Property conveyancing in Singapore: the FULL step-by-step guide

Property Conveyancing in Singapore legal procedure

As the biggest financial commitment you’ll likely make, the act of buying a property involves many legal processes to ensure both the buyer and seller are well-protected throughout. In Singapore, property buyers require the services of a conveyancing lawyer to execute the legal processes of private property transactions. The legal fees, also known as conveyancing fees, typically range from $2,500 to $5,000 and can be broken down into the following:

  • Professional Fees for Lawyers
  • Title Searches (Payable to SLA)
  • Solvency/ Bankruptcy Searches on Vendor and Purchasers (Payable to Ministry of Law)
  • Legal Requisitions (Payable to seven government bodies)
  • Road Line Plan Search (Payable to INLIS via SLA)
  • Purchaser and Bank Caveat Lodgement for Transfer and Mortgage (Payable to SLA)
  • MCST Certification (Payable to SLA)
  • Transfer Registration Fee (Payable to SLA)
  • Mortgage Stamping Fees (Payable to IRAS)
  • Mortgage Registration Fees (Payable to SLA)
  • CPF Lawyer Fees and Expenses (Payable to CPF Board)
  • Bank’s Fee for Issuance of Cashier’s Order (Payable to Bank)

The above-mentioned fees are for private property transactions. For HDB flat or Executive Condominium (EC) purchases, HDB acts as the buyer’s legal representative, and defines its own costs and fees, which can be calculated here.

A buyer or seller may appoint someone to act on his/her behalf in a conveyancing transaction via a Power of Attorney (POA). The duration of a POA typically lasts 2 to 6 years whereby an appointed individual can sign on the appointor’s behalf in a property transaction.

 

Option-to-Purchase (OTP) and Hiring a Conveyancing Lawyer

Suppose you’ve found a condominium unit you want to buy, obtained a home loan Approval In-Principle from the bank, and your offer has been accepted by the seller. You’ll need to pay directly to the seller 1% of the agreed upon purchase price (the Option Fee) in exchange for the Option to Purchase (OTP).

The issuing of the OTP also means the seller ends any negotiations with other potential buyers during its 14-day validity period.

You should have a conveyancing lawyer in mind once you receive the OTP, so you can promptly engage his/her services. When you receive a quote from the law firm, be sure items such as mortgage stamping, CPF fee, Law Society fee and GST are included in the total cost (i.e. the quoted price applies to the full conveyancing transaction).

One of your lawyer’s first tasks would be to vet the OTP, which needs to be exercised within 14 days from the date of issue. In the meantime, your lawyer may assist you in getting your home loan approved. You should also receive a clear timeline with a list of deadlines up until completion.

 

Lodging a caveat

When you are ready to exercise your OTP, your lawyer will proceed lodge a caveat against the title to the property to notify the public and/or any other interested third parties that you have a valid claim or interest in the said property. In other words, a caveat prevents the property from being sold multiple times.

Upon exercising the OTP, you’ll have to pay to the seller a minimum 4% of purchase price as downpayment. This amount is paid to your lawyer to a conveyancing account (i.e. holding account) where it will be paid to the seller upon completion, along with other sums pertaining to the transaction. The conveyancing account can be:

  • A conveyancing account specially opened by the lawyer’s law firm to receive such monies;
  • The Singapore Academy of Law’s Conveyancing Money Service; or
  • An escrow account jointly owned by the buyer and seller’s lawyers.

The purpose of the conveyancing account? To ensure that no one can run away with the money during the transaction, between now and the completion of the sale.

After exercising the OTP, your lawyer will proceed to send out legal requisitions to seven government arms including PUB, LTA, NEA and IRAS. This is done to ensure that the seller has a ‘good root of title’, meaning there is no outstanding issues, such as unpaid property tax, that would otherwise prevent the property’s title from being transferred without incurring damage or negative consequence for the new owner.

There are nine such requisitions sent to seven government bodies:

  • PUB (Water Reclamation Network) Department for sewage and drainage;
  • LTA (Survey and Lands Department) for MRT works;
  • LTA (Survey and Lands Department) for street works;
  • LTA for Road Line Plan;
  • Building Control Authority for alterations/additions made to the property;
  • National Environment Agency (Environmental Health Department) for any outstanding issues regarding mosquito breeding, drain chokage, etc;
  • National Environment Agency (Central Building Planning Unit) if the property is affected by the current drainage scheme;
  • Inland Revenue Authority of Singapore (IRAS) for any outstanding property tax; and
  • URA to ascertain the master plan zoning, any decision on proposals to develop the site, etc.

