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Buying a Resale Property in Open Market Issues.
- What is conveyancing?
Briefly, conveyancing refers to the selling and buying of property process.
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- What is a "Title to a property"?
Title to a property is broadly divided into two categories:-
- Freehold
- This allows the owner to own the property forever
until he chooses to transfer or assign it away.
- Leasehold - This allows the owner to own a property
for a fixed period of time, which is also known as "lease".
A lease can be for 99 years, 999 years or even 9999 years.
At the end of the lease, the title reverts to the original owner.
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- What is the meaning of a "Joint Ownership"?
There are 2 types of joint ownership:-
- Joint Tenancy - A Joint-Tenancy means all co-owners have an equal share or interest in the property and regardless of how much each co-owner had contributed to the purchase price, the parties are presumed to own the property in equal shares.
- Tenancy-In-Common - It means that each co-owner holds a separate and definite share in the property.
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- What is the significance of owning a property under Joint-Tenancy?
In a Joint Tenancy, there is a "Right of Survivorship". Upon the death of any of the co-owners, his or her interest will be automatically passed to the remaining surviving co-owner(s). A joint tenant is unable to unilaterally dispose of his or her "interest" in the property whether by way of a will or any other form of disposition.
E.g. Both husband and wife own the property as joint tenants. When the husband dies, the property automatically passes to the wife.
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- What is the significance of owning a property under Tenancy-In-Common?
There is no "Right of Survivorship". The deceased co-owner’s interest in the property does not pass automatically to the remaining surviving co-owner(s). The co-owner's interest can be distributed in accordance with his will (if any) or the provisions of the Intestate Succession Act.
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Buying a Property Direct from Developer Issues
- What is the "Option Money" for properties under construction?
The Option Money also called the booking fee is usually 5 to 10% of the purchase price.
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- What are the procedures for purchasing a property under development?
a)The procedure is regulated if the developer is licensed under the Housing Developers’ (Control and Licensing) Act.
(b) Option to Purchase and Sale and Purchase Agreement.
To obtain the Option to Purchase you will pay a booking fee, which is 5 to 10% of the purchase price. Within two (2) weeks from the date of the Option to Purchase, you or your lawyer will receive the Sale and Purchase Agreement (in triplicate) from the Developer on terms and conditions approved by the Controller of Housing. You must then sign the Agreement and pay another 10% of the property within three (3) weeks of receipt for the Agreement. You may ask the Developer for an extension of time to pay this 10%. If purchaser decides not to sign the sale and purchase agreement and proceed with the purchase, 25% of the Option Money so paid would be forfeited by the developer. The balance 20% of the purchase price (less the Option Money) would be payable when the Sale and Purchase Agreement is signed or 8 weeks from the date of the option, depending on the terms stated in the option.
(c) Progress Payments
The remaining 80% of the purchase price is payable against issuance of the architect’s certificates as each stage of the construction progress. Liaise with your lawyer, your Banker and CPF Board to ensure that you obtain sufficient funds to make payment as and when due otherwise interest will be payable.
(d) Defect Liability Period>
The developer is obliged to make good the defects in the property for the period of one (1) year commencing from the date the developer issues you the Notice to take possession of the property. If you discover any defects during this period, you should notify the developer in accordance with your rights provided for in the Sale and Purchase Agreement.
(e) Errors and misdescription
If the area of the property is less than the area stated in the Sale and Purchase Agreement, the Purchaser is entitled to a corresponding adjustment of the purchase price for the difference in excess of three (3) per cent of the specified area.
(f) Legal Completion
Legal title will be issued to you only when all progress payments have been made. the developer under the Sale and Purchase Agreement has to deliver to you the title to your individual property within 3 years from the date of the TOP.
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Buying a Resale HDB flat Issues.
- Can private property owners buy HDB flats direct from HDB?
No, a private property owner cannot buy a HDB flat direct from HDB. If he disposes of his private property, he has to wait 30 months before he is eligible to buy a flat direct from HDB. However, HDB may consider granting exemption to exceptional cases based on the merits of each case. Private property owners with full share in the property are not eligible for exemption.
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- How does a private property owners apply for exemption from the non-ownership of property rule?
If the private property owner wants to purchase a HDB flat direct from HDB and wishes to apply for exemption, he has to take the following steps:
(a) Obtain a property questionnaire and application form from Reception Counter Sales Unit, HDB Centre or any HDB Branch Office.
(b) Complete the questionnaire and application form; and submit them personally at the counter of Sales Unit together with documents as follows:-
(i) Property Acquired Through Inheritance
• Will
• Grant of Probate
• Estate Duty Schedule, or
• Petition for Letters of Administration
• Grant of Letters of Administration
• Estate Duty Schedule
(ii) Property Acquired by Way of Gift
• Deed of Gift
• Transfer Instrument or Notice of Transfer
(iii) Property Acquired by Purchase, Shophouse or Residential Land
• Title Deeds
(iv) Property Outside Singapore
• Title Deeds
• Valuation Report from a Licensed Valuer in that country.
The applicant has to wait up to 2 months to know the outcome of his request and eligibility for exemption.
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- Can private property owners buy a HDB resale flat from the open market?
