What is conveyancing?
Conveyancing is the transfer of legal ownership of property from one person to another. It is an exciting and most expensive decision a person has to make in his/her life. A lot of time is invested in looking for the dream home. Some people will choose a property near the MRT station and town centre and prices of homes will be more costly. Others will choose a home near the choice schools so as to facilitate a smooth entry into the school of their choice for their children. Then there maybe others who prefer to live in a quiet neighbourhood far from the bustling town centre where properties will be much cheaper. Whatever their choice, home buyers must ensure that they have sufficient monies set aside for the purchase of their dream home in addition to the purchase price. This would comprise property tax, maintenance fees (for condos) and stamp duty. Please refer to the chart below.
Stamp Duty Payable (from 12 January 2013)
|Buyer's Citizenship Status||Stamp duty on 1st Property Purchase||Stamp duty on 2nd Property Purchase|
|Singapore Permanent Resident||5%||10%|
|Foreigners & entities buying any residential propert||15%||15%|
Stamp duty payable by Singapore citizen purchasing his first property at a purchase price of $3,000,000 is $84,600.00.
Stamp duty payable by Singapore Permanent Resident purchasing his first property at a purchase price of $3,000,000 is $234,600.
Stamp duty payable by foreigners purchasing his first property at a purchase price of $3,000,000 is $534,600.
There are many types of property in Singapore, namely, freehold (ie property belongs to you indefinitely), leasehold of 999 years and leasehold of 99 years.
Once you have decided on the location, price and type of property you wish to purchase, you must source for a good, responsible and reliable lawyer, i.e. one you can easily approach and contact in case of any doubts or queries. As most private properties are now above $1,000,000, it would be wise to pay a little above average in legal cost for a reliable and responsible lawyer or you may end up talking to the answering machine most of the time as the lawyer/his secretary is too swamped with numerous conveyancing files to answer your queries. As wisely stated by Warren Buffett: ‘’Price is what you pay. Value is what you get”.
Basic steps of conveyancing
They are as follows:
- The seller grants a contract (i.e. the option to purchase) to the buyer in exchange for 1% option monies and the buyer is given a time limit, usually two weeks (or maybe more) to consider if he will accept the contract and to pay the balance of the deposit (i.e. 5% or 10% of the purchase price). He has to accept it by within the time limit given by the seller or he stands to lose his 1% option monies.
- Buyer’s lawyer will conduct some preliminary searches whilst the buyer source around for bank loan during the 2 weeks. If he is not able to obtain a loan, it is would be advisable not to proceed with the purchase of the property as the buyer will be sued by the seller for not being able to complete the purchase of the property on the stipulated completion date.
- In addition to the bank loan, the buyer can use his CPF monies and cash towards the purchase price. The banker will assist him to calculate his CPF usage, cash usage and loan quantum.
- Once his loan is approved, the buyer can now instruct his lawyer to exercise the option to purchase by submitting the duly signed option to purchase form and pay the deposit to the seller’s lawyer’s conveyancing account. This will result in a binding contract. The buyer’s lawyer will lodge a caveat (i.e. a caution) on the property with the Singapore Land Authority (SLA) to inform anyone of your interest in the property.
- Buyer and seller’s lawyers will do all that is necessary to protect their respective clients’ interests and also prepare all necessary documents for their respective clients to sign.
- On completion date, all the duly executed legal documents and keys to property etc will be handed over in exchange for the balance amount of the purchase price.
- Thereafter, the buyer’s lawyer will proceed to register the change in ownership with the Singapore Land Authority.
- The buyer is now the proud owner of the property.
When does a purchasing homeowner start the conveyancing process?
The conveyancing process starts from the time the buyer gets the option to purchase or even before. It is advisable and preferable for the buyer’s lawyer to vet the option to purchase before paying the 1% option monies so that the terms of the contract can be negotiated and agreed before the exchange of 1% option monies and option to purchase.
However, the current practice is for the buyer to make an “offer to purchase” together with the 1% option monies to the seller to consider if he will grant an option to purchase to the potential buyer at the price indicated. If the seller is agreeable, he will then grant an option to purchase to the buyer.
What research should a potential homeowner and his/her lawyer do before purchasing a property?
Buyer’s lawyer will do his due diligence by conducting the relevant searches on the property and seller.
How long does conveyancing take?
It usually takes about 10 to 12 weeks to complete the sale and purchase of the property. However, it varies from case to case, subject to agreement between seller and buyer.
Do you need a lawyer to do conveyancing in Singapore?
Yes. The legal documents have to be signed in the presence of a lawyer and also duly certified by buyer and seller’s lawyers for it to be registered with the Singapore Land Authority.
How does a conveyancing lawyer help make the process easier?
He takes on the stress and burden of ensuring that everything goes smoothly from the option to purchase stage to the completion date.
How much does a conveyancing cost?
It varies from case to case and firm to firm. It also depends on the depth of client’s pocket and his/her choice of firms/lawyers.
In the case of a purchase, it can range from $2,500 to $5,000. Additional charges will be incurred if additional documents are to be drafted by the lawyers, for example, if the terms and conditions deviate from the standard agent’s printed option to purchase forms.
Have a question on conveyancing?
If you are looking for a conveyancing lawyer or have a legal question, you can request a quotation with Daisy. Alternatively, you can also get a Quick Consult with one of our practicing lawyers. With quick consult, you can check out in minutes and for a transparent, flat fee of S$49, the lawyers will call you back on the phone within 1-2 days to answer your questions and give you legal advice.
You may also be interested in these articles:
- Security Deposits: A Guide For Tenants & Landlords
- What Expats Need to Know About Property Rental in Singapore
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practicing lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Interstellar Group Pte. Ltd. accepts or assumes responsibility, or has any liability, to any person in respect of this article.