Temporary Occupation License (TOL)

What is Temporary Occupation License (TOL)?

Temporary Occupation License (TOL) also known as Lesen Pendudukan Sementara (LPS) is permitted in our National Land Code 1965 (NLC). It is a temporary license granted by the Malaysian state authorities to individuals or companies to occupy certain land. The purpose of TOL is to allow the holder to occupy state land, mining land and reserved land which are currently not being used for mining or the purpose it was being reserved respectively[1]. The use of the land is governed by the regulations set in the TOL and the NLC.[2]

There are myriad instances where an individual/ company can apply for a TOL. For example, contractors can apply for TOL to set up temporary worksites when they are constructing houses, individuals opening food stalls/ night markets, corporate entities creating parking bays etc. The more common use of TOL in Malaysia can be found in instances where an individual applies for TOL to temporary reside on the land.

TOL has one calendar year lifespan[3]. Therefore, the license will expire on the last day of the year it was issued regardless of when it was issued. Before its expiration, the holder may renew their TOL. TOL can be renewed for a maximum of three renewals. However, with the consent of the state authorities, the holder may extend the lifespan to include more than three renewals[4].

What Happens when TOL Expires?

Upon the expiry of TOL and if the state authority does not approve of the application for renewal of license:

  1. holders are required to surrender the land back to the state authority and cease occupying the land. Any holder who continues to occupy the land after the expiry of the TOL is considered a squatter or trespasser. A squatter or trespasser can be sued for trespass[5].
  2. Any rights conferred to the holder in relation to the use of the land is automatically terminated.
  3. Any buildings that already existed prior to the creation of TOL other  than those that are erected temporarily and is capable of being removed will be vested in the state authorities[6]; and
  4. The state authority will not compensate the holder for any buildings that are vested in the hands of state authority[7].

What Rights does TOL Holders Have Prior/ Post Expiry of TOL?

Prior Expiry:

As a holder is an individual/ company who has temporary rights to possess the land until the expiry of TOL, the holder has the right to bring an action against any other individual/ company who trespasses upon the land[8]. This includes initiating an action for trespass against the previous holder[9].

A holder is also allowed to rent out/ grant tenancy for the non-permanent properties that he builds to other parties[10] during the duration of the TOL. This would entail the holder to initiate civil proceedings such as eviction order or distress action against the prospective tenants.

However, a TOL cannot be assigned to any other parties[11] unless the rights are completely transferred to another via an application made by the current holder to the registrar before the expiry of the TOL[12].

It must also be noted that the rights of a TOL holder are terminated upon the holder’s death[13]. The rights granted to the holder is therefore not transferable to another individual/ company.

Post Expiry:

Any rights conferred to the TOL holder will be extinguished upon the expiry of the TOL. Simply put, the only rights that a TOL holder have are the right to occupy the land temporarily for the duration of the TOL i.e. the occupation does not create any legal nor equitable rights for the TOL holder[14]. He cannot initiate an action against the state authority for their refusal to renew the TOL nor can he initiate action against any subsequent TOL holder/ registered proprietor of the same land for expenses he incurred over the land during the duration of his occupation[15].

As the law puts it: “No title to State land shall be acquired by possession, unlawful occupation or occupation under any license for any period whatsoever[16]”. It is therefore unwise to place any emotional attachment on a piece of land that can be reclaimed by the state authority upon the expiry of the TOL. Any prospective TOL applicants should take heed of it and understand the risk of applying for a TOL.

[1] Section 65 (1), National Land Code 1965.
[2] Section 65 (2), Ibid.
[3] Section 67 (1), Ibid.
[4] Section 67 (3), Ibid
[5] PP v Yap Tai [1947] 1 MLJ 50.
[6] Section 47 (1), National Land Code 1965.
[7] Section 47 (2), Ibid.
[8] Julaika Bivi v Mydin [1961] MLJ 310.
[9] Ibid.
[10] Govindaraju v Krishnan [1962] MLJ 334.
[11] Section 68, National Land Code 1965.
[12] Section 416, Ibid.
[13] Section 68, Ibid.
[14] Teh Bee v K Maruthamuthu [1977] 2 MLJ 7.
[15] Ibid.
[16] Section 48, National Land Code 1965.

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