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Application for an Order For Sale at Land Office

The application for an Order for Sale at the Land Office is regulated by the National Land Code (NLC). This will only apply to a property with a Land Office title. When a Chargor defaults in his/her repayment to the Chargee, the Chargee will apply to the Land Administrator for an order to sell the charged property by way of a public auction

Any application for an Order for Sale under Land Office Title by a Chargee pursuant to Section 260(2) of the NLC shall be made to the Land Administrator by way of a Form 16G. Generally, the said Form 16G must be submitted to the Land Office together with the relevant documents i.e.: Form 16D together with the proof of posting, Affidavit of Service of Form 16D, official land title search, Notice of Appointment of Solicitors (Section 253(4) of NLC), quit rent assessment bill, sewerage bill, the certified true copy of the land title and duplicate charge, and application fee for 16G. However the required documents might differ from one Land Office to another Land Office. For this reason, it is recommended that the appointed solicitors do have the checklist of the required documents for each relevant Land Office. 

According to Section 261(1) of the NLC, upon receiving an application by the Chargee for an order for sale (Form 16G), the Land Administrator shall fix an enquiry date by (a) appointing a time and place for the holding of an enquiry (b) notify the Chargee of the time and place so appointed; and (c) cause a summons to be served on the Chargor, requiring him to appear at the enquiry and show cause why the order should not be made.

In the circumstances where the Chargor is present at the time of the enquiry, the Chargor will normally be questioned by the Land Administrator on the reason of the default of repayment to the Chargee. If the Land Administrator is satisfied that there is an effort from the Chargor to make payment and to settle the arrears, usually the Chargor will be given another enquiry date to settle the amount required to be paid by the Chargee.

In a situation where the Chargor is not present at the time of the enquiry, the Land Administrator may at his discretion conduct the enquiry by way of ex parte or he may postpone the enquiry to another date and issue a new summons to be served on the Chargor.

In any event, if the Land Administrator is satisfied that the default by the Chargor is proven and there is no effort from the Chargor to remedy such default and the Chargor fails to show any cause to the contrary, the Land Administrator may at his discretion grant an order for sale in respect of the charged property.

According to Section 263(2) of the NLC, the Order for Sale granted shall be in Form 16H and shall provide for the sale to be by way of public auction, specify the date on which the sale is to be held, specify the amount due to the Chargee at the date on which the order is made and a few other conditions related to the public auction.

Prior to the sale, the Land Administrator shall serve a copy of the Form 16H upon the Chargor and the Chargee. Meanwhile, the Chargee shall deposit with the Land Administrator the duplicate charge and the original title not less than seven days before the auction date. A licensed auctioneer will be appointed by the Land Administrator to conduct the auction sale. A proclamation of sale will be prepared by the appointed auctioneer. Before proceeding with the advertisement of the same, the appointed auctioneer will forward the same to the Land Administrator and the Solicitors for the Chargee for their approval. Once approved, the Proclamation of Sale will be distributed, posted at the charged property and advertised in the local newspaper.

The auction sale will be conducted by the Land Administrator assisted by the appointed auctioneer. The interested bidder will be required to deposit the sums amounting to 10% of the reserve price of the property. During the auction, the bidder who offers the highest amount shall be the Purchaser of the property.

On the other hand, there will also be a situation where the Chargee wishes to postpone or cancel the auction. This may be due to both Chargee and Chargor having agreed upon a settlement. If the Chargee intends to cancel the auction before the Form 16H is issued by the Land Administrator, the Chargee may do so only by writing to the Land Administrator stating the intention to cancel the auction fixed without having to make any application or payment to the Land Office.

However upon issuance of Form 16H by the Land Administrator, any cancellation or postponement of the auction must be made pursuant to Section 264A of the NLC which provides that the Chargee may apply for the postponement or the cancellation of the Order for Sale granted in Form 16O with the consent of the Chargor. This application shall be accompanied by such fee as may be prescribed by the relevant land office. However, the parties must take note that the said application must be submitted to the land office not less than seven days before the date of the auction. Failure to do so may result in the auction proceeding despite the Chargee and the Chargor having agreed to a settlement.

Norliza Ab Aziz

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