Land Transactions: Amend laws to protect owners
07/06/2007 By : M.G. DEVA, Kuala Lumpur

I REFER to "Missing lawyers in CBT cases" (NST, May 27) wherein the Federal Commercial Crimes Division director was quoted as saying that "the majority of these cases involve lawyers who represented their clients in sale and purchase transactions".

There is no dearth of cases of land owners being cheated by lawyers. There is often a feeling of unease and trepidation on the part of land owners when handing over their land titles to a lawyer to effect land transactions.

This is more so after the Federal Court ruling in the case of Adorna Pro-perties Sdn Bhd vs Boonsom Boon- yanit (December 2000). In that case, the court held that the purchaser who purchased the land in good faith for valuable consideration, obtained good title to the land even though the title was proved to have been acquired under a forged document.

The original owner, Mrs Boonsom, thus exhausted her legal remedies to recover her land which she lost through no fault of her own.

The English equitable principle that favours the right of "the purchaser in good faith for valuable consideration" over the innocent owner who was deprived of his land through fraud or forgery is incorporated in a proviso to Subsection (3) of Section 340 of our National Land Code (NLC).

Although Subsection (3) (read together with subsection 2) of Section 340 of the NLC in effect says that the acquisition of any land by registering it through forgery is void and can be set aside by the courts, a proviso to Subsection (3) excludes the said effect of the main subsection (3) to "any purchaser who acquired the title in good faith for valuable consideration" (often referred to as the "darling of equity").

After 50 years of independence, it is time for the proviso to Subsection (3) of Section 340 of the NLC to be removed so that it favours the interests of the innocent land owner over the innocent purchaser in good faith, and thereby bring peace of mind to property owners.

The onus should be on the innocent buyer to make sufficient investigations and make inquiries from the owner and others before committing his money, in keeping with the principle of caveat emptor.

Owners of land should be allowed to caveat their own land (the NLC does not provide for this). All transfer documents should bear the thumbprint of the owner as a safeguard against being defrauded of one’s property through identity thefts (i.e. the use of forged identity cards to fraudulently transfer property).