TG13PD PROPERTY DEVELOPMENT

Transcription

1 TG13PD PROPERTY DEVELOPMENT Lecturer : Randy Chan Lesson 7 SALES AND LEASES OF PRIVATE AND HDB RESIDENTIAL PROPERTIES Trent Global College of Technology and Management Sale of Private Properties Sale of Private Properties Contract for Sale of Land/Property 1. Does not confer title to purchaser. 2. It is merely a contract that binds both parties (a contractual relationship) to complete at a mutually agreed date. 3. Transfer of title is done on the agreed date where sellers will transfers his title by signing the transfer document and the buyer will lodge it with SLR. 4. OTP can be drafted by a lawyer, supplied by salesperson or buyer or sellers can draft their own. 1

2 Contract for Sale of Land/Property If the buyer accepts the terms of the OTP, he will accept the OTP by exercising (signing on the Acceptance Copy) it and paying the remainder of the deposit (4%). His lawyer will then do a background search of the owner and the property. Replies to his searches must be satisfactory. Four stages of the Sale Option to Purchase (OTP) Sale and Purchase Agreement Legal Completion where the title is finally transferred to the new owner Vacant possession, i.e. the taking over of the property 2

3 OPTION TO PURCHASE right to buy Right to demand for seller s title ( must be in exchange for consideration) and legal completion. If transferred, transferee enjoys the same rights. There must be some form of exchange (monetary consideration) for that right to exist. Sale by Private Treaty A binding contract is formed when the buyer exercises his rights to buy. He has to sign on the Acceptance Copy is exercise that right and further pay the balance of the deposit. Sale by Private Treaty means that it is between buyer and seller facilitated by a privately written OTP which later form a S&P agreement. Terms can be varied and the OTP can be prepared by lawyers, salesperson, buyers or sellers. 3

4 Sale by Private Treaty For HDB properties, under the Housing Development Act, you will have to use a standard OTP issued by them. ( all come with serial numbers) They are not amendable. For sales of properties under construction, you must use a standard type of OTP and S&P agreement which is not amendable. Difference are : I. Principle of Caveat Emptor. (What you see is what you get). This may not apply to properties under construction as the buyer does not physically view the actual unit but the showflat. II. It is a requirement to make good of any illegal renovation done by the seller of the HDB flat, which may not constitute to what you see is what you get Important Rules of the OTP Right granted to the buyer to buy Sellers cannot grant another OTP to another party even if the second party offers a higher price. If and/or Nominees has been added to the name of the buyer, sellers will have to accept whoever exercises the OTP. It does not compel the buyer to buy. The buyer can walk away from the sale if he does not accepts the OTP. If he does that, he is liable to lose the 1% which he has given to the seller. Sellers will be binded and not allowed to rescind the OTP unless the buyer does not exercise the OTP by the agreed date. Unless if there is a provision ( statutory or otherwise). The OTP will eventually form a binding contract. 4

5 Important Rules of the OTP Seller has the right to forfeit the Option Money Seller has the right to forfeit Option Fee (1%) if buyer don t exercise the OTP in the manner stipulated in the OTP.( Signing on Acceptance Copy and paying balance of 4%). Thereafter, the OTP shall be null and void. Information That Must be Incorporated in the OTP All sellers names, NRIC Nos and address All buyers names, NRIC Nos. and address. Property address and legal description. Housing type (developer s project), land or interior area, sold with vacant or tenancy. If the property is sold with personal items, a inventory list should be included. Date of completion (12 weeks from exercise) Stake holders clause, to held in CVY Account or in the account of Singapore Law Academy. 5

6 Information That Must be Incorporated in the OTP The Sale and Purchase is subjected to satisfactory replies from the eight government departments:- 1. The Sewerage Department, Ministry of Environment 2. The Comptroller of Property Tax 3. The Environmental Environment Health Division, Ministry of 4. Land Transport Authorities for Street works 5. The Director of PWD, Building and Construction Authority 6. Land Transport Authority- Mass Rapid Transport System 7. Pollution Control Department- Drainage Interpretation Plan 8. Road Interpretation Plan-widening of roads SALE AND PURCHASE AGREEMENT After the buyer accepts the terms of the OTP, it is a binding contract. Buying from developer is different as the OTP is subject to contract and does not lead to the forming of a contract. A separate S&P have to by entered as required by COH. 6

