When you take out a housing loan to buy a property, the bank plays a crucial role as the lender. However, the legal documents and procedures vary depending on the status of the property’s title. Here’s a simplified explanation of the two main processes:

Understanding the Title Status

• Master Title: If the property is still under a Master Title (a title that covers multiple properties, usually before subdivision), you’ll need to sign a Deed of Assignment and a Power of Attorney when you complete the loan documents with the bank.
• Individual or Strata Title: If the property already has its own Individual or Strata Title (a title specific to one property), the process involves something called the Perfection of Charge. This is where you formally register the bank’s interest in your property.

Security for the Loan

• For Master Title Properties: The security you provide to the bank is through the Deed of Assignment and Power of Attorney. This means the bank has legal authority to act on your behalf concerning the property.
• For Individual/Strata Title Properties: The security is provided by registering a Charge on your property. This Charge is a legal claim the bank holds over your property until the loan is fully repaid.

What Happens After the Loan is Paid Off?

• Discharge of Charge (For Individual/Strata Title): Once you’ve paid off your loan, the bank will remove the Charge on your property. You’ll receive the Original Title, free from any bank claims.
• Deed of Receipt and Reassignment (For Master Title): After settling your loan, instead of receiving a title, you’ll get back the original documents, including the Deed of Receipt and Reassignment. This process may also require further steps, like the Perfection of Transfer, to complete the ownership transfer.

Key Differences at a Glance:

This breakdown should help you understand the differences between these processes and what to expect depending on your property’s title status.

Once you’ve fully repaid your housing loan, you’ll need to retrieve the Original Title of your property from the bank through a process known as Discharge of Charge.

The Discharge of Charge is the process that removes the bank’s claim on your property, making you the sole owner free of any encumbrances. This process involves coordination between your bank, the Inland Revenue Department (LHDN), and the Land Office.

Steps to Complete the Discharge of Charge:

1. Bank Notification: After settling your loan, the bank will send you a letter requesting you to appoint a solicitor to handle the Discharge of Charge process. You can choose any law firm you prefer for this.
2. Document Preparation: You’ll need to provide your solicitor with the following documents:
   • Your IC/Passport
   • The latest Quit Rent (Cukai Tanah)
   • The latest Assessment (Cukai Pintu)
   • Proof of your loan settlement
3. Solicitor’s Role: The solicitor will prepare and submit all necessary documents. The typical steps include:
   • Signing a Letter of Authorization for the Discharge of Charge
   • Submitting the required documents to the bank
   • The bank will then execute these documents and return them to your solicitor
   • The documents will be sent to LHDN for review and stamping
   • Finally, the documents are presented to the Land Office for registration
4. Final Step: Once the process is complete, you’ll receive a new Original Title, confirming that the property is entirely yours without any bank claims. You can collect this title from your law firm once it’s ready.

Disclaimer: The information provided is for general purposes only. ANN & AIN, ADVOCATES & SOLICITORS make no representations or warranties regarding the accuracy or fitness of the information for any particular purpose. While we have made every effort to ensure the information is accurate as of the time of writing, it should not be relied upon for making any financial, investment, real estate, or legal decisions. Always seek professional advice that considers your personal circumstances.