Singapore has one of the highest home ownership rates globally (about 90% of the population). As such, most Singaporeans will be involved in at least one property transaction in their lifetime. Purchasing or selling a property for the first time can be a daunting experience, especially when one is confronted by the mountain of legal documents involved in the transaction.
In this article, we explain some common terms found in contracts for the sale and purchase of (1) resale HDB flats and (2) condominium/apartment units under construction from developers with a view to assisting sellers and buyers to understand their legal obligations when selling or purchasing properties.
Resale of HDB Flats
Every agreement for the sale and purchase of HDB flats must be in the standard HDB-prescribed Option to Purchase format. This is provided for under the Housing and Development (Agreements for Sale and Purchase) Rules. No amendment can be made to the standard Option to Purchase format without the authorisation of HDB.
The common terms found in the standard Option to Purchase are set out in the table below:-
| Clause | Explanation |
| Details
(Clause 1) |
This clause sets out the pertinent details of the transaction including the address of the flat, the purchase price, the option fee, the option expiry date and time and the particulars of the seller and the buyer.The seller and the buyer should ensure that all details are accurately reflected. |
| Agreement for Sale and Purchase (Clause 10) | This clause states that the seller is selling to the buyer the remaining leasehold interest in the flat. The buyer should check the number of years remaining on the lease before purchasing the flat. |
| Liability for Upgrading Works (Clause 11) | This clause provides that the costs of any upgrading works are to be borne by the party who is the owner of the flat at the time of HDB’s demand. The buyer of the flat will only become the owner after the completion of the sale and purchase of the flat. |
| Completion Date
(Clause 13) |
This is the date on which the sale and purchase of the flat will be completed. On the Completion Date, the buyer will pay the balance sale price due to the seller in exchange for the keys and title deed to the flat together with an instrument of Transfer signed by the seller. |
| Seller’s Obligations (Clause 14) |
This clause sets out the seller’s various obligations relating to the sale of the flat. Notably, the seller has to cooperate and do such things as may be required by HDB or the buyer’s solicitors to obtain HDB’s approval to the sale of the flat. Further, the seller must allow HDB or its officers to inspect the flat for unauthorized works and must carry out the following works at his/her costs before the Completion Date:-
(a) remove all unauthorised works carried out to the flat; (b) repair any defects in the flat due to the removal of the unauthorised works; and (c) remove all waste from the flat. |
| Buyer’s Obligations (Clause 15) |
This clause sets out the buyer’s obligations relating to the purchase of the flat. Generally, the buyer has to cooperate and do such things as may be required by HDB or the seller’s solicitors to obtain HDB’s approval to the sale of the flat. |
| Non-approval of Sale and Purchase (Clause 16) |
This clause sets out the consequences if HDB’s approval for the sale of the flat is not obtained or is cancelled before the Completion Date.If the non-approval is not due to the fault of the seller or the buyer, the transaction will be cancelled and all monies paid by the buyer to the seller will be refunded to the buyer. Both parties will have no further claim against the other.
If the non-approval is due to the seller’s or buyer’s fault, the party who is not at fault will be entitled to sue the other for damages (i.e. money for losses suffered), specific performance (i.e. obtaining a court order for the other party to perform the contract) or any other remedy. |
Condominium/Apartment Units Under Construction Purchased from Developers
Every agreement for the sale and purchase of condominium/apartment units under construction from developers must be in the standard prescribed Sale and Purchase Agreement format. This is provided for under the Housing Developers Rules. No amendment can be made to the standard Sale and Purchase Agreement format without the prior approval of the Controller of Housing.
The common terms found in the standard Sale and Purchase Agreement are set out in the table below:-
| Clause | Explanation |
| Agreement for Sale and Purchase (Clause 2) |
This clause specifies the tenure of the property (whether it is freehold or leasehold). Where the tenure is stated to be leasehold (typically for 99 years or 999 years), the buyer should take note of the commencement date of the lease to ascertain the number of years remaining on the lease |
| Payment Schedule (Clause 5) |
This clause sets out when the buyer has to make payment to the developer. Save for the deposit of 20% of the purchase price, payments are made by way of instalments according to the stage of completion of the construction and must be paid within 14 days of the buyer’s receipt of the notice from the developer.
