What happens to a jointly owned property in Malaysia when one of the owners dies? Does the surviving owner automatically become the sole owner? Can the deceased owner’s children inherit the property? What if there is a Will?
These are common questions when a property in Malaysia is registered in the names of two or more persons.
A common misconception is that when one co-owner dies, the surviving co-owner automatically becomes the sole owner of the property.
Under Section 343(1)(c) of the National Land Code 1965, when a co-proprietor dies, his or her share does not pass automatically to the surviving co-proprietors. Instead, the deceased’s share devolves upon his or her personal representatives and is dealt with as part of the deceased’s estate.
This means that the death of one co-owner can have significant consequences for the surviving owner and the deceased’s beneficiaries.
What Happens to a Deceased Owner’s Share in Jointly Owned Property in Malaysia?
Under the National Land Code, property registered in the names of two or more persons is generally held by them as co-proprietors in undivided shares.
Section 343(1)(a) provides that the shares are deemed to be equal unless different proportions are specified in the memorial of registration.
For example, suppose a house is registered in the names of:
- A — 50%; and
- B — 50%.
If B subsequently dies, B’s 50% share does not automatically become A’s property.
Instead, B’s 50% share forms part of B’s estate and must be dealt with through the appropriate estate administration and distribution process.
The surviving co-owner, A, therefore does not automatically become the 100% owner merely because B has died.
Does the Surviving Co-Owner Automatically Inherit the Property?
The answer is no.
This is one of the most important points for co-owners to understand.
Section 343(1)(c) of the National Land Code expressly provides that upon the death of a co-proprietor, the deceased’s share “shall not pass to the other or others” but shall devolve upon the deceased’s personal representatives or otherwise be dealt with as part of the deceased’s assets.
Therefore, if a husband and wife own a property equally and the husband dies, the wife does not necessarily become the sole registered proprietor simply by virtue of being the surviving spouse.
The husband’s share must first be dealt with as part of his estate.
What If the Deceased Left a Will?
If the deceased left a valid Will, the deceased’s interest in the property must be distributed in accordance with the Will.
For example:
A husband and wife own a house equally. The husband dies leaving a valid Will stating that his 50% interest in the property is to be given to his wife.
In such a situation, the wife’s eventual ownership of the husband’s share would be dealt with through the estate administration process.
The surviving wife should therefore not assume that she automatically becomes the sole owner immediately upon the husband’s death.
However, if the husband’s Will states that his 50% interest in the property is to be given to his children instead, the children may inherit the deceased husband’s 50% interest in accordance with the terms of the Will.
The surviving wife would therefore continue to own her original 50% interest, while the deceased husband’s 50% interest would pass to the beneficiaries named in his Will, subject to the proper administration and distribution of the estate.
What If the Deceased Died Without a Will?
The situation becomes more complicated if the deceased died intestate, meaning without a valid Will.
The deceased’s share will then be dealt with according to the applicable rules of succession.
For a non-Muslim deceased, the Distribution Act 1958 may apply, subject to the circumstances of the estate.
For a Muslim deceased, the distribution of the deceased’s estate is generally subject to faraid and the applicable Islamic law and procedures.
Example: A House Owned by Two Siblings
Consider this example.
Ahmad and his sister, Sarah, jointly own a house in Selangor:
Ahmad — 50%
Sarah — 50%
Ahmad dies without a Will.
Sarah may assume:
“I am the only surviving owner, so the whole house is now mine.”
That assumption may be incorrect.
Ahmad’s 50% interest does not automatically disappear upon his death. His share becomes part of his estate and must be administered and distributed to the persons legally entitled to inherit it.
Sarah may therefore eventually find herself owning the property together with Ahmad’s beneficiaries.
This can create significant practical difficulties if the beneficiaries include several persons.
Can the Surviving Owner Sell the Whole Property?
This is another important issue.
If one co-owner has died and the deceased’s share has not yet been properly transmitted, the surviving co-owner generally cannot simply treat the entire property as his or her own and sell the whole property as though the deceased never had an interest.
The deceased’s estate must first be properly administered.
