Why Property is the Most Complicated Asset in Faraid

Unlike cash in the bank or ASB savings that can be divided cent by cent according to faraid ratios, a house or a piece of land cannot be "split" so easily. This is the main reason why inherited property often remains unresolved for years, with some even remaining unsold for several generations, even though the heirs already know their theoretical faraid shares.


This article focuses specifically on how faraid applies to property, the process of transferring ownership, challenges in splitting/sharing, and the unique issues of Bumiputera Lot and Malay Reserved Land specific to property in Malaysia.


Are All Properties Included in Inherited Assets?

Generally, yes, any property registered in the name of the deceased (individually or partially, e.g. joint ownership) is an inherited asset and subject to faraid. However, a few things need to be checked before any division:


  • Land tenure status — freehold or leasehold. Leasehold land with only a few years remaining on the lease can affect the actual value inherited.
  • Lot status — whether the property is a Normal Bumiputera Lot (still requires approval from the State Authority for transfer to non-Bumiputera, a process that can take 6 to 24 months), Released Bumiputera Lot (approval has been obtained, free to be sold to anyone), or Malay Reserved Land (legally restricted to Malays only — cannot be released to non-Malays under any circumstances).
  • Existing joint ownership — if the deceased owned the property jointly with a spouse (e.g. a house bought during marriage), only the deceased's share becomes part of the inheritance; the surviving spouse's share remains theirs and is not divided according to faraid.
  • Bank mortgage (housing loan) — if the property is still mortgaged with a bank, the outstanding loan is a debt that must be settled first (see article Faraid and Inheritance Debt) before the property can be truly free of encumbrances for inheritance.


Process of Transferring Inherited Property to Heirs

Unlike cash which can be distributed immediately once the heirs agree, property requires a formal inheritance administration process before the heir's name can be registered at the land office:


  1. Obtain a Faraid Certificate from the Syariah Court — this is an official document that confirms who the valid heirs are and their respective shares. Online calculators (including the Faraid Calculator on this site) are only for estimation and reference; they are not a substitute for the official Faraid Certificate.
  2. Application for the Partition Order — depending on the total value of the inherited property, this is handled by Amanah Raya Berhad (property valued below RM600,000, no will, no disputes), Land Office/Small Estate Partition Office (for some land cases), or the High Court (property valued higher or involving disputes).
  3. Transfer at the Land Office — once the partition order is issued, the transfer form (Form 14A under the National Land Code) is submitted to register each heir as a co-owner according to their respective Faraid shares, or transfer full ownership to one party if other heirs agree to sell their share.
  4. If involving Bumiputera Lot/Malay Reserved Land — an additional layer is required: approval from the State Authority (PBN) for any transfer involving land status/land reservation, even if the transfer is between heirs themselves in some states. Check your state's specific requirements as they vary.


Selling, Dividing, Or Remaining as Joint Ownership?

After the property is registered under the names of several heirs according to their Faraid shares (e.g. 3 siblings each own 1/3), the family usually faces three options:


  • Sell and divide the proceeds — the easiest option when there are many heirs and not all want to live/invest in the same property. Each heir receives cash according to their percentage share from the inheritance.
  • One or some heirs buy out other heirs' shares — if there are heirs who want to continue owning/occupying the family home, they can "buy" the shares of other heirs based on current market value (not original value), usually confirmed through a certified valuation.
  • Remain as joint ownership (tenancy-in-common) — all heirs remain co-owners without selling. This may seem simple at first but the main cause of land being abandoned/unproductive for years is when heirs cannot reach agreement on renting, development or sale, especially as the number of heirs increases across generations (children of children of children).


To help families make this decision more clearly, the Inheritance Property Division Calculator on this site calculates the percentage and RM value of each heir's share for a specific property, useful as a starting point for family discussions before appointing a lawyer.


Malay Reserved Land Issues: More Than Just Inheritance

Malay Reserved Land brings an additional layer of complexity not present in normal properties: it can only be transferred between Malays (according to the Federal Constitution definition), without exception, including during the distribution of inheritance. If a heir is married to a non-Malay or has a non-Malay adopted child listed as an heir, the issue of eligibility to receive reserved land must be resolved separately from the faraid calculation itself, usually with the advice of a lawyer who commonly handles Malay reserved land matters in the relevant state.


Conclusion

Faraid determines what percentage each heir is entitled to of a property,  but the actual process of transferring ownership, especially for Bumiputera Lots and Malay Reserved Land, involves an additional layer of bureaucracy unique to properties in Malaysia. Start early: obtain the Faraid Certificate as soon as possible after death, and involve a Shariah/property lawyer before any discussion of sales or division begins, so that this process does not drag on for years as is often the case.


Read also basic Faraid guide: who are the heirs & how much each is entitled to and Faraid and Inheritance Debt,  debts must be settled first before the property is truly free to be inherited.

Disclaimer: This article is for educational and general reference purposes only, prepared based on the official guidelines of the Selangor Islamic Religious Council (MAIS) through the portal eFaraid MAIS. It is not legal advice. Every inheritance case is unique — please obtain an official Faraid certificate from the Shariah Court and consult a licensed Shariah/housing lawyer for a final decision.