In the event of any late payment, late payment interest will be payable to the developer. |
| Repudiation by Purchaser (Clause 7) |
Where any instalment and late payment interest remain unpaid for more than 14 days after the due date, the developer has the right to treat the agreement as having been repudiated by the buyer and to re-claim possession of the property, re-sell the property, forfeit 20% of the purchase price and recover amounts due to them under the agreement from the buyer. |
| Title Surveys
(Clause 11) |
The developer will arrange for title surveys to be conducted and plans to be prepared for the property and the fees for such title surveys and plans shall be shared equally between the developer and the buyer. |
| Delivery of Possession (Clause 12) |
This clause specifies the latest date on which the developer should deliver vacant possession of the property to the buyer. Late delivery would result in the seller having to pay liquidated damages to the buyer calculated on a daily basis at the rate of 10% per annum on the total sum of all the instalments paid by the buyer towards the purchase price. |
| Maintenance Charges
(Clause 13) |
The buyer will be liable for its share of the maintenance charges commencing from (1) the date that vacant possession of the property is delivered to the buyer or (2) the 15th day from the date of the buyer’s receipt of the Notice to Take Possession from the developers, whichever is earlier.
The buyer will have to pay the maintenance fees for the first 6 months in one lump sum to the developer within 14 days of receiving the developer’s Notice to take Possession. Subsequent maintenance fees are paid on a quarterly basis. |
| Certificate of Statutory Completion (CSC)
(Clause 15) |
Before the CSC for the property is issued, the buyer should obtain the written consent of the developer before carrying out any alteration or addition to the property. If CSC is unable to be obtained due to any unauthorised alteration or addition, the developer may enter the property to carry out the necessary addition or alteration as required by the relevant authority and recover the costs of such addition or alteration from the buyer.
The buyer should also note that prior to the issuance of the CSC, the developer has the right to make such addition and alteration to the property as may be required by the relevant authority and the buyer will have to allow the developer access to the property for that purpose. |
| Completion
(Clause 16) |
The developer must serve a Notice to Complete (i.e. a notice requiring the buyer to pay the balance purchase price to the developer in exchange for the title deed to property and instrument of Transfer signed by the developer) on the buyer by the stipulated date, failing which the developer will have to pay liquidated damages to the buyer calculated on a daily basis at the rate of 10% per annum on the total sum of all the instalments paid by the buyer towards the purchase price. |
| Defects Liability Period
(Clause 17) |
The developer is liable for any defect in the property that becomes apparent within 12 months from (1) the date that vacant possession is delivered to the buyer or (2) the 15th day from the date of the buyer’s receipt of the Notice to Take Possession from the developer, whichever is earlier
If the buyer discovers any defect, the buyer should notify the developer in writing. The developer will have to rectify the defect within 1 month, failing which, the buyer should obtain a quotation from his/her own contractor, provide a copy of the quotation to the developer and give a written notice to the developer to carry out the rectification works within 14 days. If the developer still fails to carry out the rectification works within the 14 days, the buyer may engage his/her own contractors to carry out the works and recover the costs of the works from the developer. |
| Errors, Omissions and Misdescription
(Clause 18) |
If, on completion of the title survey (see Clause 11 above), the actual area of the property is found to be less than the area stated in the agreement by more than 3%, the buyer will be entitled to an adjustment in the purchase price. |
| Taxes
(Clause 19) |
The buyer is liable for the property tax and other outgoings relating to the property from the date immediately after the date of the buyer’s receipt of the Notice to Take Possession from the developer. |
| The First Schedule – Specifications of the Building | The buyer should take note of the specifications listed as these are what the developer is contractually obliged to provide. |
| The Second Schedule – Amendments to the Sale and Purchase Agreement | This schedule sets out the amendments to the prescribed Sale and Purchase Agreement format and the buyer should take note of such amendments. |
| The Third Schedule – Restrictions on Use and Enjoyment | This schedule sets out the various restrictions on the buyer’s use and enjoyment of the property. The buyer is required to abide by these restrictions. |
| The Fourth Schedule – Transaction Particulars | This schedule sets out the pertinent details of the transaction including the property, the purchase price and the particulars of the buyer. The buyer should ensure that the details are accurately reflected. |
Conclusion
In conclusion, sellers and buyers should familiarise themselves with the terms and conditions contained in contracts for the sale and purchase of properties and clarify any doubts which they may have with their lawyers so that they fully understand their legal obligations when selling or buying properties.
Need legal advice?
If you are in need of legal advice, you can request a quote with Tan Ee Nin or get a Quick Consult with other lawyers. With Quick Consult, from a transparent, flat fee of $49, a lawyer will call you back on the phone and give you legal advice.
This article is written by Tan Ee Nin of Tan Peng Chin LLC and Soh Kian Peng from the Asian Law Students’ Association.
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.
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