After nine years the Malaysian Federal Court has correctly restored the principle of deferred indefeasibility in their Torrens system of registration and is enshrined in section 340(1) of the National Land Code, 1965. The practical effect of sections 340(2) and (3) was to allow only the subsequent bona fide purchaser/transferee and not the immediate bona fide purchaser/transferee to get an indefeasible title created out of a defeasible title.
Unfortunately in 2000 the Federal Court in Adorna Properties Sdn Bhd v Boonsom Boonyanit espoused the principle of immediate indefeasibility which allowed a situation to develop where C could still get indefeasible title where B forges A's (the registered owner of the land) signature and transfers the land immediately to C without having first transferred it to himself.
As a result, land scams have increased dramatically where syndicates using "inside people" have forged land titles using the computerised land registration system. Replacement titles for apparently lost titles were generated, and used to sell the land. One must note that the latest decision only makes it more difficult to fraudulently transfer land and not impossible.
Quite clearly more stringent procedures and measures need to be implemented in order to prevent replacement titles being obtained fraudulently, otherwise it could threaten property investment.
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