Depending on the circumstances, this may involve:
- obtaining the appropriate grant of probate or letters of administration;
- applying for a small estate distribution order where applicable;
- identifying the beneficiaries;
- obtaining the necessary consent or authority from the relevant persons;
- registering the transmission of the deceased’s interest; and/or
- subsequently dealing with the property by way of sale, transfer or other appropriate transaction.
The exact procedure depends on the circumstances of the estate.
What If the Property Is Subject to a Housing Loan?
The death of a co-owner does not necessarily mean that any outstanding housing loan simply disappears.
The surviving co-owner and the deceased’s estate should therefore check the financing arrangements and any insurance or takaful coverage connected with the loan.
For example, a husband and wife jointly own a house and have an outstanding housing loan. If the husband dies, his share in the property may form part of his estate, but the bank’s existing security over the property is not automatically removed simply because the husband has died.
However, the existence of MRTA, MLTA or takaful should not be assumed to mean that the entire loan will automatically be settled. The actual policy, coverage amount and applicable terms should be checked.
If the loan remains outstanding after taking into account any insurance or takaful proceeds, the parties will need to consider how the loan is to be serviced.
Can the Surviving Owner Buy the Deceased’s Share?
Yes.
For example, suppose:
- A owns 50%;
- B owns 50%;
- B dies; and
- B’s 50% interest eventually devolves upon B’s beneficiaries.
If the beneficiaries and the surviving owner agree, there may be a way for A to acquire the beneficiaries’ interest, subject to the appropriate estate administration, documentation, consent and registration requirements.
This may be a practical solution where the surviving owner wishes to retain the property rather than becoming a co-owner with several beneficiaries.
However, the surviving owner should not assume that he or she can simply pay money to the beneficiaries and regard the transaction as completed. The proper legal and land registration procedures must be followed.
What If Several Beneficiaries Inherit the Deceased’s Share?
This can create a particularly difficult situation.
For example:
A and B own a house equally.
B dies leaving:
- a spouse;
- three children; and
- no Will.
B’s 50% interest may ultimately be distributed among the persons entitled to inherit.
The surviving owner, A, could therefore end up co-owning the property with several beneficiaries.
This may create disagreements over:
- whether the property should be sold;
- whether one party should buy out the others;
- who should occupy the property;
- payment of the mortgage;
- payment of quit rent and assessment;
- maintenance and repairs; and
- the division of sale proceeds.
This is one reason why estate planning is particularly important where valuable property is jointly owned.
What Should You Do When a Co-Owner Dies?
If you are the surviving co-owner, it is advisable to take the following steps.
1. Obtain the death certificate
The death certificate will normally be required for the estate administration process.
2. Check the title
Conduct a land search and confirm:
- who the registered proprietors are;
- the respective shares;
- whether there is a charge;
- whether there are restrictions in interest; and
- whether there are any other registered interests affecting the property.
3. Check whether there is a Will
The existence of a valid Will may significantly affect how the deceased’s share is administered and distributed.
4. Identify the appropriate estate administration process
Depending on the circumstances, the estate may involve:
- probate;
- letters of administration;
- small estate proceedings; or
- other applicable procedures.
The appropriate route depends on factors including the value and nature of the estate and whether the deceased left a Will.
5. Deal with the deceased’s share properly
The deceased’s interest should be transmitted and registered in accordance with the relevant order, grant or other authority.
6. Consider the long-term ownership arrangement
Once the deceased’s share has been dealt with, the surviving owner and beneficiaries should consider whether they wish to:
- continue holding the property jointly;
- sell the property;
- transfer the property;
- buy out another co-owner; or
- otherwise restructure the ownership.
How Can Joint Property Owners Avoid Problems After Death?
If you are currently a co-owner of a property, do not wait until a co-owner dies before considering what should happen to the property.
Property owners should consider:
✔ Making a Will
A properly prepared Will can help provide greater certainty regarding what should happen to the deceased owner’s interest.
✔ Reviewing the registered ownership
Make sure the title reflects the intended ownership proportions.
✔ Understanding the financing
If there is a mortgage, check whether insurance or other arrangements may affect the outstanding financing following death.
