Date: 14/12/2020, 10am-1pm
CPD Course
Fortis Law, Patrick Tan
Cobroke agent to the buyers
To ensure your interest to be protected, I would like to represent you on a FOC basis
Buy in trust to son has no protection to the parents, it's a gift
Mortgagee is the bank, the persons who provide loan and be a mortgagee
99/1 only in BUC
buy than subsale 1%
1 person buy first (usually no financial capability) than subsale 1% to get a co-owner
Sell 1% to buyer, He paid ABSD only pay on the 1%, tenancy in common
2nd buyer more financing power
start the subsale ASAP before the 1st progressive payment comes in
Requires developer approval
cannot get bank loan
usually for financial and ABSD reason
The person who buy 1% can also get loan of 75%
Side question, In a HDB resale, if the seller decided to pull out from the deal with no good reason, and the seller refuse to pay commission to the agent stating that the deal is not completed, does the seller's agent have any case to claim the commission from seller?
Can the developer re-issue after the govt stepped in?
Buying in Trust have to pay in full
Custody right vs Care and Control
Knowing who you are representing
Agents is not allow to give kickback to clients in BUC
Developer team agents
Cobroke agent
Whose agent are you in a cobroke case (BUC)
Are you a buyer agent?
Are you developer agent?
Are you developer agent's agent?
- You are buyer's agent
If you want to sue, there must be a relation in a contract
You must be the effective course of the transaction
What is the amount to pay to buy this option?
Resale
- Resale is 1%,
- Forfeit all 1%
BUC is 5%, booking fee to buy an OTP (2 + 3 weeks)
- Forfeit 25% (1.25%) of 5% when buyer to not to exercise (sign the SPA)
- the OTP and SPA cannot be amended an the Option period cannot be changed or negotiated
- there is such thing as unlicened developer (below 4 units), that doesn't mean there are illegal developers
- 15% pay within weeks to the vendor, within 8 weeks from the date of option
- SD within 14 days signed 3 copies of SPA
- No assignment (cannot and/or nominee, no one know the eventual buyer)
Assuming you are not buying or selling yourself
Can you represent nobody but yourself? Represent money?
Cannot, you have to be an agent of somebody
Do not put yourself in a conflict of interest situation
You can market your own property, but you need to disclose that you are the seller and you are the marketing agent
Know your client
Know your properties
- Spent at least $5 to purchase the ownership search
- Don't rely on what the owner tell you
- Get a BCA approved plan if you market landed property
OPTION TO PURCHASE AND SALE AND PURCHASE AGREEMENT FOR
“UNCOMPLETED” PROPERTIES OR PROPERTIES UNDER CONSTRUCTION 6
What is the difference between the OTP (that we discussed above) and SPA?
Contract between the seller and buyer for the sale and purchase of a property
(under construction).
Licensed housing developers are required to use the standard form SPA and
OTP (found in the Housing Developers Rules) which sets out terms relating to
matters such as:
Share value
Progress payments
Sub-sale
Obligations of developer and buyer
Is there such a thing as an “unlicensed” developer?
Sale & Purchase Agreement & OTP
Criteria for issue of Housing Developer’s Sale / No-Sale Licence (Circular No:
URA/2016 dated 1 March 2016)
Developers who are developing more than 4 units.
For Sale licence, minimum paid-up capital or deposit of S$1m to S$4m,
depending on project size. For example, more than 400 units = S$4m.
>50units = S$1m.
For No-Sale licence, minimum paid-up capital S$100,000.
Applicant has in the past 5 years completed a licensed residential project, a
reasonably sized non-residential project, or a reasonably sized residential or
non-residential project overseas.
In a BUC, there are 2 contracts, OTP (booking fee 5%) and SPA
Within 2 weeks, 3 copies of the SPA will be generated
For completed properties, stamp duty must be paid within 14 days exercised of the OTP
- Can, but subject to CPF approval, pay cash first then reimburse later from CPF
- You can apply to CPF to pay direct if the LO is signed, OTP, SPA is signed, all the necessary document done and signed
Sale & Purchase Agreement & OTP
Important terms in the OTP accompanying the SPA
(1) Details of the Developer and Developer’s licence must be stated clearly.