Only when all the requisitions have come back satisfactorily should the sale proceed to completion. Unsatisfactory requisitions may be remedied by the seller in order to facilitate the sale, and the sale may be called off buy the buyer if an encumbrance cannot be released (the buyer will only lose the 1% booking fee for the OTP).

 

Pre-completion

Upon exercising the OTP, you and the seller would also have agreed upon the date of completion for the sale, typically in about 10 to 12 weeks’ time. During this period, a formal valuation of the property will also be carried out by your bank’s appraiser.

If the seller is still paying mortgage for the property that you are buying, your lawyer needs to work in tandem with the seller’s lawyer to release the property from the encumbrance of the seller’s mortgage and facilitate the passing over of the property’s title from the financing institution to you, the new owner.

On your part, prepare to submit any necessary documents to your lawyer, who will liaise with the CPF Board and/or the financing institution to ascertain that your required loan amount and CPF amounts are ready for drawdown for the successful completion of the sale within the agreed time window.

The timely completion of the above steps is crucial, as a delay in the completion date can lead to unintended consequences, such as additional bank administrative fees and interest charges of 6% per annum on the sale price payable to the seller. (The reverse is applicable for the seller, who has to pay the buyer 6% per annum in interest charges on the sale price to the buyer.)

The 10- to 14-week time gap between the exercising of the OTP and completion also allows the seller to move out of the property, if they haven’t already, and to ensure that old furniture is disposed of, or agreed repairs completed. This naturally depends on the agreed sales terms – if you are purchasing the property in “as-in” condition or “vacant” possession.

Near to completion, the seller will grant vacant possession to the buyer when the property in question is in occupying condition. When that happens, you can inspect the property for any defects, and should any defect be found, you can raise it to the seller then and there for it to be rectified before completion. (Take note there’s no defects liability period for resale properties.)

If the inspection is satisfactory, your lawyer and seller’s lawyer will finalise the transaction, including the handing over of keys for completion and exchange of cashier’s orders.

Completion of your resale property and key collection

Upon completion, you’ll receive the keys to your new home, the property’s certificate of title, as well as a transfer form for the new ownership. Your lawyer would have already followed up on transferring the remaining 95% to the seller, which includes your balance downpayment. At this point, the property transaction is legally complete.

You can then expect your lawyer to notify IRAS (and any other relevant authorities) that you’re the new owner of the property. This means that maintenance fees, property taxes and other charges associated with the property will take effect from this date of completion.

Property Conveyancing in Singapore infographic legal process

 

I’m a seller. Are there any differences in the property conveyancing process?

If are selling your property rather than buying, your conveyancing lawyer will check on whether you have an outstanding mortgage and, if so, whether there is any penalty payable for early redemption under the mortgage. They should also check if CPF funds have been used, and how much needs to be repaid to your CPF account plus accrued interest.

Once that’s done, the seller’s lawyer will submit necessary notice to the bank for redemption (total discharge of mortgage) and CPF board for discharge of CPF charge. The lawyer will prepare proof that all miscellaneous charges are paid up. So this includes things like property tax, MCST charges and dues.

Seller’s lawyers will also draft an inventory list of furnishings, fixtures and furniture that would be included in the sale, to avoid misunderstanding and potential disputes. The seller’s lawyers will also inform you about your sales proceeds and answer any questions you may have along the way.

 

A seller’s sales proceeds for a private property are as follows:

  • Price sold
  • Less outstanding mortgage loan plus any outstanding instalment and interest.
  • Less CPF used plus accrued interest.
  • Less property agent’s commission
  • Less property tax up to the date of completion.
  • Less seller stamp duty (if applicable).
  • Less legal fees from lawyer acting for seller in the conveyancing.
  • Less maintenance and service charge payable to the MC (if applicable) up to the date of completion.

 

Want to know how much you can borrow for your property purchase?

Read our Loan-To-Value Ratio For Singapore Property: A Complete Guide, or if you need help with refinancing your home, speak to our Home Advisors at PropertyGuru Finance for free

Read Next