Purchasing a House or Flat
When buying a house (House) or a flat (Flat), you should seek advice from your lawyer on the following:
The title to the House may be:
• freehold i.e. an absolute title;
• an estate in perpetuity i.e. an estate forever subject to the payment of a quit rent;
• Leasehold i.e. for example, a lease for 99 years or 999 years.
The title to the Flat may be:
• a common law lease (under the old Conveyancing system) for 99 years or 999 years with no interest in the land or with a proportionate fractional share in the land subject to the lease;
• a strata title where the proprietor will have a title to the flat with a proportionate share in the land (freehold or leasehold) on which the flats had been erected.
Area of house or flat
You are advised to check with your lawyer the land area of the House or floor area of the Flat (as the case may be). You may also want to consult a qualified surveyor if you suspect any discrepancy in the boundary tine or encroachment or if you require the actual area of the House or Flat.
Before you decide to purchase a House or Flat you should ensure that you have sufficient funds available to complete the purchase. If you are financing your purchase with your CPF funds and/or a Loan you should contact the CPF Board and the Lender bank/finance company in advance to sign all relevant application forms and furnish all relevant information and documents to ensure that the CPF funds and/or Loan would be approved and the funds will be available. In addition to the purchase price you will have to make provision for the stamp fees and Lawyer's fees. You can request your Lawyer to give you an estimate of such stamp fees, costs and disbursements that will be incurred in the purchase, CPF Charge and Mortgage. Stamp fees on the purchase (approximately 3% of the purchase price) will have to be paid in advance under the recent amendments to the Law.
Residential Property Act
Only Singapore citizens and approved persons can purchase Landed 'residential property' as defined in the Residential Properties Act. Foreigners are eligible to purchase units in condominiums or apartments which are not landed dwelling houses. Foreigners who wish to purchase landed property in Singapore must first seek the approval of the Controller of Residential Property.
Your Lawyer's Role in a Property Purchase
When you purchase property, your lawyer's responsibilities include the following:
• Review the terms and conditions of the contract to ensure that your interest is protected and explain these terms and conditions to you.
• Conduct searches on the title of the property to ensure that you will be given title to the property that is identified in the contract and which you have negotiated to buy.
• Send routine queries to various government departments to ensure that are no adverse regulatory notices or government schemes that will affect the property you wish to purchase.
• Pending completion of your purchase, your lawyer will lodge a caveat against the title to the property - this serves to notify the public (and any third party interested in the property) that you have a valid interest or claim to the title of the property arising from the contract for the sale and purchase.
• If you are using a bank loan to finance this purchase, your lawyer will also liaise with the Bank's lawyer who is responsible for preparing the mortgage to secure the loan. In some cases, your Bank will also appoint the same lawyer to represent its interest.
• Your lawyer will be responsible for liaising with the Bank and the CPF Board (or their lawyers) to ensure that your Housing Loan and your CPF Funds are in place and ready for drawdown to order to complete the purchase within the agreed completion period.
• Complete the Sale - this is a technical term referring the payment of the contracted sale price (from you as the Buyer) in exchange for the signed conveyance of title called the "Instrument of Transfer" which effectively transfers the ownership of the property from the current owners to yourself (as the new owner).
Procedures for Purchase
Generally, legal contracts for the sale and purchase of property take two forms:
• An Option to Purchase; or
• A Sale & Purchase Agreement.
An Option or Agreement/Contract for the Purchase of a House or Flat can be formed in many ways e.g.
• by correspondence;
• by the exercise of an Option;
• by the parties signing an Agreement/Contract. (which are often prepared by brokers) and Agreements/Contracts are documents that create legal rights and obligations, dealing particularly with:
Whatever form the legal contract takes, these terms must be present in order for the contract (for the sale of property) to be legally enforceable:
• Identification of the property offered for sale
• Completion Date
The contract must be in writing and signed by the owner or his authorised representative.
You are advised to consult your lawyer immediately after paying the booking fee and obtaining the prescribed Option to Purchase the property. The lawyer will then investigate the title and advise you on the terms of the prescribed Agreement before you accept the same by exercising the Option to Purchase.
The Law Society's Conditions of Sale
Most contracts for the sale and purchase of property in Singapore will incorporate standard terms called the Singapore Law Society's Conditions of Sale 1999. If the terms of the sale and purchase agreement or of the option are silent on certain points, then the provisions of these conditions will apply. These conditions may also be modified by express terms in the contract - for example, it is common for the sale to be subject to the property being unaffected by road widening schemes.
Purchase from an Unlicensed Housing Developer
You are advised to consult your lawyer before paying the booking fee as unlicensed developers are not required to comply with the Housing Developers (Licensing and Control) Act or the Rules made thereunder. The unlicensed developer is free to mortgage the land and there are no statutory safeguards to ensure that the progress payments from the purchaser would be utilised to pay off the mortgage loan. In the event the unlicensed developer defaults in his mortgage payments or if he gets into financial difficulties he may not be able to complete the development. Further, you may have difficulty obtaining approval to use your CPF funds to buy a property or in obtaining a mortgage from a bank or finance company to finance your purchase of the House or Flat in view of the risks involved.
The lawyer's fees do not include stamp fees or disbursements properly incurred by the lawyer.
Selling Your House or Flat
You can sell your House or Flat by:
• granting an Option to the Purchaser; or
• entering into an Agreement/Contract
Options (which are often prepared by brokers) and Agreements/Contracts are documents that create legal rights and obligations, dealing particularly with:
• discharge of encumbrances;
• vacant possession;
• the date of completion;
• liability for property tax, maintenance fees or sinking fund;
• other special terms.
You should consult your Lawyer before accepting or signing the Option or Agreement/Contract. This is to ensure that your interests are protected.
The deposit on exercise of the Option or signing of the Agreement/Contract will normally be held by the Vendor's lawyers as stakeholders. This is because the sale will normally be subject to:
• the discharge of encumbrances like mortgage and CPF charge;
• the title being in order;
• satisfactory replies to legal requisitions to the various Government departments.
The deposit is therefore held by the Vendor's lawyers as stakeholders to assure the purchaser that the deposit will be kept safely until completion of the purchase.
Where you are buying property which is under construction, the Singapore Academy of Law will hold a portion of the purchase monies as stakeholders until the expiry of the defects liability period provided in the Agreement/Contract.
Goods and Services Tax (‘GST’)
GST is not payable on residential property at present. However, as some residential properties (e.g. shophouse with a flat above) may involve a commercial component you should seek advice from your lawyer on this.
Your Lawyer’s Role in a Property Sale
When you sell Property, your lawyer's primary responsibility is to ensure that on completion, you are ready to deliver the title to the property free from your mortgage and CPF charge. This requires your lawyer to liaise with your bank's and CPF Board's lawyer for payment, out of the sale proceeds, the outstanding loan amount and refund of your CPF funds sufficient to discharge the bank's mortgage and CPF charge.
You are advised to contact the HDB directly in respect of the sale and/or purchase of HDB flats. The HDB has devised their own form of Agreement/Contract for the purchase of HDB flats.
(The Law Society of Singapore)