Yes, private property owners can buy a resale flat from the open market. However, they must reside in the HDB resale flat.
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- I got the keys to my HDB flat 5 years ago but I was overseas for 1 year in between. Am I eligible to purchase a private property now?
No, HDB excludes any period during which you were not in physical occupation of the property when computing the period of occupation.
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- I have one month to go before the 5-year occupation period for my HDB flat expires. Is it alright if I pay the Booking Fee now as long as I sign the Sale and Purchase Agreement after the one month has passed?
NO. If you are an owner of an HDB flat bought either direct from the HDB, or from the open market with the help of a housing grant, you are NOT allowed to have any interest in private property before the 5-year occupation period expires. This includes paying the Booking Fee in exchange for the Option.
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- What are the schemes available to a Purchaser of a HDB flat?
HDB SCHEMES:
• Public Applicant Scheme
• Single Singapore Citizen Scheme
• Conversion Scheme
• Non-Citizen Family Scheme
• Orphans Scheme
• Fiancé/Fiancée Scheme
• Citizen/SPR Siblings Scheme
• Joint Singles Scheme
• Non-citizens Scheme
• CPF Housing Grant Scheme
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- What criteria do applicants have to meet to buy a flat direct from HDB?
The application must satisfy all the following conditions:
(a) CITIZENSHIP
• The applicant must be a Singapore Citizen.
• The co-applicant/proposed occupiers listed in the application must comprise at least one Singapore Citizen or Singapore Permanent Resident.
(b) AGE - Applicant must be at least 21 years of age.
(c) FAMILY NUCLEUS
Applicant and his co-applicant/proposed occupiers must form a family nucleus. A family nucleus can comprise the following:-
• Applicant and his spouse and his children (if any).
• Applicant (single) and his parents and siblings (if any).
• Applicant (widowed) and children.
• Applicant (single) and his fiancée.
• Applicant (single) and his siblings, if parents are deceased.
Each applicant is eligible to purchase one flat only for use as a private dwelling with his family who are the authorised occupiers.
(d) ETHNIC INTEGRATION
The Applicant can buy a HDB resale flat in any town/estate where the approved proportion for his ethnic group in the neighourhood/block has not been exceeded. The Purchasers and the sellers of the same ethnic group are not affected by the Ethnic Integration Policy.
(e) INCOME CEILING
• The total gross income of all persons listed in the application must not exceed $8,000.00 per month.
(f) OWNERSHIP OF PRIVATE RESIDENTIAL PROPERTY
No person shall be entitled to purchase a HDB flat if he, his spouse or any other person listed in the application:
• Is the owner of any other flat, house, building or land* or has an estate or interest therein; or
• Has at any time within 30 months before the date of making an application to purchase an HDB flat,
or between the date of the application and the date of completion of the new flat, acquired or disposed of
any flat, house, building or land, or any interest therein.
* includes but not limited to HUDC flats, properties acquired by way of gift/ inheritance, private properties, properties outside Singapore and properties owned/ acquired/ disposed of through nominees.
The HDB may, however, at its sole discretion and depending on the facts, circumstances and merits of each case, exempt persons from this condition upon his application for exemption. An application for exemption is subject to payment of a processing fee of $154.50/ $51-50 (inclusive of GST) as determined by the HDB. The processing fee is non-refundable.
(g) 5-YEAR RESTRICTION If any of the applicants, their spouses or essential occupiers listed in the application is an existing owner or ex-owner of a flat purchased direct from HDB, or under the Sale of Flats to Sitting Tenants Scheme or CPF Housing Grant Scheme, the applicant may apply to purchase a HDB flat only if a period of 5 years has lapsed from the date of purchase of the said flat to the date of registration of the new application.
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- Can an undischarged bankrupt apply to purchase a HDB flat?
An undischarged bankrupt must obtain the prior written consent of the Official Assignee before he can purchase an HDB flat.
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- Can persons listed in one application be included in another?
All persons listed in the application must not also be listed in another application to buy or rent HDB flat.
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- Can any person be barred to apply to purchase a HDB flat?
The applicant and his co-applicant/proposed occupiers must not have infringed any HDB/Government rules, regulations or policies. Any person whose name has been included in any debarment list will not be eligible to purchase or be included as an authorised occupier in an application to purchase an HDB flat.
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Bank Mortgage Loan Issues
- How do i finance my purchase of a property?
Before you make any decision to buy a property, you should ensure that you have sufficient funds. The purchase price can be paid from the approved CPF withdrawal, bank loan or cash. In addition to the purchase price, you should also set aside, either from your CPF (if it is approved) or cash, a sum equivalent to 4% of the purchase price as anticipated stamp duty and legal fees.
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- How do i apply for a bank loan?
You should first decide on your requirements before approaching any banks. Do compare different financing packages and do not sign the Letter of Offer before you are sure of all the terms and conditions stated therein as there may be a "cancellation fee" if you change your mind subsequently.
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- What is the quantum of a bank loan?
The Monetary Authority of Singapore has set a guideline allowing banks or finance institutions to finance up to a maximum of 90% of the purchase price or valuation of the property, whichever is lower. A bank finance institution may restrict your usage of your CPF money to pay the monthly instalment repayment of your housing loan to a maximum of 40% of your combined household income.
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