✔ Discussing the property with the other co-owner
This is particularly important where the property is a high-value family home or investment property.
✔ Getting legal advice before transferring or selling
A transfer following death involves both estate administration and land registration issues. It should not be treated as an ordinary transfer between living owners.
Frequently Asked Questions
Does a jointly owned house automatically go to the surviving owner in Malaysia?
No. Under Section 343(1)(c) of the National Land Code, the deceased co-owner’s share does not automatically pass to the surviving co-owner. The deceased’s interest devolves upon the personal representatives and is dealt with as part of the deceased’s estate.
Can the deceased’s children inherit the deceased’s share?
Yes, the deceased’s children may inherit the deceased’s share in the property, depending on whether the deceased left a valid Will and the applicable law of succession.
If the deceased left a valid Will, the deceased’s share in the property will generally be distributed according to the terms of the Will, subject to the applicable law. If the Will provides that the deceased’s share is to be given to his or her children, the children may inherit that share accordingly.
If the deceased did not leave a Will, the deceased’s share will be distributed according to the applicable Distribution Order and laws of succession for a non-Muslim, or according to Faraid and the applicable Islamic inheritance laws and procedures for a Muslim.
Can a Godson or Goddaughter (“干儿子 / 干女儿”) Inherit the Deceased’s Share?
A godson or goddaughter does not automatically inherit the deceased’s share in a property simply because they have a godparent relationship.
If the deceased left a valid Willm the deceased may provide in the Will for his or her property or interest in the property to be given to the godson or goddaughter.
A godson or goddaughter (“干儿子” or “干女儿”) is not recognised as a legal beneficiary under the applicable intestacy laws merely by virtue of the godparent relationship. Accordingly, they would not ordinarily be entitled to inherit the deceased’s share of the property under the intestacy distribution.
Can the surviving owner sell the property after the other owner dies?
The surviving owner should not assume that he or she can sell the entire property as sole owner. The deceased’s interest must first be properly dealt with through the estate administration process.
What happens if there is no Will?
The deceased’s share in the jointly owned property will be distributed according to the applicable laws of succession.
For a non-Muslim who dies without leaving a valid Will, the deceased’s estate is generally distributed in accordance with the Distribution Act 1958. The beneficiaries and their respective entitlements will depend on the deceased’s family circumstances, such as whether the deceased leaves a spouse, children, parents or other surviving relatives.
For a Muslim who dies without leaving a Will, the deceased’s estate will generally be distributed in accordance with Islamic inheritance law (Faraid) and the applicable laws and procedures governing the administration of the deceased’s estate.
The deceased’s share in the jointly owned property will therefore form part of the deceased’s estate and will be distributed among the persons legally entitled to inherit under the applicable Faraid rules.
What if all the beneficiaries agree that the surviving owner should have the property?
Yes, they can do so. If all the beneficiaries entitled to the deceased’s interest agree that the surviving co-owner should take over the deceased’s share, the property can be transferred to the surviving owner, subject to the proper estate administration and land registration procedures.
A lawyer should be appointed to handle the entire process, including advising the beneficiaries and surviving co-owner, preparing the necessary documents, dealing with the estate administration process, liaising with the relevant authorities and/or Land Office, and arranging for the appropriate transfer and registration of the deceased’s interest in favour of the surviving owner.
The lawyer can also advise on the appropriate method of transferring the deceased’s interest depending on the circumstances of the estate, the terms of the Will (if any), the applicable succession law and the status of the property’s title.
How long does the process take?
There is no single timeframe applicable to every estate. The duration depends on matters such as the type and value of the estate, whether there is a Will, whether beneficiaries agree, whether there are disputes and the relevant administrative process.
JKPTG currently indicates that small estate proceedings may generally take around four to six months, although cases with heavier backlogs or complications may take longer.
What Happens If the Beneficiaries Do Not Agree to Sell or Transfer the Property?
If the beneficiaries of the deceased’s estate do not agree to sell or transfer the deceased’s share of the property to the surviving co-owner, the surviving co-owner cannot simply transfer the deceased’s share into his or her own name.
