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clock 23-07-2019
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Why You Should Have Agreements for Joint Ownerships: Part 2

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Inheritance of the agreement

If one of the joint-owners dies, the person’s heritage beneficiary or beneficiaries will inherit the deceased’s portion of the property.

Notwithstanding the fact that Malaysia is part of the

Commonwealth and is still operating under the British Common Law today, Tan points out that Malaysia does not adopt the notion of the “law of survivorship”. In other words, if a co-owner passes away, the surviving owner/owners will not inherit the property if he or she is not a heritage beneficiary of the deceased. 

The successors of the heritage should be bound by the terms of the JOA, but ultimately it is up to the court to decide whether the agreement could be challenged or not.

The concept of having a JOA is still relatively new in Malaysia. As such, the legality of a JOA has yet to be tested in the local judicial system.

However, the courts are likely to consider the agreement, as long as the agreement does not contradict with the Contract Act 1950 or the National Land Code 1965 (NLC 1965) and there is no duress or fraud.

“All agreements are legally valid and sufficient if they are executed by the relevant parties, attested witnesses and stamped to have the agreement admissible for court proceedings,” Normaliza says.

“It is generally binding and enforceable, unless it is validly challenged in law or even policy reasons like inconsistency with the applicable bumiputera policies,” says Tan, adding that this is normally an extra contractual agreement with mutually agreeable unique terms between the joint owners, in addition to the fact that the joint ownership should have been adequately reflected in the land registry already.

Normaliza adds that the legal fee charged by each solicitor to draw up the JOA differs as the JOA does not fall under the scale or fixed fee under the Solicitors Remuneration Order 2015. Thus, solicitors are free to charge fair and reasonable fees based on the contents, complexity and time taken in the preparation of such an agreement.

So, do you really need a JOA?

Perhaps, because it’s not just about signing an agreement but by doing so, it forces the buyers to sit down and dive deep into the purpose of buying a property together, while getting to know more about each other’s needs and constraints.

Most importantly, sufficient communication is needed to prevent dispute and losses arising from joint ownership property.

Co-owners have to ensure that they share common objectives for buying the property, to avoid conflict and dispute regarding the management of the property.

As each person may have different financial needs at different times, a common financial objective is an important consideration.

Normaliza says it is better for the co-owners to have a legal relationship or strong relationship bond, such as spouses or family members, as this could reduce the risk of personal conflicts later on.

“Choose wisely your co-proprietor. If you have a legal relationship with each other, if one dies, the inheritance will remain within the same circle,” she says.

Meanwhile, Tan says it is advisable for owners to have the right expectations of each other.

“As long as there is sufficient consensus among the co-owners, whether there is a need for a proper document will depend on the risk profile of the respective co-owners,” he adds.


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