Property without a individual title is common thing in Malaysia. Housing developers have been selling them for quite a long time, especially those housing developers which are connected to state government. Either they are the joint-venture partner of state government agencies or the state government agencies themselves. Due to the nature of business in the early days of government, these state government agencies are allowed a few 'exemptions' and they can sell without having to obtain individual titles first before selling them.
Once, they were even exempted from using Schedule H or Schedule G, the standard Sale & Purchase Agreement, that housing developers are required to use to sell houses. Only when the property law in Malaysia caught up with them in 2007 does the playing field is leveled for all. State agencies or government-linked companies have to apply for individual title like any other housing developer. That is basically the history of property without title. When it was going on, other housing developer seen the things being made possible, it become a norm in Malaysia for the sale of property without title.
In these past week, I was asked to explain by friends and potential clients about property without title. The questions revolved around whether are the any advantages or disadvantages of owning a property without title and whether you can sell it. As to advantages, there are basically not much different between a property with title or without title but you do have to do a registration when you an individual title is issued for the property. In Malaysia, although the time has been cut tremendously, it can still take a 5-year wait for some property for it to happen. And when that happens, be prepared to pay the full amount of stamp duty for the transfer. The stamp duty starts at 1% for any amount below RM100,000-00 and climbs to 3% for property costing above RM500,000-00.
As for transfer or sale of property without title, you can do it at any time, including while an individual title is being issued to you (which will require you to register it with the land office). What you need is actually a good lawyer who understands property law, with special emphasise on sub-sale (property transaction involving second hand property) and proper negotiation with the purchaser. You will use a document called Deed of Assignment which assign you all the beneficial and legal ownership of the property to you. This is actually the document which substitute the Form 14A in National Land Code and is your proof of ownership.
One of the issue of having a property without title is your relationship with the housing developer which you buy the property from. It is their prerogative whether they want to allow you to transfer the property to your purchaser or not. They may allow it and all the Sale & Purchase Agreements relating to the property will be acknowledge as the proof in ownership and all the Deed of Assignment in existence will be the proof of transfer of ownership. All these documents will lead to the latest owner's name who bought the property to be registered on the individual title. If the housing developer doesn't allow for 'direct transfer', they will register it on the first owner's name and then a transfer has to be made to the latest owner.
These are the basics of owning a property without title although there are other issues which need to be considered. I am now researching them to be included in the sequel to my book. Oh, one final thing, a property without title need not be strata development but can also be landed property especially gated community property.