Deed of Assignment in Malaysia: Buying a Factory Before Its Title Is Issued
When a factory has no individual or strata title yet, it changes hands by deed of assignment instead of a transfer. How it works, the stamp duty, bank loans and the risks.
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- Peter TanREN 12771 · 016-666 6872
Key Takeaways
- A deed of assignment (DOA) transfers your rights under the sale and purchase agreement when the factory's own individual or strata title has not been issued yet; a memorandum of transfer (MOT) is used once a title exists.
- HASiL treats an assignment on sale as a conveyance on sale, so a DOA pays the same ad valorem stamp duty as a transfer: 1% on the first RM100,000, 2% up to RM500,000, 3% up to RM1,000,000 and 4% above that, paid by the buyer.
- Foreign companies and non-citizens pay 4% on the whole price under item 32(aa).
- A bank that lends before the title is issued takes an assignment by way of security over the SPA rights instead of a land charge, and gives a deed of reassignment when the loan is settled.
- The main risks are a missing chain of assignments, a developer's consent condition and a long wait for title: check all three before you pay a deposit.
This guide explains deeds of assignment for factory buyers and sellers. It is general information, not legal advice: your conveyancing lawyer prepares and checks the documents for your purchase.
What is a deed of assignment in Malaysia?
A deed of assignment is a written instrument by which one party (the assignor) passes its rights and interest in something to another party (the assignee). In property, it is how a buyer takes over the seller's rights to a property that has no separate title of its own yet: the buyer steps into the seller's shoes under the original sale and purchase agreement (SPA) with the developer or landowner.
This happens in newer factory schemes where only a master title exists, or where strata titles are still being processed. Our guide to strata title vs individual title factories explains master titles and the subdivision timeline.
When is a DOA used instead of an MOT?
| Situation | Document that transfers ownership | Bank security |
|---|---|---|
| Individual or strata title already issued to the seller | Memorandum of transfer (MOT, Form 14A) registered at the land office | Charge registered on the title |
| Title not yet issued, only the master title exists | Deed of assignment of the SPA rights | Assignment by way of security over the SPA rights |
| Title issued after you bought by DOA | MOT from the developer or landowner directly to you | Bank converts to a charge |
A CIMB security template states the condition plainly: a separate issue document of title or strata title has not yet been issued, so the borrower assigns all its rights, title and interest under the SPA to the bank as security (CIMB deed of assignment).
How much stamp duty is payable on a deed of assignment?
HASiL's guideline on the First Schedule of the Stamp Act 1949 says that a contract or agreement for the sale or assignment of any estate or interest in property is charged ad valorem as a conveyance on sale under item 32, and lists the deed of assignment among its examples (HASiL First Schedule guideline). The rates under item 32(a) are:
| Value of the property | Stamp duty |
|---|---|
| First RM100,000 | RM1 per RM100 (1%) |
| RM100,001 to RM500,000 | RM2 per RM100 (2%) |
| RM500,001 to RM1,000,000 | RM3 per RM100 (3%) |
| Above RM1,000,000 | RM4 per RM100 (4%) |
Under item 32(aa), a sale of real property to a foreign company or to an individual who is neither a citizen nor a permanent resident is charged RM4 per RM100 on the whole value. The buyer pays the duty. When the title is later issued and the legal interest is transferred, HASiL charges that transfer a fixed RM10 under item 32(i) if ad valorem duty was already paid on the earlier instrument.
Use our legal fees and stamp duty calculator to estimate the duty on your price, and see stamping on MyTax for how documents are stamped online.
How do bank loans work on a factory without title?
Without a title, the bank cannot register a charge. It takes an absolute assignment of your rights under the SPA as security instead, and usually needs the developer's or landowner's acknowledgement. When you settle the loan, the bank signs a deed of reassignment that returns those rights to you; UOB's form, for example, reassigns all its benefits, rights and interest under the sale agreement and in the property to the borrower (UOB deed of reassignment).
If you are buying a sub-sale unit by DOA with a new loan, your lawyer coordinates three steps: your bank's assignment, the seller's bank's reassignment on redemption, and the developer's consent to the assignment if the original SPA requires it.
What are the risks of buying a factory by deed of assignment?
A broken chain of assignments
Every owner after the first buyer must hold a stamped DOA from the previous owner. If one link is missing, the developer or landowner may refuse to transfer the title to you later. Ask for the original SPA and every DOA since, all stamped.
Consent conditions in the original SPA
Some SPAs require the developer's written consent and an administration fee before an assignment. Check the clause and get the consent letter before completion.
Waiting for the title
Until the title is issued, you cannot register a charge or a lease on it, and some banks lend less or not at all. Ask the developer or the management body for the status of the strata or subdivision application.
Land use and approvals
A DOA moves contractual rights, not planning approvals. Still check the CCC, the permitted use and the quit rent and assessment payments, as you would for any factory.
What documents should you prepare?
- The original SPA between the developer or landowner and the first purchaser.
- Every stamped deed of assignment since then, in order.
- The developer's confirmation of the current registered purchaser and any consent letter.
- The master title search and, for strata schemes, the status of the strata title application.
- Redemption statements and reassignment documents from the seller's bank.
- CCC, latest quit rent, assessment and service charge receipts.
If you would rather buy a factory that already has its own title, browse factories by area on our industrial parks page.
Frequently Asked Questions
What is the purpose of a deed of assignment?
It transfers the seller's rights under the original sale and purchase agreement to the buyer when the property has no separate title yet. The buyer then stands in the seller's place with the developer or landowner until the title is issued and transferred.
What is the difference between a deed of assignment and an MOT?
An MOT (Form 14A) transfers a registered title at the land office. A deed of assignment transfers contractual rights under an SPA when no separate title exists. Once the title is issued, the owner registers it by MOT.
What is the stamp duty rate for a deed of assignment in Malaysia?
HASiL charges an assignment on sale as a conveyance on sale under item 32: 1% on the first RM100,000, 2% up to RM500,000, 3% up to RM1,000,000 and 4% above, or 4% on the whole value for a foreign buyer. The buyer pays.
Do I need to register a deed of assignment?
It is not registered at the land office, because there is no separate title to register it against. It must be stamped, and the developer or landowner should be notified, or give consent if the SPA requires it, so that the title is later transferred to you.
Can I get a bank loan for a factory without title?
Yes, many banks lend against an assignment of the SPA rights. The bank takes an assignment by way of security and gives a deed of reassignment when the loan is paid off. Loan terms can be stricter than for a titled factory.
FactoryHub is dedicated to helping every client find the right factory or warehouse. For help with a factory purchase, contact Peter Tan (REN 12771) at 016-666 6872.
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