, the details can be found from the Sale and Purchase Agreement.

The developer will handle the application for strata ownership. As a result, many homeowners will be unable to know the stage of application. They can, however, contact the developer to inquire whether the developer has applied for the strata title and the status of the application.

Why it's so important to get strata ownership?

The main consequence of any delay in the issuance of strata is that according to the master's title, the land belongs to the developer (or registered owner) and the homeowner has only beneficial ownership of the parcel.

This can be a big problem if homeowners find that they cannot prove their ownership of the parcel without the ownership of the strata registered under their name.

Why it is important to know the difference between individual and strata ownership?

As detailed above, each title has different types of ownership and rights. To make it easier for you to compare, below is the differences between individual and strata ownership:

Individual property rights:  Issued for landed houses.                       

Strata property: Issued for strata properties.              

House types:  Landed homes (Terrace house, Semi-D, Bungalows)

High-rise real estate units: (Flats, Apartment, Condominiums, Townhouse)

It may also include landlords in gated and controlled communities (G&G).

Individual property rights: Buyer Ownership owns both land and real estate.

Strata rights: (Buyers only have individual units, land owned by developer / owner, Common areas shared.)

Individual property rights: Registration is faster.

Strata rights: Registration is slower.