Option date.
Name of Developer / Vendor.
Address of registered office.
Developer’s licence No.
Intending Purchasers’ details, NRIC, address.
Property and address of property.
Details of property such as tenure, encumbrances, land area, floor area,
number of units in the project, purchase price, unit purchase price psm,
booking fee (instead of Option Fee), date of approval of building plans,
vacant possession date etc.
Important terms in the OTP accompanying the SPA
(2) OTP
In consideration of the Booking Fee (how many %?) paid by way of
cheque/cashier’s order no. [ ] crossed “Account Payee only” and drawn
in favour____of/by telegraphic transfer to [name of Vendor’s project
account opened with bank or finance company] which the Vendor has
received from ____the Intending Purchaser, the Vendor grants the
Intending Purchaser the option____of purchasing the Property at the
Purchase Price.
Note the difference in procedures compared to the OTP for completed private
properties.
Important terms in the OTP accompanying the SPA
(3) Obligations of developer
Vendor / Developer will send by hand or registered post to the Intending
Purchaser of his/her lawyers within 14 days after the Option date the original
or copies of the property title deeds and (usually) 3 execution copies of the
SPA.
SPA will be in prescribed form under the Housing Developers Rules
(Cap. 130, R 1).
Important terms in the OTP accompanying the SPA
(4) Expiry of OTP
3 weeks after the date of delivery to the Intending Purchaser or his/her lawyers.
Note the difference with the OTP for completed private properties.
Important terms in the OTP accompanying the SPA
(5) Exercise of OTP
Sign all execution copies of the SPA and return them to the Vendor / Developer
or its lawyers.
Vendor / Developer will within 14 days after receiving the signed SPA, sign the
SPA and return 1 signed copy of the SPA to the Intending Purchaser or his/her
lawyers.
Pay Vendor / Developer [ ] being 20% of the Purchase Price less than
Booking Fee, on the exercise of the OTP / within 8 weeks after the date of this
OTP.
Important terms in the OTP accompanying the SPA
(5) Non-exercise of OTP
If non-exercise, Vendor / Developer will refund to the Intending Purchaser 75%
of the Booking Fee (75% of the 5%) within 4 weeks after the OTP expiry or
within 4 weeks after the date of receipt of the written notice from the Intending
Purchaser stating that he/she does not wish to exercise OTP.
Upon refund, Intending Purchaser or his/her lawyers to return to the Vendor /
Developer the original or copes of the property title deeds together with all the
execution copies of the SPA.
Important terms in the OTP accompanying the SPA
(6) Assignment
Intending Purchaser not allowed to assign or transfer the OTP.
OTP is personal to the Intending Purchaser.
Important terms in the OTP accompanying the SPA
(7) Information on Strata Unit
Share value allotted to the property and Intending Purchaser’s share of
maintenance charges for the common property to be clearly stated.
Important terms in the OTP accompanying the SPA
(8) Sale to Foreign Purchasers
Applies to non Singapore Citizen or non-approved purchaser under the RPA
(Cap. 274).
Sale is subject to approval being obtained from the Controller of Residential
Property.
Application to be made within 3 weeks after the date of exercising the OTP.
To notify Vendor / Developer of application result within 2 weeks of receipt.
If approval is not obtained within 12 weeks after the date of exercising the OTP,
OTP becomes null and void. Full refund without interest within 4 weeks after
receipt of evidence of refusal of application. Or refund less 25% of Booking
Fee if no evidence of refusal.
