LIEN HOLDER’S CAVEAT LAND LAW II

Introduction

s 281 NLC

‘Lien’ - ‘Gadai’ (Not operate such ways)

May deposit the documents to someone else (bank/creditor) for the loan . He then will take the IDT/documents involved.

Not a registrable dealings however it is to protect the interest / title of the Lien holder.

If there’s default a creditor may enter into LHC.

Creation & Effect of LHC

S.330(1) - Anyone who has IDT & any other relevant documents may apply for caveat.

Procedures

S.330(2) -

Form 19D - Application to Registrar to be made. Expressing the wish to enter into LHC.

Must be accompanied with fees prescribed.

Attested with s 221 NLC.

Cannot secure transaction however with land it can be done so.

Function of RegistrarOnly administrative / procedural

Does not concern the transaction of there’s fraud/ etc.

Only to register if it is in accordance with the prescribed law

If there is RC/PC/PO, caveat can be entered with the consent of the holder of the caveat - 322(5)

Must ensure that the money has been given to the borrower over a loan transaction, then only after that LHC can be enter.

Ensure caveator has lien & has the right to caveat - 281(1)

What is Lien?

Only create an equitable interest (occur by way of initial transaction); different from the registrable interest.

It is a consensual (both parties agreed), possessory transaction.

Procedure to Enter

S. 330(3) -

A. Unless he is prohibited by RC/PC/PO, then he must enter into caveat. When there’s RC & consent was given to enter thus must register it.

B. Serve notification Form19A to Proprietor + lease holder.

S.330(4)(b) - LHC effected by endorsement under hand 7 seal of Registrar together w statement:

1. Whether caveat binds land/ lease

2. Particulars of caveator

3. Time from which it is effective

Effect of LHC

S. 330(5) - Continue to be in force unless and until it is removed/ debt is settled/ court’s order to sell.

Freezes the land from any dealings

Failure to Caveat the Land

Gen Principle : If fail to caveat the land, then it has no effect to the creditor. Where there will be no effect on the priority of the Lien Holder. because the equitable interest has been registered/ so long as he/she can prove that there is intention over the transaction.

Goh Tuan Laye - the purpose is to give notification to the world that IDT is under the creditor & LHC has been entered.

Standard Chartered Bank - Not a negligence in failing to register the caveat. So long as he holds the IDT then he has the LHC.

How to know the LHC has been terminated?

The moment purchaser shows to the register IDT/MOT, then LHC has been terminated.

Cancelled by the Registrar as the debt has been paid by borrower to the creditor.

Cancellation of LHCS 331 -

S & P Caveated land -

Presenting MOT to the Registrar

Registrar must know that payment has been made

Recoup the unpaid payment

Settlement of debt/ Repayment

Borrower proved to R that he had paid fully.

Upon satisfaction - caveat be removed.

If there’s delay by R/ there’s fraud/ etc - Court will give compensation to the aggrieved party.

Registrar will access the damages occurred.