Why You Should Be Careful Buying a 'Lot Lidi' Land Title in Malaysia

"Lot lidi" land is a portion of a larger piece of land that is sold informally, usually through a trust deed, without the land being officially subdivided and without the buyer's name being registered on the land title. It is often cheap agricultural land. The risk is simple: under the National Land Code 1965, the law protects the person whose name is on the title. If your name is not there, you may have paid for land you cannot legally deal with, pass on, mortgage or build on.

This guide explains what lot lidi land is, why it causes problems for buyers, and what to check before you pay any money.

What is lot lidi land?

In a normal land purchase, the seller is the registered owner, the land has its own title, and after the sale the title is transferred into the buyer's name at the land office.

Lot lidi works differently. The land usually sits under a single title, often agricultural land. The owner (or group of owners) marks out smaller "lots" on the ground and sells them to different buyers. Instead of registering each buyer on the title, the parties sign a surat ikatan amanah or surat pegangan amanah (a trust deed or declaration of trust). The registered owner stays on the title and, on paper, holds the buyer's portion "on trust" for the buyer.

The "lots" have not been approved or surveyed as separate lots, and no separate title has been issued for them.

Lot lidi is also different from an ordinary land title (geran tanah lot), where the seller's name is on the title and the sale can be completed by a registered transfer.

Why is buying lot lidi land risky?

Many buyers are attracted by the low price and only discover the problems when they try to sell, borrow, build or pass the land on. The main risks are these.

1. Your name is not on the title

The buyer holds only a trust deed. Your name does not appear on the land title, so the land office does not record you as an owner.

2. You cannot sell or transfer the land in the normal way

Under the National Land Code, only the registered proprietor can transfer, charge or lease the land through the land office. Because you are not registered, any later sale is hard to complete lawfully, and the transfer process (including perfection of transfer) cannot simply be used to put the land in your name.

3. Your rights as an owner are not protected

Registration is what gives an owner protection under the National Land Code. A buyer with only a trust deed is not treated as the legal owner, and has to rely on the trust arrangement and on the registered owner's cooperation.

4. Passing the land to your family is difficult

If you die, your heirs may find it hard to claim the land as part of your estate, because the title is still in someone else's name. Problems can also arise if the registered owner dies and the whole piece of land becomes part of their estate.

5. Compensation if the land is acquired

If the government acquires the land, compensation is dealt with according to the registered interests in the land. A buyer who is not on the title may face real difficulty proving a claim and receiving compensation.

6. You cannot get a housing loan

Banks normally lend only against a registered charge over the land, which requires the borrower's interest to be registered on the title. Without that, a housing loan is generally not possible.

7. You may not be able to build a house

To approve building plans, the local authority (PBT) needs to see that you have the right to the land. With only a trust deed over an unsurveyed portion of agricultural land, building approval is very difficult to obtain.

8. The state authorities do not recognise your lot

Because the lot has not been approved as a separate lot and your name is not on the title, the land office and state authorities have no record of your ownership to act on.

9. You may not know exactly where your land is

The lot has not been surveyed and confirmed by the Department of Survey and Mapping Malaysia (JUPEM). The boundaries you were shown on the ground may not match any official plan, and boundary disputes with neighbouring buyers can arise.

What should you check before buying land?

If you are offered land at an unusually low price, especially agricultural land sold "per lot", check these points before you pay anything:

1. Get an official land search to confirm who the registered owner is, the land category and conditions, and any charges, caveats or restrictions. Our guide to the land title explains what a title shows.

2. Ask whether the lot has its own title. If the land is still under one title and the seller offers only a trust deed, treat it as lot lidi.

3. Check whether subdivision has been approved and whether separate titles have been or will be issued before the transfer.

4. Do not pay the full price against a trust deed alone. Where money must be paid before the transfer, it should be held by a lawyer as stakeholder until the transfer can be registered.

5. Get independent legal advice before signing anything, including on whether any step (such as a caveat) can protect your position.

For a normal purchase, the steps for transferring a title into the buyer's name are set out in our guide to the land title transfer procedure in Malaysia.

How ASCOLAW can help

If you have been offered lot lidi land, or you already hold a trust deed and want to understand your position, ASCOLAW can review the title search and your documents and explain the risks and the options that may be open to you. Fill in the ASCOLAW enquiry form below with a short description of the land and the documents you have, and our team will contact you.

Frequently asked questions

What does "lot lidi" mean?

It refers to a portion of land, usually agricultural, that is sold informally from a larger piece of land without official subdivision. The buyer receives a trust deed instead of having their name registered on the title.

Is a trust deed (surat ikatan amanah) the same as a land title?

No. A trust deed is a private document between the buyer and the registered owner. It does not put your name on the title, and the land office does not treat you as the registered owner.

Can I get a bank loan to buy lot lidi land?

Generally no. Banks lend against a registered charge over the land, which requires your interest to be registered on the title.

Can I build a house on lot lidi land?

It is very difficult. The local authority needs proof of your right to the land to approve building plans, and a trust deed over an unsurveyed lot is usually not enough.

What should I do if I have already bought lot lidi land?

Keep all your documents, including the trust deed and proof of payment, get an official search of the title, and obtain legal advice on your position before taking any further step.

This article is general information only and is not legal advice. It is based on the National Land Code 1965, which applies in Peninsular Malaysia; Sabah and Sarawak have their own land laws. Every land transaction is different, so get advice from a licensed lawyer on your specific situation before acting.

Related guides

• Land Title

• Land Title Transfer Procedure in Malaysia

• Perfection of Transfer

• Real Estate Property Transaction: Common Legal Terms, Definitions and Meanings

• ASCOLAW property lawyer pages by area