A Brief Guide On Buying And Selling A Property

FAQ on buying and selling of property:

Question: Who can be a party to the transaction?

Answer: Anyone who is 18 and above and is not bankrupt.

Question: How to find out more information on the property in question?

Answer: Do a land search in the relevant land office. The land search would provide important information such as:

1. Whether the seller cannot in any way sell the land unless he has first obtained consent from the State Authority to do so/ Whether the owner of an estate land has obtained consent from the Estate Land Board to sell the estate land.
2. Whether the land is subjected to a charge.
3. Whether a party has placed a caveat on the land.

Question: What are some of the documents involved?

Answer:

1. The sale and purchase agreement (SPA) between the purchaser (buyer) and vendor (seller);
2. The previous SPA, between the previous seller and the current seller;
3. The executed Memorandum of Transfer (MOT);
4. The Quit Rent payment receipt of the current year;
5. The latest Assessment Tax payment receipt;
6. The original land title;
7. Deed of Assignment, if the title has yet to be issued to the seller because the seller still is still servicing the loan for the property.

Question: Does the seller need to pay any taxes?

Answer: Yes. Specifically, the seller needs to pay real property gain tax (RPGT) to Inland Revenue Board (IRB) when the seller makes a profit from selling a property. Having said that, there are exemptions to the general rule, provided that certain criteria are met.

Question: What are the processes involved?

Answer:

1. Sign an offer letter between the buyer and the seller;
2. The buyer obtains a bank loan;
3.  Both parties sign the SPA;
4. Buyer to sign a facility agreement between him and the bank from which he obtained the loan;
5. Sign MOT and any relevant documents; and
6. Obtain keys to the house.

Question: How long would the entire process take?

Answer: Generally, 3 months from the signing of SPA. The process might take longer (more than 6 months) if there are other complications involved.

What else?

1. As a buyer, it is prudent to ascertain who owns the property- always do a land search with the land office. 
2. As a seller, ensure that the buyer is eligible and has the means to buy the property.
3. As a seller’s lawyer:

1. Ensure buyer pays everything within the agreed schedule;
2. Assist seller in paying the RPGT;
3. If there are restrictions to the land, ensure that consent has been obtained by the relevant authorities; and
4. Deliver the relevant documents to the buyer’s lawyer accordingly.
5. As a buyer’s lawyer, prepare all the documents to facilitate the process (SPA, withdrawal of private caveats, memorandum of transfer (MOT), register the tile in the name of the buyer once the whole process is completed, etc.).

How does the bank come into play in all these?

Seller’s bank

If the seller has not settled the loan taken to buy the property, prepare:

1. A discharge of charge once the loan is settled by the seller; and
2. A deed of receipt and reassignment is proof that the loan has been settled. 

Buyer’s bank

If a loan is given to the buyer, prepare a charging document and hold the title as security to the loan until the loan is fully paid up by the buyer.