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Jual Janji (Malay Customary Land - Malaysian Land Law)

Jual janji is a type of security transaction under Malay customary land tenure where a landowner sells land to a lender as collateral for a loan. There is an agreement that the lender will return the land to the owner if the loan is repaid by an agreed date. If not repaid, the sale becomes absolute. It allows Muslims to secure loans without violating Islamic prohibitions on usury. Key characteristics include using small plots of land worth more than the typical small, flexible loans between friends and relatives without interest charges.

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349 views2 pages

Jual Janji (Malay Customary Land - Malaysian Land Law)

Jual janji is a type of security transaction under Malay customary land tenure where a landowner sells land to a lender as collateral for a loan. There is an agreement that the lender will return the land to the owner if the loan is repaid by an agreed date. If not repaid, the sale becomes absolute. It allows Muslims to secure loans without violating Islamic prohibitions on usury. Key characteristics include using small plots of land worth more than the typical small, flexible loans between friends and relatives without interest charges.

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LAW554 – LAND LAW II

TOPIC 1: JUAL JANJI

1. INTRODUCTION

 What is jual janji?

 A type of dealing (security transaction) under Malay customary land tenure.

 It is a sale transaction with a collateral agreement by the buyer (lender) to


sell back the land to the borrower upon the latter paying back an identical
price before a stipulated date.

 If the buyer fails to do so, the sale agreement becomes absolute, in


which event the transaction becomes known as jual putus.

 It is also an undertaking between the parties that the right to


redeem the land stretched even after the expiry of stipulated time
for repayment of the loan because the transaction represented a
communal assistance to those in need.

 It is commonly practiced among the Malay Muslim community for purposes


of avoiding usury (riba / interest) which is prohibited under Islamic law
(Syariah).

 Tengku Zahara v Che Yusuf (1961)

Key point: The whole purpose of jual janji transaction is to provide a


procedure for securing a loan…without infringing the prohibition of
usury which is binding on the conscience of all good Muslims.

 Process:

1. Owner intends to borrow money from lender.

2. Owner sells land to the lender as security to secure the loan.

3. A collateral agreement is made where the lender promises to retransfer the land to the
borrower upon repayment of the loan on the agreed date.

4. During the loan duration, the lender shall take proceeds from the land.

 Characteristics:

1. The land used as security is usually small.

2. The amount of loan is little and usually fixed on the needs of the borrower, not the value
of the land.

3. The time for repayment is usually flexible and not fixed.

4. Often practiced amongst friends and relatives.


5. No interest is imposed on the borrower as Muslims are prohibited from imposing or
paying any interest for the money lent.

2.

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