In Malaysia there are 3 types of security transactions available which is Jual Janji, Lien and Charge. FYI, security transactions is a transactions to secure the loan given. Mainly between lender and borrower. The basic concept is like this:
The lender will loan his money and the borrower will give his properties (in his case it is his land) to the lender as security for the loan. If the borrower defaulted in payment, he may lose his properties (land)
Jual Janji in one of security transactions that had been practiced by traditional malay society for long time ago. It came from Islamic concept because it does not take interest or Riba from the security. But it had not been recognised by the Code. The modus operandi of Jual Janji concept is, the borrower first transfer the land to the lender. And Lender will give money for loan. It is something like the Lender is purchasing the Borrower land. But the transfer here in not like a normal transfer – this will be discussed later. Then Lender will take possession of the land and will entitled to take profit from the land. This right is only for the period of the loan. Until full payment, the land will be “transfer” back to the Borrower. In simple view, the transfer is like the borrower is purchasing back the land from the lender. And the lender is obliged to “transfer” back the land. Any issues will be discussed in details later.
For lien, the concept is quite the same as Jual Janji but it not came from traditional practice of Malay. And Lien is recognize by the Code: Section 281(1). Halsbury Laws of England defines Lien as “Right of one man to retain the property belonging to another man until certain demand of the man in possession of the goods are satisfied”. Lien do not need a registration for it to be created, same for Jual Janji. But the differences between Lien and Jual Janji is in Lien the borrower will need by physically hand over his Issue Document Of Title (IDT) or duplicate lease to the lender. And a caveat is created for securing the transaction.
The main and most complicated types of security transaction is charge. It was recognized by the code under section 241(1). Charge need a registration.If no registration, no charge. But it can create equitable charge instead of statutory charge. The concept of charge is, a borrower offer a security over his land and he been called a chargor. While a lender who will gives money as loan to the borrower is called chargee. The charges is used as a security for the loan. Charge will be most complicated security transaction available, therefore all issues will be discussed later.
Although it seems like all type of security transactions is almost the same, there are certain differences in each concept. The details of each type of security transaction will be explain in other post later.
Terms Guide:
- the Code: National Land Code 1965
