Charge

S. 241(2) registered proprietor may create 2 nd and

subsequent charges on the same piece of land (as
charge is merely interest in land)
S. 244(1) 1st chargee (chargee who is first in
registering) is entitled to the custody of the
IDT/duplicate lease as long as any liability subsists
under the charge (in the absence of any agreement
to the contrary)
S. 244(2) Chargee required to produce the
document within a reasonable period at any
Registry/Land Office on the written request of the
registered proprietor for any purposes under the NLC
 Charge
S. 244 to ensure that the registered proprietor
does not create subsequent charges without the
1st chargees knowledge
S. 249 Implied agreements in all registered
charges
S. 250 Implied agreements which can be
negatived
 Consolidation
When the chargor charges two pieces of land to
the chargee, relief against forfeiture of 1 charge
would only be given if the chargor pays all
amounts owing for both charges (even though the
date for repayment under the 2nd charge is not
yet due)

S. 245 right to consolidate is given to the

chargee ONLY if the parties expressly agree
 Consolidation
Essential conditions for consolidation:

Both charges Both charges,

must have at the time of
been effected consolidation
by the same , must be in
chargor the hands of
the same
chargee
 Consolidation
Effect of consolidation alters priorities

Eg:
1/1/2010 A charges land Z to B by way of first
charge (with the right to consolidate)
1/1/2011 A charges land X to C by way of first
charge
1/1/2012 A charges land X to B by way of second
charge (subject to consolidation)
 Consolidation
Right to consolidate should be exercised before
any application for OFS
Public Finance Bhd v Hock Seng
Housing [1992] 1 MLJ 442
66 pieces of land Consolidated 215 pieces of land
(560k loan) 7/10/1988 (3.5m loan)

OFS obtained on
Charged to
30/9/1985
Plf

Sold by public
auction on
26/5/1990
Public Finance Bhd v Hock Seng
Housing [1992] 1 MLJ 442
7/10/1988 Plf exercised right to consolidate both
accounts secured by the charges
5/7/1989 Plf applied OFS to sell the 66 pieces of
lands for the amounts outstanding based on
consolidation of the accounts.
Public Finance Bhd v Hock Seng
Housing [1992] 1 MLJ 442
Ct the right to consolidate ought to be exercised
before any action is taken for the foreclosure of
any of the charges
Ct the plfs had exercised their right to
consolidate a little too late considering
(a) their earlier action to foreclose one of the 2
charges
(b) OFS was made 3 years before
(c) first auction date was 1 month before the
notice to consolidate
Public Finance Bhd v Hock Seng
Housing [1992] 1 MLJ 442
Ct as at 7/10/1988 (date of consolidation), there
was in fact only 1 charge remaining to foreclose
[there is nothing to consolidate]
 Tacking
A means of
o Increasing the indebtedness of the chargor;
and
o Varying the chargees priority (enhances
chargees priority)
Where tacking takes place, the tacking chargee
gains priority, not only in respect of the original
sum, but also in respect of a further advance over
subsequent charges
 Tacking
M charged land Z to A for 50k
(with the right to tack)

Tacking
M charged land Z to B for 15k

M charged land Z to A for 10k

M defaulted on As charge. A sells the land for 70k. Minus costs and
expenses of 5k, and due to As right to tack, A recovers his 55k and B is
only able to recover 5k. B has to try to recover the balance of 10k by way
of breach of contract
 Tacking
M charged land Z to A for 50k

M charged land Z to B for 15k

M charged land Z to A for 10k

M defaulted on As charge. A sells the land for 70k. Minus costs and
expenses of 5k, A recovers his 50k. B recovers 15k. A has to try to recover
the balance of 10k (the third charge) by way of breach of contract
 Tacking
S. 246(1) If any tacking is authorized, any chargee
(whether 1st, 2nd/subsequent chargee) may tack
S. 246(2) tacking is permitted (despite subsequent
chargee giving written notice of the registration of
his charge to 1st chargee) in 2 circumstances:
(a) the making of the advance(s) is expressly
authorised by prior charge; or purpose of charge is
to secure the balance from time to time due to the
chargee under current/ continuing account; OR
(b) advance(s) made with the consent of
subsequent chargee
 Postponement
S. 247 registered charge may be postponed to
any subsequent registered charge [Form 16C]

X - First chargee registered on

1/1/2010

Y - Second chargee registered on

1/1/2011

X and Y agrees to swap places/X agrees to

postpone its charge. Despite X registering first, Y
becomes first chargee
 Postponement
Postponement is voluntary on the part of the prior
charge
A subsequent chargee has no right to
require/force the prior chargee to postpone
The chargor is not required to consent to the
postponement nor is notice required to be served
on him advising of the postponement
 Remedies
3 remedies for chargee:
(a) sale
(b) possession
(c) suing under covenant to recover money
owed
 Remedies
S. 253(2) Chargee who has entered into
possession of the land under the charge is not
barred from subsequently obtaining the sale of that
land
General rule:
Low Lee Lian v Ban Hin Lee Bank Bhd chargee
is entitled to pursue all remedies available to him
simultaneously, contemporaneously/ successively to
recover the money lent.
Exception:
Chan Boi Loi v Public Bank Bhd & Anor Application
unless there is an agreement to the contrary
 Possession
Taking possession of charged land inhibits
chargor from using the land for profit eg
producing crop for sale, lease
S. 270 (3) right given to first chargee only
If default in payment is to second chargee,
second chargee may sue based on contract OR
apply to sell the land
 Possession
Possession
s. 270 - 272

Receive rental from Go into occupation if there

lessee/tenant (IF land is is no lessee/tenant/ chargor
subjected to lease/tenancy occupying land

Form 16J served on

lessee/tenant (and a Form 16K served on
copy to chargor) chargor
 Sale
Must obtain court order to exercise power to sell
Registration of charge create interest in the land
only
S. 259 registry title
S. 265 land office title
given to registered chargee (first/subsequent,
land/lease)
 Overview of Sale
Default in repayment Public auction
of loan/interest

Notice of breach Successful bidder pays deposit

Application for OFS Successful bidder pays full price

Chargee disburse proceeds of sale

OFS obtained following the order of priority