Short answer: in Malaysia, an ordinary residential tenancy does not automatically bind a buyer of the property. Section 213(3) of the National Land Code is explicit about it, and the only reliable protection is an endorsement on the title obtained before the transfer is registered.
This is one of the sharpest gaps between what tenants assume and what the law says.
The Controlling Provision
Section 213(3) of the National Land Code, in terms:
"Notwithstanding subsection (2), no tenancy exempt from registration granted after the commencement of this Act shall be binding on (a) any person or body to whom the grantor subsequently transfers the reversion expectant thereon... unless, prior to the date on which the dealing referred to in paragraph (a) takes effect, the tenancy has become protected by an endorsement on the register document of title to the land pursuant to Chapter 7 of Part Eighteen."
Read that twice if you are a tenant. Your tenancy agreement is a valid contract with your landlord. It is simply not binding on the person who buys the property from them, unless you took a specific step at the land office first.
Is Your Tenancy "Exempt From Registration"?
Almost certainly yes, if it is a normal residential let.
- Section 213(1): a "tenancy exempt from registration" is any tenancy or subtenancy for a term not exceeding three years granted under section 223.
- Section 213(2): such a tenancy is valid whether in writing or by word of mouth, and the instrument "shall neither require, nor be capable of, registration".
- Section 224(a): a periodic term — week to week, month to month, year to year — is treated as a term equal to its minimum possible duration. So a monthly tenancy is a one-month term, comfortably inside the three-year line.
The consequence is neat and uncomfortable: the very thing that makes a short tenancy easy to create, no registration required, is what leaves it exposed on a sale.
How to Protect It
Section 316 lets a tenant claiming the benefit of a tenancy exempt from registration apply to the Registrar to endorse the claim on the register document of title, expressly "for the purpose of protecting his rights thereunder against subsequent dealings, as mentioned in section 213".
Section 317(1)(c): the Registrar endorses the title with the words "Exempt tenancy claimed", effective from the time of receipt noted in the Presentation Book.
Section 317(3)(a) is the trap. The Registrar must reject the application if, by virtue of section 213(3), the tenancy has already been defeated by registration of a transfer of the reversion. In other words: once the sale is registered, it is too late. There is no retrospective protection.
Section 317(5) adds a caveat worth knowing: the endorsement does not confirm the tenancy's validity. It preserves your priority, it does not adjudicate your rights.
The Strongest Position: A Registered Lease
If you need genuine long-term security — a business tenant fitting out premises, or a family committing to an area for schooling — the answer is a lease, not a tenancy.
- Section 221: leases are for terms exceeding three years, up to 99 years for the whole of alienated land or 30 years for part of it, and must be made in Form 15a.
- A registered lease is a registered interest, and binds successors in title.
The trade is cost and formality: registration, stamp duty on a longer term, and less flexibility. For a three-year-plus commitment it is usually worth it.
What Happens to the Deposit
The deposit follows the contract, not the land. You paid it to the original landlord under an agreement the buyer is not party to, and there is no provision in the National Land Code transferring deposit liability to a purchaser.
So where the tenancy does not bind the buyer, your deposit claim lies against the original landlord. Practically, that means:
- Do not hand the deposit question to the new owner and assume it is now theirs.
- Settle the deposit with the outgoing landlord as part of the sale, in writing, before completion.
- If it comes to a claim, the Consumer Claims Tribunal has no jurisdiction — section 2(2)(d) of the Consumer Protection Act 1999 excludes land and interests in land. Small claims in the Magistrates' Court, up to RM5,000, is the route. See tenancy deposits in Malaysia.
How Tenanted Sales Actually Close
The section 213(3) position is the default, not the whole story. In practice a tenanted sub-sale is usually handled by contract:
- The SPA is expressed to be subject to the existing tenancy, so the buyer takes the property knowing the tenant is there and agrees to it.
- The buyer attorns as the new landlord, taking over the landlord's side of the tenancy by agreement rather than by operation of the Land Code.
- Rent is apportioned at completion, so the seller keeps rent up to the completion date and the buyer takes it from then on.
- The deposit is dealt with expressly, either paid across to the buyer as an adjustment or retained and settled by the seller with the tenant.
None of this happens automatically. It happens because someone drafted it. If the SPA is silent, you fall back on section 213(3), and the tenant's position is weak.
What This Means in Practice
If you are the tenant
- Ask, at the start, whether the landlord intends to sell during your term. Get the answer in the agreement if you can.
- For any tenancy you genuinely depend on, consider a section 316 endorsement. Being straight with you: this is legally correct and practically rare. Most residential tenants and many agents have never heard of it, and land offices see few applications. That does not make it unavailable, and it is exactly what section 213(3) points you at — but expect to have to explain what you are asking for.
- Watch for signs of a sale — valuers, agents, viewings. Once a transfer is registered your window under section 317(3)(a) has closed.
- For a commitment beyond three years, negotiate a registered lease instead.
- Deal with your deposit before completion, with the landlord you paid.
If you are the landlord
- Selling with a tenant in place is lawful, and an unregistered tenancy will not usually bind your buyer. That is a feature for the sale and a liability for your relationship with the tenant.
- Your deposit obligation does not transfer. Settle it, or agree an explicit apportionment with the buyer in the SPA.
- Tell the tenant early. You are asking for viewing access you may not have a contractual right to.
If you are the buyer
- Inspect the title for an "Exempt tenancy claimed" endorsement before you commit. If it is there, you take subject to that tenancy.
- An occupied property may still come with a tenant who has no binding claim on you but is nevertheless in physical possession. Vacant possession is a term you negotiate.
- Do not assume you inherit the deposit. You do not, and you should not accept liability for it without an adjustment in the price.
One thing we are not going to state: the notice period required to terminate a periodic tenancy. There is no statute setting it for residential tenancies in Malaysia — it comes from the tenancy agreement first, and from common law where the agreement is silent. (The Distress Act 1951 is sometimes cited here and it should not be: that Act governs the seizure of goods for rent arrears, not termination notice.) Because the answer turns on your agreement, ask a lawyer rather than taking a number from an article.