For most people, property purchases will be one of the biggest transactions in their life. With all the rules and regulations that govern the sales of real estate, it’s extra important to get it right.
One of the more complicated transactions is known as conveyancing.
What is conveyancing?
Conveyancing is the legal process by which the ownership of a property (AKA land title) is transferred from one entity to another. These titles are split into two types: Freehold and Leasehold.
Freehold properties allow the owner to enjoy the ownership of their estate for as long as they hold the land title. Leaseholds give ownership of the real estate back to the government after a set period of time. In Singapore, these lease periods range from between 6 months to 99 years.
Although leases for 999 years exist, they are considered equivalent to freehold leases.
There are many legal issues to handle when it comes to the conveyancing process.
Important things to note
There are many things that go into the conveyancing process. Before you decide to purchase property, it’s important to conduct some research on the surrounding areas. For example, here are some important things that you should take note of:
Only Singaporeans are allowed to purchase landed residential property. Foreigners who want to purchase it will have to obtain approval from the Controller of Residential Property. Otherwise, they can opt to purchase condominium units instead.
Those looking to purchase HDB flats will also have to take into account the ethnic integration policy, which limits the number of ethnic groups per HDB block.
The size of your property’s land/floor area. Take note that land area is calculated by living space: a two storey property would include both floors in the land area. Also, bungalow classes are defined by the total land/floor area.
Land area (in square metres)
400 – 550 sqm
550 – 700 sqm
700 – 1000 sqm
1000 – 1400 sqm
Anything above 1400 sqm
This includes the property’s price, but also includes hidden costs such as property taxes and stamp duties. For a more extensive list of costs, you might want to read up on our articles.
There are several ways that you can pay for the property. The most common ways are through loans from either HDB or banks, although you can use funds from your CPF to offset some of the payment. Alternatively, you can seek out HDB grants to subsidize the costs.
Your lawyer also will conduct a title search to find out more information about the property. Title searches include information such as:
Property title and tenure
Whether the property is freehold (belongs to you and your heirs indefinitely) or leasehold (the property belongs to you for a fixed term, and might not be extendable).
Encumbrances (if any)
Encumbrances refer to a piece of real estate that has a limitation on, or a claim/liability against it. It may also include issues such as caveats or mortgaging. If any encumbrances are found, additional steps will have to be taken to remove them where possible.
Name of registered proprietor(s)
The names of the owners of the property.
Manner of ownership
If there are multiple owners of the current property, and what their statuses (joint tenants/ tenants-in-common) are.
Joint tenants have equal interests in the flat regardless of their amount of contribution to the purchase, while tenants-in-common own the property in divided shares.
Is a lawyer necessary for conveyancing?
To make sure everything goes smoothly, it’s best to engage a lawyer.
While it is not compulsory to have a lawyer, it is highly recommended to get one. Most private properties are sold in the price range of millions, and it is far better to have someone who knows what they are doing. Unless you’re well versed in property law, you may end up in over your head with legal issues that you aren’t prepared to deal with.
It’s also important to find a lawyer that you can trust. In 2018, a conveyancing lawyer was fined $10,000 after failing to notify the authorities about a suspicious transaction in Sentosa Cove. The transaction was suspected to be linked to a multi-billion dollar Ponzi scheme.
Signing of contract
Once you have found the property you want to purchase, negotiations between your lawyers and those of the sellers’ will begin. If you decide to purchase the property, you may go on to sign the ‘option to purchase’ or ’sale and purchase’ agreement, depending on which one is being used.
After which, your lawyer will lodge a caveat to the Singapore Land Authority. Henceforth, any subsequent dealings affecting the property will provide notice to you and your lawyer.
The downpayment for the property will also have to be paid. The sum will be collected by you from your lawyer and placed in a ‘conveyancing account’, which will be paid to the seller. These accounts can be specially opened by the law firm themselves, by the Singapore Academy of Law’s Conveyancing Money Service, or through the use of an escrow account. Escrow accounts are used to pay off property taxes and insurance, but can also be used to pay for conveyancing fees.
If you want to find out more about the costs that go into purchasing a property, such as stamp payments, you can check out costs of buying a property in Singapore here.
Taking possession and transfer of land title
Once the property is ready to be transferred, the seller will give vacant possession of it to the buyer. Vacant possession refers to the property being in a state fit for occupation. When the buyer has ensured that it is free of defects, they will then receive a certificate of title, a transfer form, and the keys to the property from the seller.
The transfer form indicates that the property now belongs to the buyer. Once these three items are passed over to the buyer, the transaction is concluded.
Property purchases can be complex, given how many steps are involved in the process. Fortunately, the same steps apply to all types of properties, whether they are HDB flats, condominiums, or landed properties. In any case, it is highly recommended to engage a competent lawyer who can ensure that your best interests are protected. They can also save you a lot of hassle by providing valuable advice on any issues that might crop up.
If you’ve decided to look for another way to purchase a flat, you might want to find out more about how to pay for a resale flat in Singapore.
For a rundown on the conveyancing process of buying private property in Singapore, read Property Conveyancing In Singapore: The FULL Step-By-Step Guide
To get more guides like this, check out PropertyGuru.