Joint Property Ownership in Malaysia: The Shop-Lot Case Study | CNB Amanah

Inheritance Case Scenario: The Dangerous Myth of Automatic Survivorship

In Malaysia, many couples and business partners assume that if they buy a property together, the survivor automatically becomes the sole owner upon the other’s passing. At CNB Amanah, we have to deliver the hard truth: the “Right of Survivorship” is not automatic for real estate in Malaysia.

Under the National Land Code, a joint share is an asset that must be formally transmitted through the probate process. Without proper estate planning, your home or investment could end up being co-owned by people you never intended to include.

The Case of Mr. Tan and Mr. Khoo: The Shop-Lot Standoff

Case Example Scenario:
Mr. Tan and his close friend Mr. Khoo invested in a high-value shop-lot as a 50/50 joint venture. They were like brothers and assumed that if one passed away, the other would continue managing the property. Neither of them engaged in professional will writing.

When Mr. Tan passed away unexpectedly, his 50% share did not go to Mr. Khoo. Because Mr. Tan died intestate, his share was distributed according to the Distribution Act 1958. Suddenly, Mr. Tan’s estranged siblings whom Mr. Khoo had never met became 50% co-owners of the shop-lot.

A legal deadlock ensued. The siblings wanted to sell the property immediately to get their cash inheritance, while Mr. Khoo wanted to keep the business running. Because there was no buy-sell agreement or will trust in place, the property remained frozen for years, resulting in lost rental income and massive legal fees for all parties.

Why Joint Property Ownership Needs a Will

If you own property with someone else, you must consider the legal weight of your “share.” Inheritance law in Malaysia dictates that your portion is a separate legal entity unless specified otherwise:

• The Frozen Share: Until a Grant of Probate is issued, the deceased’s share cannot be sold, transferred, or used as collateral for loans.
• The New Co-Owner Risk: Your partner could find themselves co-owning their home with your parents or siblings, leading to conflicts over maintenance, rental, or sale decisions.
• Mortgage Complications: If the MRTA/MLTA only covers the deceased’s portion of the loan, the surviving owner may struggle to pay the remaining debt alone.

How CNB Amanah Secures Joint Assets

Protecting a joint investment requires a strategic approach to wealth succession. At CNB Amanah, we provide integrated estate solutions to ensure your property remains a blessing, not a burden:

• Specific Bequest Clauses: We draft wills that give the surviving owner the “Right of First Refusal” or specify the direct transfer of the share to the partner.
• Property Trust Services: By placing your property share into a private trust, the transition of ownership is immediate and avoids the public probate system.
• Corporate Executor Services: Appointing CNB Amanah as your professional corporate executor ensures that property titles are transferred efficiently without family bias or emotion.

Frequently Asked Questions

Does joint property automatically go to the survivor in Malaysia?

In Malaysia, the ‘Right of Survivorship’ is not automatic for real estate. Unless specified otherwise, your share becomes part of your estate and is distributed according to your Will or the Distribution Act 1958.

What happens if a co-owner dies without a Will?

The deceased’s share is frozen and distributed according to the Distribution Act 1958. This often means family members (like parents or siblings) become co-owners with the surviving partner, leading to potential disputes.

Can a surviving owner be forced to sell the property?

Yes. If the deceased’s heirs want their share in cash, they can apply for a court order to partition or sell the property, even if the surviving owner wishes to stay.

How can I protect my partner in a joint property ownership?

The best way is through professional will writing or a Property Trust. You can specify that your share goes directly to your partner or grant them a ‘Right of First Refusal’ to buy out your share.

For further enquiries or to book a property inheritance review, reach out to CNB Amanah via our official contact channels.