Land management and community involvement are two main elements in ensuring the absence of conflict between landowners and agencies. Disputes between owners and agencies will be the biggest obstacle in the land development effort. Therefore, this article aims to address the cause of landowners’ objections against land alienation using the institutional approach. To enable the researchers to understand the root causes of landowners' objections against the alienation of land using the Communal Grant method, the institutional approach has been adopted to identify the issue of the objection. Therefore, questionnaires for 100 landowners were distributed in two villages in Semporna district in Sabah. The purpose is to obtain their views on the cause leading to the dispute of land alienation using the Communal Grant method. The Likert scale was used to enable community rankings on issues that can be understood according to the level of seriousness of the population's views on the issue of using Communal Grants in native customary land alienation. The study results explain that there are four factors that drive objection of the Communal Grant land alienation which involves the formal factors. The findings explained that there are 4 formal provisions which lead to the community's objection against Communal Grants, namely the native customary lands (NCR) act, provision of Communal Grants, provisions in the land ownership and land allocation in Sabah Land Ordinance.Due to numerous objections among native customary peoples concerning the native customary land alienation using Communal Grants, the government has acted in substitution with a fair method of individual ownership for the native customary peoples. This situation explains that disputes in land ownership can be a threat to the country if it cannot be resolved in ways and methods acceptable to the native customary community. This study will benefit the government and NGO’s to alert and focusing on barriers in the context of local community land laws. Communal grants are intended to address land issues in Sabah.