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:
Types of Conveyancing Fees in Singapore
|Type of conveyancing fees||Whom is it payable to?|
|Solvency/ bankruptcy searches on vendor and purchasers||Ministry of Law|
|Road line plan search||INLIS via Singapore Land Authority (SLA)|
|Mortgage stamping fees||IRAS|
|CPF lawyer fees and expenses||CPF Board|
|Legal requisitions||Seven government bodies|
|Purchaser and bank caveat lodgement for transfer and mortgage||SLA|
|Transfer registration fee||SLA|
|Mortgage registration fees||SLA|
|Bank’s fee for issuance of cashier’s order||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). For the uninitiated, a conveyancing transaction refers to the transfer of ownership from one party to another. This includes the granting of encumbrances (i.e. a claim on the property by another party) such as mortgages.
If you are making a conveyancing transaction through a POA, the duration of a POA typically lasts two to six 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:
- Enter into a valid and binding legal contract in written form with the seller. This contract, known as the OTP gives you the exclusive rights to purchase at an agreed purchase price.
- You will need to pay pay directly to the seller 1% of the agreed upon purchase price (aka Option Fee) in exchange for the 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 to 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 the seller a minimum of 4% of the purchase price as down payment. 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 are 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||Sewage and drainage|
|LTA (Survey and Lands Department)||MRT works|
|LTA||Road line plan|
|Building Control Authority||Alterations/additions made to the property|
|National Environment Agency (Environmental Health Department)||Outstanding issues regarding mosquito breeding, drain chockage, etc|
|National Environment Agency (Central Building Planning Unit)||If the property is affected by the current drainage scheme|
|Inland Revenue Authority of Singapore (IRAS)||Outstanding property tax|
|Urban Redevelopment Authority (URA)||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 by the buyer if an encumbrance cannot be released (the buyer will only lose the 1% booking fee for the OTP).
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 a 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 terms of the agreed sale – 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.
Summary of Steps Involved When You Are Buying Your Dream Property in Singapore
Let’s take a small step back to see how conveyancing fits into the steps in getting your dream home in Singapore.
|Steps to your dream property in Singapore||What does it involve?|
|Finding your dream home||Research, browse and shortlist your dream home on PropertyGuru.|
|Offer accepted by the seller||Get into an agreement on the selling price with the seller.|
|Engage a conveyancing lawyer||Hire a conveyancing lawyer to handle the property conveyancing for you.|
|Vetting OTP and conduct a background check||Let your conveyancing lawyer vet the OTP while you conduct your own series of background checks on the seller just to make sure that there are no issues with the property or the seller|
|Exercise the OTP||You have 14 days from the moment the OTP is issued to exercise it. Once exercised, you are confirming that you will buy the property at the agreed price|
|Lawyers perform checks for title deed validity||Legal requisitions will be made with seven government bodies. Your conveyancing lawyer will also lodge a caveat on the property while helping you liaise with the bank and CPF on financing the property purchase|
|Final inspection||You do a final inspection of the property and ensure that all things are in place for the purchase to take place|
|Purchase completion||“Officially” complete the purchase of your dream home|
|Notify IRAS||The conveyancing lawyer will notify IRAS of the new property ownership under your name|
I’m a Seller. Are There Any Differences in the Property Conveyancing Process?
If you’re selling a property, 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 the 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
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