Basic Foreclosure Procedure at High Court (Registry Title)


For Registry title, the application for an order for sale must be made to the courts and is governed by Order 83 of the Rules of Court 2012 (hereinafter refer to as “ROC 2012”) and Section 256 National Land Code 1965 (hereinafter refer to as “NLC 1965”).


The basic procedure are as follows"-


1. Letter of Demand / Letter of Recall

A letter of demand (LOD) will be issued to the Borrower/Chargor requesting for the arrears to be paid; failing which, a letter of recall (LOR) will then be issued to the Borrower/Chargor requesting for whole outstanding amount.


2. Form 16D

Before the Chargee can make the application to the courts, Form 16D must be issued against the Chargor pursuant to Section 254 NLC 1965. The Chargor is required to remedy the breach within one month of the date on which such Form 16D was served.


3. Originating Summons and Affidavit In Support

The application is made by Originating Summons (“OS”) supported by affidavit (“AIS”) in accordance with Order 83 ROC 2012. A Further Affidavit will be filed to state the particulars of the amount remaining due under the charge as at the hearing date of the OS (Order 83 rule 3 ROC 2012).


4. Service of Cause Papers

A copy of OS and AIS will be served unto the Chargor not less than 4 clear days before the first hearing day (Order 83 rule 2 (2) ROC 2012). If the Chargor is absent from the hearing and the hearing is adjourned, the Chargee shall serve on the Chargee a written notice together with any Further Affidavit intended to be used at the hearing day not less than 2 clear days before the next hearing day (Order 83 rule 2 (4) ROC 2012).

Affidavit of service must be filed to prove the abovementioned service of cause papers.


5. Hearing

Section 256 (3) NLC 1965 provides that the Court shall order the sale of the land to which it relates unless there is cause to the contrary. The burden of proving cause to the contrary is on the Chargor. In the case of Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 2 CLJ 36, the Federal Court held that “cause to the contrary” can be established in the following categories:-

  1. Failure to satisfy the notice requirement in Form 16D;
  2. Failure to comply with the procedural requirements of Order 83 ROC 2012;
  3. Exceptions to the indefeasibility doctrine in Section 340 NLC 1965; and
  4. Grant of Order for Sale would be contrary to rule of law or equity.

In the event the Chargor is able to prove cause to the contrary, the Chargee’s application will be dismissed.

In the instance where the Chargor fails to prove such cause to the contrary, an Order for Sale will be granted with cost and a tentative auction date will be fixed by the Court. The Order for Sale will then be served unto the Chargor.


6. Application for Execution

After the granting of an Order for Sale, an application is made by Notice of Application supported by affidavit exhibiting the said Order for Sale and a copy of the Valuation Report. A valuation report will deemed to be valid if it is made within 2 years from the date of filing of application (Practice Direction No. 1/2014).

The Registrar of the Court will then fix an auction date (if the earlier auction date cannot be used) and a reserve price for the purpose of the sale, which is equivalent to the estimated market value of the land. (Section 257 (1)(d) NLC 1965). An auctioneer will also be appointed by the Court.


7. Preparing of Proclamation of Sale (“POS”) and Conditions of Sale (“COS”)

The appointed auctioneer will prepare the POS and COS. After being vetted by the Chargee’s solicitor, the POS and COS will then be advertised in selected newspapers; distributed around the area of the property and be served on the Chargor.


8. Depositing of Original Documents and Deposit into court

One week before the auction date, the deposit (3% of the reserve price of the property) has to be paid to the court. Simultaneously, the original Title and duplicate Charge are to be deposited with the court. Failing which, the Court has the right to postpone the auction.


9. Auction Date

Every interested bidder has to pay 10% of the reserve price to the Court by way of bank draft on the auction day before the auction starts. The Successful bidder has to pay the balance purchase price (“BPP”) within 120 days. In the event the successful bidder fails to settle the BPP within 120 days, the 10% deposit will be forfeited by the Chargee. A new Notice of Application to fix new auction date shall be filed within 8 weeks from the expiration of 120 days. Failing which, the deposit and original documents will be returned to the Chargee and the file will be closed (Practice Direction No. 1/2014).

The Chargee may also withdraw the auction anytime before the auction date (by filing Notice of Discontinuance) if there is payment made by the Chargor. Nonetheless, if the Chargee intends to proceed with auctioning the property again, he may do so by filing a fresh Notice of Application.