Auction can be held by individuals with participation limited to a select group of people or organisations – so called ‘private’ auction. This is where property owners elect to auction off their properties instead of finding potential buyer and having to sign a sale and purchase agreement.
Public auctions on the other hand are usually organised by licensed auctioneers or big corporations like the banks. This happen when the borrower defaults in paying their home/property loan installment with the finance institution resulting in foreclosures proceedings.
Public auctions can be conducted either at the auctioneers office, the High Court of Malaya or at the Land Offices around Malaysia. Where the auction is conducted actually showed the status of the title of the property auctioned.
All property without title, ie, property ‘assigned’ to the bank with ‘power of attorney’ to the back to sell off the property in case of default, the auction will be conducted at the licensed auctioneer’s office.
For property with title, ie property with ‘geran’, the property would have been charged to the bank at the respective land offices for a loan. When the borrower defaulted in the payment of the loan installment, the bankers or financier will proceed with court proceedings in order to get an ‘order for sale’. And that is why such property will be publicly auctioned at either the High Court or the Land Office.
Why some property with title are conducted by the High Court and others at the Land office?
In West Malaysia, under the National Land Code,
section 256 specifically provides for all application for an order for sale of a Registry Title* to be made to the High Court of Malaya;
while section 260 provides for all application for order for sale in respect of Land Office title** to be made to the Land Administrator.
*Registry title means title evidenced by a grant or a State lease or any document of title registered in the Registry of Tittles.
**Land office title means title evidenced by a Mukim grant or Mukim lease or any document of title registered in a Land Office.
In Sabah, under the Sabah Land Ordinance, where the property is with title, the financier/bank relying on the Memorandum of Charge signed by the borrower in favour of the bank/financier, may apply to the Collector (ie the Central Land Office) under section 111 for an order to sell the charged property by way of auction when the borrower defaulted in loan installment payment. As such all property with title will be publicly auctioned at the Sabah Land Office as far as Sabah land titles are concerned.
The procedure of the Sabah Land Office sale is laid out in Rule 14 of the Sabah Land Rules (GN 505 of 1930).