7 LEGAL COMPLETION The final stage is known as completion When actual conveyance (transfer) takes place. Purchaser completes the sale with the payment of the balance 95% in exchange for the Instrument of Transfer and keys to the property. Date is fixed on the OTP but could take place earlier provided both parties agrees. This is usually done at sellers lawyer s office. All balance have to be in cashier s order. (95%) After completion, Transfer is lodged with SLR and buyer will be the officially owner. SOLICITORS ACTING FOR PURCHASER 7

8 SOLICITORS ACTING FOR VENDORS Receipt of instructions from client or agent Prepare option or sale contact for seller s approval Arrange title search Receive the deposit as stakeholders Redeem the mortgage / CPF charge Get property tax and maintenance bills Inform the management corporation of sale Answer requisitions on title Check the transfer Send completion account Arrange for completion account Attend to completion To buyer s lawyer In exchange for payment (cashier s order) Sign Transfer, Certificate of Title, Total Discharge of Mortgage, receipts for property tax and maintenance fees. Send copy of signed Statutory Notice of Transfer to Property Tax Department Inform change of ownership to Management Corporation Keys to property To seller s mortgage cashier s order for redemption money To Property Tax Department send statutory Notice of Transfer To Management Corporation notify change of ownership Deliver the title deeds Report completion LEASE OF PRIVATE PROPERTIES Usually, when a prospective tenant is interested in renting a property, he will express his interest to rent via a Letter of Intent to the Landlord. In the LOI, rental price, term, commencement, diplomatic clause, security deposit, goddfaith deposit and other terms or request the tenant may put forth to the landlord. It is not a finalized contract. The landlord will have to accept unconditionally. If accepted, a formal contract call the tenancy agreement will be entered. In leases of commercial spaces, a Letter of Offer is often used instead of a LOI. The Letter of Offer is a binding agreement when the tenant accepts its terms. 8

9 Immigration Act Requirements (Only for residential properties lease) Home owners are required to check on the status of their tenants to ensure that they are in Singapore legally. There are three mandatory checks required:- a) Check his ORIGINAL immigration pass and/or work pass. b) Cross-check the particulars of his pass against the particulars on his ORIGINAL passport c) Verify the validity of his pass either by checking with the Immigration & checkpoints Authority (for immigration pass) OR the Ministry of Manpower/Employer (for work pass) Consequences of Harbouring Overstayers and/or Illegal Immigrants Under the Immigration Act, the homeowner is liable to be charged for harbouring overstayers and/or illegal immigrants in his house. a) He will be considered reckless if he fails to carry out all three or only one of the checks or knowingly harbouring overstayers and/or illegal immigrants, he may be sentenced to imprisonment of not less than six months and not more than two years AND a fine not exceeding S$6,000. 9

10 Consequences of Harbouring Overstayers and/or Illegal Immigrants If a homeowner is found guilty of negligently (i.e. carrying out only two of the three due diligence checks) harbouring overstayers and/or illegal immigrants, he may be liable to a fine not exceeding S$6,000 OR to imprisonment for a term not exceeding 12 months OR to both. TENANCY AGREEMENT The tenant is to pay legal Fees (if any)and Stamp Duty. Depending on the term of lease, tenant shall pay accordingly and also the advance rent for the month. In commercial lease, sometimes a 3 month security deposit is required and a term of 3 years for the lease. 10

11 TENANCY AGREEMENT Diplomatic Clause- this clause allows the tenant (usually a company) to terminate the tenancy agreement if the occupant is sent back or work contract is terminated. There must be a t least 2 months notice and security deposit will have to be refunded back to the tenant. Repairs and Maintenance- tenant is responsible for minor repairs in the property limited to $150/=. The landlord shall be the upper portion. Condition is that the damage is due to fair wear and tear. Tenants are also required to take up an air-con servicing contract during the term. In some cases that the property is a landed house that comes with a swimming pool and garden, tenant is required to maintain and service the pool and garden TENANCY AGREEMENT Maintenance Fees, Property Tax and Fire Insurance - this shall be the landlord s responsibility. Total Gross Renti. Rent of premise; ii.rent for fittings and furnitures; and iii.maintenance Fees. 11

