In Malaysia, there are two types of property auctions, namely LACA and non-LACA
Loan Agreement cum Assignment (LACA)
A LACA auction is a non-judicial process, managed by the respective bank. This type of auction involves properties that do not yet have individual or strata titles issued. If the property owner defaults on mortgage payments, the bank can sell the property without needing a court order for sale. One advantage of LACA cases is that they often involve newer or recent developments, particularly high-rise properties. Since these properties are relatively new, they usually carry a lower risk of significant damage that would require expensive repairs. This can be appealing to buyers who are looking for a property in good condition without the need for major renovations or costly fixes, which are more common in older properties. However, it has to be noted that since the title has not been perfected, there may be additional costs/issues related to title transfer such as Double MOT.
Non-Loan Agreement cum Assignment (Non-LACA)
The Non-LACA auction, also colloquially known as a government auction, is regulated by the National Land Code and is conducted at the High Court or at Land Office. This type of auction applies to properties that already have individual or strata titles issued in the borrower’s name, with a charge that has been perfected. When a borrower defaults on mortgage payments, the bank must apply to the High Court (for properties with Land Registry titles) or the Land Administrator (for Land Office titles) to obtain an order for sale before proceeding with the auction. When people refer to a “court auction” or “high court auction,” they are usually talking about non-LACA cases. Non-LACA auctions tend to follow clear and straightforward rules, in contrast to LACA cases, which may have title-related issues. Since the properties in non-LACA auctions already have individual or strata titles issued, the process of acquiring a property is much simpler. Buyers don’t have to worry about complications like double Memorandum of Transfer (MOT) fees or other hidden costs often associated with LACA auctions.