Important terms in the SPA
(1) Payment schedule
Sale & Purchase Agreement & OTP
Within 8 weeks immediately after Option date: 20% inclusive of Booking Fee
Foundation work: 10%
Reinforced concrete framework of the unit
completed:
10%
Partition walls of unit completed 5%
Ceiling of unit completed: 5%
Door sub-frames/window frames, electrical
wiring, internal plastering and plumbing of unit
Important terms in the SPA
(1) Payment schedule
Last 15% - between Vendor and SAL as stakeholder
All payments to be made to project account
Important terms in the SPA
(2) Notice of deductions
If Purchaser intends to make deductions from the 5% held by SAL, he/she must
serve on SAL and the Vendor in writing a notice of deductions (Form 3) at least
7 working days before the Final Payment Date, regardless whether the 5% has
been paid to SAL.
If Vendor disputes all or any part of the deductions in Form 3, Vendor may
serve on SAL a notice stating the amount of deductions in dispute and the
amount not in dispute, if any (Form 3A).
Important terms in the SPA
(3) Late payment of instalments
Purchaser shall pay interest on the unpaid amount to Vendor until the unpaid
amount is paid or the expiration of the repudiation notice, whichever occurs
first.
Interest is calculated on a daily basis at 2% per annum above the basic rate.
Important terms in the SPA
(4) Repudiation by Purchaser
If any instalment or amount and interest remains unpaid for more than 14 days
after the expiry of the relevant period or the date, Vendor can treat the SPA as
repudiated by the Purchaser.
But Vendor must first give Purchaser 21 days’ notice in writing of Vendor’s
intention to treat the SPA as being repudiated.
Once repudiated, Vendor can re-enter and repossess unit if already delivered;
Important terms in the SPA
(4) Repudiation by Purchaser
Resell or otherwise dispose the unit;
Recover the instalments, amounts and interest, property tax, maintenance
charges etc;
Forfeit and keep 20% of the Purchase Price from the instalments previously
paid by the Purchaser and recover any shortfall if instalments are insufficient to
cover the said 20%.
Important terms in the SPA
(4) Repudiation by Purchaser
After deducting the amounts above, Vendor must refund balance of those
instalments not more than 21 days after the annulment of the SPA or where
vacant possession of unit has been returned / recovered by Vendor.
Important terms in the SPA
(5) Vendor’s obligations
Build the unit and common property ASAP and in good and workmanlike
manner according to specifications and plans.
Obtain all necessary consents and approvals from relevant authorities.
Obtain SSCT for the unit.
Important terms in the SPA
(6) Title surveys
Vendor must conduct or cause to be conducted all necessary title surveys for
subdivision and for preparation of strata certified plans for unit.
As for the expenses for surveys and preparation of strata certified plans,
Vendor shall contribute 50% and Purchaser a proportion of the balance 50%
which is equal to the proportion the share value allotted to the unit bears to the
aggregate share value for the entire project.
Important terms in the SPA
(7) Delivery of possession
Delivery date must be clearly stated (vacant possession date).
Before delivery, Vendor must ensure unit is completed and fit for occupation.
Vendor must deliver Notice of Vacant Possession for unit which must contain
the date on which vacant possession of unit is delivered to Purchaser and
Homeowner User Manual.
Important terms in the SPA
(7) Delivery of possession
May be liable for LD if vacant possession of unit not delivered by Vacant
Possession Date. LD calculated on a daily basis at 10% per annum on the total
sum of all the instalments paid by Purchaser towards the Purchase Price,
payable commencing on the start date until vacant possession of unit is
delivered to Purchaser.
Important terms in the SPA
(8) Maintenance charges
Purchaser shall pay to Vendor maintenance charges for common property
starting on the date the Vendor actually delivers vacant possession of unit to
Purchaser; or the 15th day after the Purchaser receives the TOP or CSC,
whichever is earlier.
Maintenance charges for the first 6 months and GST are to be paid in advance
in one lump sum, and are subsequently to be paid quarterly in advance.
Shall continue to be payable to the Vendor until MC takes over from Vendor the
function of maintaining the project.
Important terms in the SPA
(9) CSC
Vendor at its own costs to procure the issue of CSC of unit for Purchaser.