12 Introduction Set up on 1 Feb 1960 SALE OF HDB FLATS Under the British was called Singapore Improvement Trust. At that time, only 9% of the population stays in public housing. To provide housing for Singapore Citizens. Now, over 82% of population owns HDB flats. Basic Requirements to direct purchase from HDB. The requirements are as follows:- The applicant must be a Singapore Citizen and comprise of another Singapore Citizen or Singapore Permanent Resident. For applicants, must be above the age of 21 years Must form a proper family nucleus Gross household income must not exceed $10,000. Must not owned or disposed of a private property or have an interest at any time within 30 months. There are only 3 schemes available Public scheme, fiancé/fiancée scheme and orphan scheme. 12

13 Basic Requirements to purchase a resale HDB Singapore Citizens, Singapore Permanent Residents 21 years of age. Must form a family nucleus except when SC s are buying under Single Singapore Citizen Scheme, Joint Singles Scheme and Orphan Scheme (a) Types of Eligibility Schemes 1. Public Scheme 2. Fiance/Fiancee Scheme 3. Single Singapore Citizen Scheme (35 years or 21 years for widowers and orphans) 4. Joint Singles Scheme 5. Non-Citizen Spouse Scheme 6. Non-Citizen Family Scheme 7. Orphans Scheme 8. Conversion Scheme 13

14 Types of Schemes Types of Schemes 14

15 Types of Schemes No income ceiling, Ethnic Integration Policy and SPR Quota applies, must dispose interest of private property within 6 months from completion of purchase of resale flat. Types of Housing Grants Available Family Grant (S$30,000) Higher-tier Family Grant ($40,000) Additional CPF Housing Grant (AHG) (Depends) Singles Citizens Grant (S$15,000) Higher-tier Singles Grant (S$20,000) Top-up Grant to Family Grant Half-Housing Grant Special Housing Grant (SHG)for new 2 and 3rm fr HDB 15

16 Types of mortgage loans for HDB flats HDB Concessionary Loan from HDB Each and every Singapore Citizen Household ( SC+SC or SC + SPR) is only entitled to 2 concessionary loans from HDB. To qualify for the 1st concessionary loan, applicants will have to fulfill the following criteria:- (a) have at least one buyer who is a Singapore citizen; (b) have a gross monthly household income not exceeding $10,000/-; (c) have not previously taken two or more HDB concessionary interest rate loans; (d) do not own any private residential property^ in Singapore or overseas; (e) have not disposed off any private residential property^ within 30 months before the date of application for HDB Loan Eligibility (HLE) and have never taken any HDB concessionary interest rate loan; (f) do not own more than one market / hawker stalls or commercial / industrial property in Singapore or overseas; (g) own one market / hawker stall or commercial / industrial property and operate the business yourself; (h) are buying a 5 room or smaller resale flat under the Single Singapore Citizen (SSC) Scheme with a gross monthly income not exceeding $5,

17 For the 2nd Concessionary Loan The qualifying criteria remains the same as the above but the applicant can keep the greater of $25,000 or half of the cash proceeds (including the cash deposit received), HDB will take into account the remaining part of cash. Maximum Loan Quantum Maximum repayment period is 30 years or 65years of age whichever is shorter. Interest rate is plug at 0.1% above CPF s Ordinary account interest. Reviewed every quarterly. Capped at 35% of gross monthly income Loan ceiling is 90% of valuation amount or sales price whichever is lower. Gross Monthly Income Credit assessment is based on average age of borrowers 17

18 Mortgage loan from a commercial bank or finance institution. If buyers are not eligible for HDB loan ( 2 times), shall have to apply for bank loan to purchase HDB flat For those taking bank loans, a Letter of Offer must be obtained from the banks / financial institutions before you exercise the Option to Purchase for the HDB flat. 18

19 LEASE OF HDB FLATS HDB's Approval Needed To Rent Out the Whole Flat Only Singapore Citizens can rent out Only after written approval from HDB Only when MOP is met. In TA, may have to include that the lease is subject to HDB approval for subletting. Can also lease out before MOP provided approved by HDB 19

20 Maximum numbers of subtenants RENTAL OF ROOMS IN A HDB FLAT No consent is needed but landlord must inform HDB on the details of the room tenants. This is to ensure that the tenants are legally allowed to stay and work in Singapore and approved by HDB Can lease room out before MOP. Construction workers who holds Work Passes from countries like China, Bangladesh, Myanmar or Thailand, they will have to be housed in approved dormitories. Only exception are Malaysian construction workers, which under the present regulations, are allowed to rent and stay in HDB flats. 20

21 Number of occupants allowed 21