Land Law: Temporary Occupational Licence

A brief introduction on Temporary Occupational Licence (TOL)

These are licences granted by the Malaysian state authorities (in accordance with the Malaysian National Land Code) to individuals or companies to occupy certain lands within the Peninsular Malaysia, such as state land, mining land and reserved land which are currently not being used by the states for their intended purposes. 

TOL has a myriad of purposes, for example: 

1. Contractors can apply for TOL to set up temporary worksites when they are constructing houses;
2. Individuals can apply for TOL to open food stalls/ night markets, corporate entities creating parking bays etc. 
3. The most common use of TOL in Malaysia where individuals apply for TOL to reside on the land.

As the name suggests, TOL is a temporary license- it has a lifespan of one calendar year. In this regard:

1. It expires on the last day of the year it was issued regardless of when it was issued;
2. It can be renewed for a maximum of three renewals; and 
3. It can be renewed for more than three times provided the TOL holder manages to obtain the approval of the state authorities to extend the lifespan of the TOL.

What happens when it expires?

Upon expiry (and assuming the state authority does grant further renewals):

1. TOL holders must surrender the land back to the state authority and vacate the land.
2. If TOL holders continue to occupy the land after the expiry date,  they can be liable for trespass.
3. Any rights conferred to the holders for the use of the land is automatically terminated.
4. Buildings on the land, including those existing prior to the creation of TOL (but not including those that are erected temporarily and is capable of being removed) taken over by the state authorities; and
5. The state authorities will not compensate the holders for those buildings.

Rights prior/ post expiry

Prior:

1. The holder has the right to bring an action against anyone who trespasses unto the land, including previous TOL holders of the land. 
2. The holder is also allowed to rent out the land/ grant tenancy for the non-permanent properties that he builds to anyone he wishes to do so. In this regard, the holder can initiate civil proceedings such as eviction order or distress action against the prospective tenants.
3. The rights conferred under TOL is an exclusive one, in this regard:
   1. It cannot be transferred to anyone else unless it is done via an application made by the current holder to the registrar before the expiry of the TOL; and
   2. The rights are terminated upon the holder’s death and is not transferable to anyone else. 

Post:

As mentioned above, any rights conferred prior expiry will be extinguished upon expiry. In this regard: 

1. It does not create any legal or equitable rights for the TOL holder. 
2. The TOL holder cannot initiate an action against the state authority for their refusal to renew the TOL; 
3. Neither can the TOL holder initiate an action against any subsequent TOL holder/ registered proprietor of the same land for expenses he incurred for the use of the land during his occupation of that land.

Any prospective TOL applicants should, therefore, understand the risk that comes along with the licences before applying for one.

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