Investors make long term decisions as they wait and rent out the unit until the price is right, usually after a couple of years, when they can then sell it for a profit.

SECURING or buying a property (whether residential or commercial) in the current volatile market may initially not seem like such a good idea.

Considering the financial debt that may be incurred from purchasing a property and not being able to finance or sell it when the going gets tough may be a burden that is too heavy to bear.

Hence the reason why there are a growing number of buyers who choose to pool their resources to purchase a property that hopefully gives them a profitable gain in the near future.

Although the Malaysian property industry is quite mature there might still be some confusion about the labels in which the buyers fall into, which are generally two major categories — traders and investors.

Traders buy their properties, make value-added improvements on it and sell for a profit while Investors make long term decisions as they wait and rent out the unit until the price is right, usually after a couple of years, when they can then sell it for a profit.

An Investor would also want to ensure that the rental is at least able to cover the bank loan instalments or even generate monthly positive cash flow.

Determining which type of buyer all the involved parties are from the beginning will prevent any disagreements and headaches later.


Co-investment is a condition that occurs when two or more investors are sharing ownership of a real estate investment. One of the most common co-investments is where all the co-investors are required to share in the investment responsibilities of that property(s) including legal fees, stamp duties, quit rent, bank loan interest and payments, profit and/or losses etc.

Co-investing in a property isn’t all that uncommon. From married couples to company purchases to parent-child combos or even among friends, co-investing has been around for a long time.

Co-investing in a property is also known as purchasing a property through “Proxy” or “Trustee” and in most circumstances the said Proxy / Trustee hold the property on behalf of a beneficiary.

This is a common example of purchase through the way of a Proxy: The Sale and Purchase Agreement and the Loan Agreement are signed under Party A. Party A and a new Party - Party B - then sign another legal agreement called a Deed of Trust which states that Party A only holds a 30 per cent shares of the said property and Party B owns a 70 per cent share. Each party would thereafter pay all the maintenance and bank loan repayments based on the above apportionment of 30 per cent and 70 per cent.

Based, on the above scenario, Party A would be the so called “Trustee” or “Proxy” on behalf of Party B because Party B’s name did not appear in the Sale and Purchase Agreement nor the Loan Agreement. Yet, Party B owns 70 per cent of the said property.


After all the major terms and conditions are agreed upon between the Trustee and the Beneficiary, both parties then execute a legal document called the Trust Deed, which secures the interest of both parties.

To further secure the interest of beneficiaries, a caveat may be entered on the property under an Individual or Strata title.


With income spreading, loss sharing, cost reduction and many more benefits that comes with co-investing, what could possibly go wrong? Well there are some issues to consider.


With conflict, it may be difficult to remain objective and see the larger picture in the end. Agreeing to buy any property then becomes an unpleasant experience.

Some Trustees might need to commit themselves to a bank loan to secure the property on behalf of the Beneficiary. In this circumstance, trust is one of the main concerns.

A trustee might worry about what might happen if the beneficiary defaults on the loan repayment and if it would then affect the trustees profile with the financial institution since it is the trustee who signs all the legal documents to secure the loan.

Another version of this issue might also arise on the part of the beneficiary who might think “I am the one that paying all the instalments to bank while the property is still under the name of the trustee. What if the trustee sells off the property without my knowledge? How am I protected?”

So, in order to prevent or minimise conflicts in a co-investment, mutual trust among all the parties coupled with proper legal documentation is a MUST.


Co-Investing in a property is a long-term commitment and along the way, troubles or disagreements may happen.

Because co-investing requires an agreement to be signed by more than one party, each of the signatories is held responsible for the actions or in this case, the non-actions of the others and suddenly a shared burden might become a liability.

Maintaining a property also requires common effort from all the parties.


Even if a personal agreement dictating all possible eventualities is created, there is still an issue with it being within the current legal framework. Some parties could still be vulnerable to unnecessary risks.

The most common scenario in Malaysia is that there are Master title properties and Individual title or Strata title properties.

For properties that come with individual or strata titles, a caveat can be entered on the property to protect the rights of all the legal owners or beneficiaries.

However, a caveat is not applicable on properties that are still under a Master title. Hence, the beneficiary is facing the risk that the trustee might dispose the property without the beneficiary’s knowledge.

So, it is important to know your rights and also the risks you face before co-investing.


The profit share of the deceased will not be automatically be directed to the rest of the parties unless specifically stated in the will of the deceased or there is a trust deed created among the parties beforehand. Parties may find themselves in a situation where they are forced to compete with next of kin for the fair share of the profits if there is lack of proper legal documentation.

In a nutshell, while co-investing in a property with the proper legal documentation is still a safe and sure-fire way to own one especially in these dire economic times it is the responsibility of all parties to determine the trustworthiness of their partners and safe guard themselves from being in crippling financial debt in the future.

It is important that these decisions are not rushed in to and this obvious tip may just protect you: HIRE THE RIGHT SOLICITOR.

Ron Ong is a property entrepreneur and practising lawyer in Malaysia.

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