Fwd: Sterling Law Corporation: Random Property Law Topics - Part-Share Purchase/Decoupling matters
Jackie Ho
From: Alicia Xu <alic...@hotmail.com>
Date: Mon, Jan 26, 2015 at 12:12 PM
Subject: Fwd: Sterling Law Corporation: Random Property Law Topics - Part-Share Purchase/Decoupling matters
To: prope...@gmail.com, Jackie Baby <jack...@gmail.com>
Begin forwarded message:
From: "Junius Cheng" <Junius...@sterlinglaw.com.sg>
To: "Junius Cheng" <Junius...@sterlinglaw.com.sg>
Subject: Sterling Law Corporation: Random Property Law Topics - Part-Share Purchase/Decoupling matters
Random Property Law Topics – Part-share Purchase (aka Decoupling)
Dear Partners,
First and Foremost, may I extend my well wishes to all of you a prosperous and great new year of 2015!
My apologies for not being able to write up this topic earlier as I was in Taiwan (For Holiday) and fell sick after that, (Post holiday Syndrome, Haa!) and hope that you’ve had your fair share of the festive season.
Nonetheless, I am glad to have spent the year of 2014 to provide services required based on the knowledge I’ve acquired from SLC, in hopes of assisting all of you with your business/work in regards to client’s legal queries.
My Special thanks to some of ‘YOU’ who has been continually supporting, guiding and providing me with the latest updates, I thank you for the working collaboration and genuinely hope that we can continue working together in this 2015! J
Our special gratitude to Santarli Realty Pte Ltd and City Development Limited, whom very kindly provided us with exposure opportunities by inviting us over to talk on Conveyancing matters and sincerely hope that we have helped you with your business and queries so far.
Those interested in the previous legal topics, please let me know.
This interesting topic of Part share purchase/decoupling for all of your easy reference and perusal please. Thank you!
Topic: Part-Share Purchase / Decoupling
1. What is Part-Share Purchase/decoupling about?
a. The process of buying a share of an existing property between 2 or more parties.
b. Parties usually involved are Husband and Wife, Siblings, friends
2. Why conduct part-share purchase/decoupling?
a. To provide a party the opportunity to own his/her 1st property in their own name.
b. Friends who have invested a property together back then decides to get married and purchase their 1st matrimonial home and not incur ABSD in the process.
c. Paying ABSD straight VS conducting of decoupling à Which will be cheaper?
d. Getting maximum loan entitlement, I.e. 80% for 1st property.
3. What needs to be taken into consideration when conducting part-share purchase/decoupling?
a. Option to Purchase (OTP) / Sales & Purchase Agreement (S&P)
i. Purchaser to exercise to indicate formally they are purchasing the share.
b. Additional buyer’s Stamp Duties (ABSD) / Seller’s Stamp Duties (SSD)
i. Required to pay the 3% BSD within 14 days of exercising OTP/S&P.
ii. If at the point of purchasing share, client has more than 1 property, ABSD applies.
iii. If at point of purchasing share, client bought property less than 5 years, SSD applied.
c. CPF
i. Must repay whatever they use via CPF, back to CPF in cash.
d. Bank Loans
i. If property is encumbered, purchaser of share must do refinancing to takeover full remaining loan.
ii. Banks to check on buyer’s TDSR whether buyer capable of handling full loan purchase alone.
iii. 3 months redemption period applies, so if client wants to complete fast, will incur interest by the bank.
e. Legal Fees
i. 2 law firms to represent 1 seller and 1 buyer.
ii. Law firms to draft OTP/S&P
iii. Application of CPF
iv. Mortgage stamping fee and application documents to bank
4. How to transfer the share of an existing property?
a. Step 1: Purchaser need to sign OTP/S&P agreement (Note: Timeline of 6-8 weeks for completion of part-share purchase/decoupling process)
b. Step 2: Purchaser to pay BSD (or ABSD/SSD if any), 14 days from exercising
c. Step 3: CPF will be repaid to seller upon completion, which is reflected in their CPF one(1) – four(4) weeks after completion
d. Step 4: Seller to take note of the following before doing the refinancing for the loans:
i. Breakage fees
ii. Clawback of legal fees, insurance premium, etc.
iii. Late payment charges
iv. Bank Redemption date
5. Practical illustration as follows:
Part share of 1st property as follows:
· $1,000,000 current property value bought under joint Tenancy (Both Singaporean Citizens)
· Therefore, Sale price of 50% share is $500,000.
· Buyer’s Stamp Duty amount: $9,600 (Payable within 2 weeks of exercising of OTP/S&P)
· Check if any Seller’s Stamp Duties incurred
· Legal fees to act for both parties, est. $5,500
· Therefore, total expenses = $15,100
· *Note: CPF and bank loans needs to be repaid
New Property Purchased with Part-Share Purchase as follows:
· E.g. $2,000,000 new property value
· Buyer’s Stamp Duty amount: $54,600
· Legal Fees: $2,500
· Therefore, total expenses = $57,100
· *Note: if use CPF, from completion date of 1st property have to wait 1-4 weeks to reflect in CPF account + 2 – 4 weeks to disburse for new property again
Alternatively, for new property purchased WITHOUT part-Share Purchase:
· E.g. $2,000,000 new property value
· Buyer’s Stamp Duty amount: $54,600
· Additional Buyer’s Stamp Duty (7% as SC) amount: $140,000
· Legal Fees : $2,500
· Therefore, total expenses = $197,100
· *Note: May not get full 80% loan entitlement if 1st property is encumbered, min sum in CPF applicable as well
6. Anything special to take note of?
a. Upon exercising S&P and paid total Stamp Duties, The seller (Already deemed to have indicated sold his share) can actually proceed to sign new OTP to buy the new property, without waiting for the full completion.
b. Clients must be clear on whether they have enough cash in hand to:
i. Pay back their CPF used for current property or not?
ii. Capabilities to have refinancing on their own? (inclusive of all TDSR compliance)
iii. For 2nd property, if purchasing a new completed property, stamp duties to be paid solely by cash.
iv. For 2nd Property, if purchasing a new launch property (BUC), stamp duties can have a leeway to be paid by CPF, subjected to bank’s abilities to provide in time:
1. Bank Letter Offer
2. Letter of instructions
3. Valuation report
Otherwise, to pay via Cash.
With these, I hope that I had helped you to understand better on part-share purchase / decoupling process with a clearer view. Thank you!
[DISCLAIMER] All the indicated advice may be accurate to the best of my knowledge however I cannot simply guarantee the accuracy of all the information provided within the email, as the aforementioned details may be outdated with time since the laws are continually changing, as well as subjected to certain case by case scenarios. We give no warranties or representations concerning the free legal advice, and accept no liability in relation to the reliance of the free legal documents, as it will still be determined by the lawyers. Thank you.
About us: Sterling Law Corporation
Sterling Law Corporation is a limited Liability Law Corporation with multidisciplinary practice that covers not only Conveyancing, but other aspects such as General Civil and Criminal Litigation, Arbitration, Dispute Resolution, Corporate Advisory and other commercial transactions.
Please feel free to enquire or provide us with feedback on any doubts or legal queries, always glad to learn from you J
Best wishes for your businesses and sales!
Sincerely,
Junius Cheng
Marketing & Business Development Manager
Sterling Law Corporation
4 Battery Road, 30th Floor
Bank of China Building
Singapore 049908
9834 7361 (HP) • 6323 5366 (DID) • 6323 7566 (Fax)
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Warmest Regards,
Jackie Ho J C
Associate Division Director
HP: +65 8484 4666
Cea Reg: R031800D
Email: jack...@gmail.com
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