Discharge of Charge in Malaysia

A discharge of charge is the instrument that removes a bank's registered security from a property title once the loan has been settled. Until it is registered, the charge remains on the register and the property cannot be sold or refinanced cleanly.

What a discharge of charge does

When a property is financed, the lender registers a charge against the title. That charge stays on the register until it is formally discharged, executed by the chargee in the prescribed statutory form, Form 16N, and registered at the land office.

Settling the loan does not by itself clear the title. The bank issues the discharge documents and releases the issue document of title, and a solicitor then presents the discharge for registration. Owners often discover the charge is still registered only years later, when they try to sell.

When you need a discharge

• You have paid off your housing loan in full
• You are selling the property and the buyer's financier requires a clean title
• You are refinancing, so the existing charge is discharged as the new one is created
• The loan was settled by insurance proceeds after the death or disability of the borrower
• The property is being transferred to a family member and the existing loan is being redeemed

Where no title has been issued

If the property has no individual or strata title, the bank's security was taken by way of an assignment rather than a registered charge. In that case the release is done by a deed of receipt and reassignment executed by the bank, together with the return of the original documents, rather than by a discharge of charge.

What we do for you

1. Conduct a land search to confirm the charge and the chargee particulars on the register
2. Obtain the redemption statement and coordinate settlement with the bank
3. Collect the executed discharge instrument, the issue document of title and the supporting documents
4. Attend to stamping and adjudication
5. Present the discharge for registration and return the clean title to you

Common mistakes

• Settling the loan and never registering the discharge, leaving the charge on the title
• Losing the discharge documents released by the bank, which then have to be reissued
• Discovering an old charge in favour of a bank that has since merged or changed its name, which needs extra supporting documents
• Starting the sale of the property before the redemption position with the bank is confirmed
• Assuming the bank registers the discharge for you after settlement

Frequently asked questions

I finished paying my loan. Is my title automatically clear?

No. The charge remains registered against the title until a discharge is presented and registered at the land office. The bank releases the documents; someone still has to lodge them.

Who keeps the title after the discharge is registered?

The issue document of title is returned to the registered owner once the discharge has been registered, unless it is being held for a new charge in a refinancing.

What if the bank no longer exists under that name?

Where the chargee has merged with or been taken over by another institution, the successor institution executes the discharge and supporting evidence of the change is presented with it. We deal with this as part of the file.

Can I sell without discharging the charge first?

A sale can proceed, but the redemption and discharge are dealt with as part of completion. The buyer's financier will not release the balance of the price until it is satisfied the charge will be removed and its own charge registered.

Do I need a lawyer for a discharge of charge?

The instrument must be correctly executed, adjudicated and presented with the title and supporting documents. In practice it is prepared and lodged by a solicitor, and errors are usually only found on rejection.

Related services

• Loan Agreement
• Memorandum of Transfer (MOT)
• Land Search
• Sale and Purchase Agreement
• Tenancy Agreement
• Lease Agreement
• Property Transfer & Transaction
• Caveat of Property
• Foreigners Buying Property
• Property Lawyer Malaysia

This page is general information about property law procedure in Peninsular Malaysia and is not legal advice for any particular situation. How a matter is handled depends on the title, the state and the facts, and Sabah and Sarawak have their own separate land legislation. Speak to a lawyer about your own circumstances.