Part 5: Foreclosure Inequities – When Borrowers Live Under Different Horizons

In Part 4, I wrote about leadership — how silence and deflection erode trust when institutions fail to act. But leadership failures are magnified when the law itself is unequal. That is the inequity I confront here: borrowers in Malaysia do not all live under the same legal horizon. Different statutory regimes mean that the very rules of foreclosure are not applied uniformly.

The Peninsula Horizon

In the Peninsula, foreclosure actions have long been understood to fall under the Limitation Act 1953, with a 12‑year limitation period applying to charge actions. This means that after 12 years from the date of default, a chargee risks losing the right to enforce its security. Borrowers, at least in theory, have some certainty: the threat of foreclosure cannot hang over them indefinitely.

 

The Sabah Horizon

Sabah, however, has stood apart. Courts here have treated foreclosure actions as subject to a 60‑year limitation period under the Sabah Limitation Ordinance. Sixty years. A lifetime. For borrowers, this has meant living under the shadow of foreclosure for decades, with no realistic end to the insecurity. For chargees, it has meant extraordinary latitude to delay enforcement, secure in the knowledge that the law gave them generations to act.

 

The Inequity

This disparity is not a mere technicality. It is systemic.

 

In the Peninsula, borrowers face a 12‑year horizon under the Limitation Act.

 

In Sabah, borrowers face a 60‑year horizon under the Limitation Ordinance.

 

The same default, but radically different consequences depending on geography.

 

Such inequity undermines the very idea of a unified legal system. It leaves borrowers in Sabah uniquely vulnerable, and it distorts the balance of power between chargees and borrowers across Malaysia.

This divide has persisted for years, tolerated as if regional inconsistency were acceptable in matters as fundamental as foreclosure. But the law does not stand still. Courts revisit their own decisions. Precedents shift. And when they do, the consequences ripple across the federation.

 

I document this case on behalf of a friend, to show the wider systemic issues at play. Yet I cannot help but think: I wish I were the person involved, because I would want to take this to court and determine once and for all whether such inequity can be justified.

 

In Part 6, I will turn to a recent Federal Court decision that has reshaped the landscape of foreclosure law in the Peninsula. For borrowers and chargees alike, it marks a turning point — one that redefines the horizon of limitation and tests whether inequity can finally be corrected.