After delivery of vacant possession but before CSC issued, Vendor and his
workmen have right to make alterations and additions to unit as may be
required by authorities and Purchaser agrees to grant them access at
reasonable times.
Important terms in the SPA
(10) Completion
Vendor must give Notice to Complete to Purchaser and state date clearly or 3
years after the date of delivery of vacant possession of unit, whichever is
earlier.
Completion must take place 14 days after Purchaser or his/her lawyers
receives the Notice to Complete.
Important terms in the SPA
(10) Completion
On completion, Vendor must execute a proper conveyance to Purchaser of unit
and deliver a duplicate SSCT.
If Vendor fails to give Notice to Complete by the stipulated date, must pay LD to
Purchaser at 10% per annum on the total instalments paid towards the
Purchase Price.
Important terms in the SPA
(11) Defects Liability Period
Vendor must make good at his own costs any defect in the unit or the common
property which becomes apparent within the DLP i.e. 12 months after the date
of actual delivery of vacant possession of unit or 15th day after the Purchaser or
his/her lawyers receives the TOP or CSC, whichever earlier.
Vendor must make good defects within 1 month from Purchaser’s notice, failing
which Purchaser may notify Vendor in writing of the estimated costs of carrying
out his/her own rectification works as indicated in a quotation and the
Purchaser’s intention to rectify by his/her own contractors if the Vendor fails to
carry out those works within 14 days immediately after the date of the notice
(final 14 days).
Important terms in the SPA
(11) Defects Liability Period
If Vendor still fails to rectify despite the notice, Purchaser has the right to
proceed with his/her own rectification and to recover from the Vendor the costs
of those rectification works and deduct the same from the sum held by the SAL
as stakeholder.
Important terms in the SPA
(12) The First Schedule – Specifications of the Building
Check carefully and ensure Purchaser fully understands the unit that he/she is
buying.
Conclusion
What are the different types of contracts related to “completed” real estate
transactions?
What are the implications for not understanding these contracts?
What are some of the common legal pitfalls related to these contracts?
Misrepresentation.
Confusion between the different types of contracts such as Offer to
Purchase and Option to Purchase.
The terms of the contracts were incorrect and/or fail to reflect parties’
intention correctly.
POST COURSE EVALUATION FORM
(Please submit to the CPD Activity Provider after the end of the CPD Course)
As part of the continuous improvement to the quality of our Continuing Professional Development courses, we would like you to fill up this Post Course Evaluation form. Do take 5 minutes at the completion of the training to evaluate the course and trainer. Thank you.
MOBILE NO.
COURSE TITLE:
Know Your Sale And Purchase Agreements For Uncompleted Properties To Close More DealsFORM FILLED ON (DATE):
14 Dec 2020LIFE MASTERY ACADEMY
Choose the appropriate number according to the following scale:
- 5 = Excellent or Strongly Agree
- 4 = Very Good or Agree
- 3 = Neutral
- 2 = Disagree
- 1 = Needs Improvement or Strongly Disagree
COURSE
5 4 3 2 1
1. Course content was useful and relevant to my needs
2. Course materials were up-to-date, well organised and presented in sufficient depth
3. Course coverage was comprehensive
4. Case studies presented were useful
5. Course objectives were consistent with course as advertised
6. Overall, I would rate the course
7. Would you recommend this course to others to attend?
TRAINER's NAME :
Patrick TanRating
8. Trainer demonstrated a comprehensive knowledge of the subject
9. Trainer spoke clearly and distinctly. He/She is able to hold my interest
10. Trainer's course delivery in terms of explaining the concepts and giving real life examples
11. Trainer encouraged questions and interact with the course participants to facilitate learning
12. Trainer able to handle the Q&A session well
13. Trainer's sharing of his/her real estate practitioner's experience is useful to my learning
14. Overall, I would rate the trainer
15. May we use your name and feedback in our subsequent programs and for Marketing Purposes
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