The deceased’s share remains part of the deceased’s estate and will be dealt with according to the applicable Will or, where there is no Will, the applicable laws of succession.
In such circumstances, the surviving co-owner may have to continue holding the property together with the beneficiaries who are entitled to the deceased’s share. Where the surviving co-owner and the beneficiaries have different views about what should happen to the property, the situation can become complicated and may eventually result in a deadlock between the parties.
If the parties are unable to reach an agreement, the surviving co-owner may need to seek legal advice on the available remedies, including whether an application to court for appropriate relief or an order for sale may be available depending on the circumstances.
How Do I Transfer a Deceased Person’s Share of Property to the Beneficiaries?
The deceased person’s share in the property does not automatically transfer to the beneficiaries upon the deceased’s death. The estate must first go through the appropriate estate administration and distribution process.
The process will depend on whether the deceased left a valid Will, whether the deceased was a Muslim or non-Muslim, and the nature and value of the estate.
Generally, the process involves:
- Determining the deceased’s registered interest in the property
- Obtaining the appropriate estate administration document – this may include a Grant of Probate, Letters of Administration or Distribution Order.
- Determining the persons entitled to inherit
- Obtaining the relevant order or authority for distribution
- Appointing a conveyancing lawyer for the transfer or transmission at the Land Office
How Much Is the Legal Fee for Transferring a Deceased Person’s Share of Property?
The legal fees will depend on the nature and complexity of the estate, the value of the property, the number of beneficiaries and the work required to complete the estate administration and transfer of the property.
The legal fees may also depend on whether the matter involves:
- obtaining a Grant of Probate or Letters of Administration;
- applying for a Distribution Order;
- preparing the necessary estate administration documents;
- dealing with the relevant Land Office;
- transferring or transmitting the deceased’s interest in the property;
- redemption of an outstanding housing loan; or
- resolving disputes between beneficiaries
Every estate is different. We therefore recommend that you obtain a free quotation after providing us with the basic details of the deceased’s estate and property.
Do Not Delay the Transfer of the Property After the Owner’s Death
If a property is registered in the name of a deceased person, it is strongly advisable not to delay the estate administration and transfer of the property, even if the family is not planning to sell the property immediately.
Leaving the property under the deceased owner’s name for many years can create significant difficulties later, particularly when important documents cannot be located or the developer or other relevant parties are no longer operating.
A Real-Life Example
We have encountered a case where a client approached us about five years after her father’s death. The property was still registered under her late father’s name.
Unfortunately, by the time the family sought legal assistance:
- the deceased had passed away approximately five years earlier;
- the family was unable to locate the relevant property documents;
- the developer of the property had subsequently been wound up; and
- the client faced difficulties in completing the necessary process to have the property inherited and transferred to the beneficiaries, even though her late father had left a Will.
The case illustrates an important point: having a Will does not, by itself, mean that the beneficiary automatically becomes the registered owner of the property. The necessary estate administration and land registration procedures still need to be completed.
The longer the process is delayed, the more complicated it can become. Documents may be lost, companies may cease operations or be wound up, beneficiaries may pass away, family circumstances may change, and additional estate administration issues may arise.
Act Early to Avoid Unnecessary Complications
If a co-owner or registered proprietor has passed away, it is therefore advisable to start the estate administration and property transfer process as soon as reasonably possible.
You do not need to wait until you decide to sell the property. Completing the transfer early can provide greater certainty as to ownership and make it significantly easier for the beneficiaries to deal with the property in the future.
Conclusion
The death of one owner of a jointly owned property does not necessarily mean that the surviving owner becomes the sole owner of the property.
For properties governed by the National Land Code, the deceased’s share generally forms part of the deceased’s estate and must be dealt with through the appropriate estate administration and land registration process.
The situation can become particularly complicated where there is no Will, there are multiple beneficiaries, there is an outstanding mortgage, or the surviving co-owner and beneficiaries disagree about what should happen to the property.
If you are a surviving co-owner, beneficiary or family member dealing with jointly owned property after the death of an owner, it is important to obtain legal advice before attempting to sell, transfer or otherwise deal with the property.
