Section 340(1) of the National Land Code (Revised 2020) (“NLC”) establishes certainty of title by way of registration adopted from the Torrens System. It states that the title or interest of any person or body registered as the proprietor of a land, or in whose name any lease, charge, or easement is registered, is generally indefeasible, subject to the provisions mentioned in this section.

Section 5 of the NLC did not define the term “encumbrance” on a title but a bona fide purchaser for value would generally impose a condition on the proprietor in the sale and purchase agreement to dispose the title or the registered interest in the title free from caveats, encumbrances and prohibitory orders. As such, the proprietor would be required to deliver to his bona fide purchaser a clean title pursuant to the contract and not an encumbered one.

Interests in land that are capable of being registered are considered encumbrances.

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About the author

Hee Sue Ann
Associate
Real Estate, Banking & Finance
Halim Hong & Quek
[email protected]