6. Completion Accounts

Podcast Beta

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the total amount that the Purchaser must pay due to the Vendor on legal completion?

$853,500.00

$951,758.06

$98,258.06

$948,258.06 (correct)

Which entity issues a cashier’s order for the Purchaser’s CPF monies?

XYZ Bank

Vendor’s solicitors

CPF Board (correct)

Purchaser’s solicitors

Which of the following describes where the cash difference paid by Purchaser goes?

It is paid into the Purchaser’s solicitors’ conveyancing account. (correct)

It is retained by the CPF Board.

It is sent directly to the Vendor.

It is issued as a cashier’s order to the Bank.

What must the Vendor's solicitors do before issuing cashier’s orders for collection?

Prepare and e-file the Payout Form BC. Signup and view all the answers

Which of the following is NOT a step taken by the Purchaser’s solicitors for the cash difference payout?

Verify the request for payment to the Purchaser. Signup and view all the answers

What is one of the roles of the Purchaser’s solicitors after the Vendor signs the Letter of Authority?

Prepare the e-filed payout requests. Signup and view all the answers

How is the Purchaser's bank loan of $650,000.00 strategically divided?

$400,000.00 to the Vendor, $250,000.00 to CPF Board. Signup and view all the answers

What happens after the Vendor’s solicitors log into the ePI system?

They approve and countersign the payment requests. Signup and view all the answers

What is the primary purpose of the Payout Form BC prepared by CPF Board’s solicitors?

To initiate a refund for the Vendor’s CPF monies. Signup and view all the answers

What action must the Purchaser’s solicitors take after receiving the Payout Form BC?

Log into the ePI system to verify and approve the payment. Signup and view all the answers

Which entity issues cashier’s orders to pay the CPF Board after the Purchaser’s solicitors' approval?

The CPF Board’s solicitor's Bank. Signup and view all the answers

What must be done if it is determined that the Payout Form BC is not in order?

Reject the form and inform the CPF Board. Signup and view all the answers

What is the ePI system primarily used for in this context?

For processing financial transactions related to property. Signup and view all the answers

What is the consequence of failing to secure written permission for the use of course materials?

There may be potential legal penalties for copyright infringement. Signup and view all the answers

What must the solicitor’s Bank notify the CPF Board’s solicitors of?

Approval from the Purchaser’s solicitors. Signup and view all the answers

Which of the following steps is NOT involved in the payout process outlined in the content?

Issuance of legal advice to the Vendor. Signup and view all the answers

What is the total sum that the Vendor will ultimately receive from the Purchaser's cashier's orders?

$75,758.06 Signup and view all the answers

Which of the following amounts is included in the add section of the Vendor's account?

Stakeholder monies Signup and view all the answers

What is the total of all deductions made from the Vendor's account?

$912,500.00 Signup and view all the answers

What is the amount of the commission payable by the Vendor's real estate agent?

$10,000.00 Signup and view all the answers

How much is the refund of property tax that is added to the total sale price?

$883.87 Signup and view all the answers

What is the total amount transferred from the Vendor as rental-related transactions?

$12,838.71 Signup and view all the answers

What is the total Nett proceeds due to the Vendor when completing the sale?

$75,758.06 Signup and view all the answers

What amount is specifically referenced as being payable by the Purchaser in legal fees?

$3,500.00 Signup and view all the answers

What is the total amount refunded to the CPF account during the Vendor's calculations?

$600,000.00 Signup and view all the answers

What is the alternative amount of total sale price including refunds according to the alternative account calculations?

$1,001,096.77 Signup and view all the answers

What is the primary purpose of a completion account in real estate transactions?

To inform the purchaser of the amount payable on completion Signup and view all the answers

Which of the following is NOT an element required to prepare the account from the vendor's solicitors to the purchaser's solicitors?

Agent commission fees Signup and view all the answers

When calculating rental proceeds, which specific time frame is used to determine the final amount payable?

19th to 31st of August Signup and view all the answers

How is the refund of property tax calculated in the completion account?

$200.00 divided by 31 days times 13 days Signup and view all the answers

In the completion account, what is the sum owed by the purchaser to the vendor after accounting for all deductions?

$948,258.06 Signup and view all the answers

What amount is reflected as the vendor's CPF amount to refund in the completion account?

$600,000.00 Signup and view all the answers

Which of the following costs is considered a charge that is paid by the vendor up until September 30th for the maintenance and sinking fund?

$150.00 per month Signup and view all the answers

How is the amount of stakeholder monies calculated in the completion account?

4% of the sale price Signup and view all the answers

What is the total sale price of the property mentioned in the completion account?

$1,000,000.00 Signup and view all the answers

What is considered a refundable amount in the completion account?

Refund of property tax Signup and view all the answers

Study Notes

Completion Account Definition

A completion account is a statement prepared by a vendor's solicitor to a purchaser's solicitor, outlining the total payable amount upon completion of a property purchase.

Types of Completion Accounts

Vendor's Solicitor to Purchaser's Solicitor: This account lists the total payable by the purchaser to the vendor.
Vendor's Solicitor to Vendor: This account presents the vendor's net proceeds from the sale after deductions and payments.
Purchaser's Solicitor to Purchaser: This account details the total amount the purchaser needs to finance the purchase.

Information Needed for Vendor's Solicitor to Purchaser's Solicitor Account

Completion Date
Sale Price
Option Monies
Stakeholder Monies
Rental Deposit
Rental per Month
Rental paid to date
Property Tax per Month
Property Tax paid to Date
Maintenance and Sinking Fund Charges per Month
Maintenance and Sinking Fund Charges Paid to Date
Vendor's CPF Amount
Amount to Repay to the Vendor's Mortgagee

Computation of Completion Account Items

Rental Proceeds: Calculated by dividing the rental per month by the number of days in the month and multiplying by the number of days of rental received.
Refund of Property Tax: Calculated by dividing the property tax per month by the number of days in the month and multiplying by the number of days of property tax applicable.
Refund of Maintenance and Sinking Fund Charges: Calculated by dividing the monthly charges by the number of days in the month and multiplying by the number of days applicable for the refund.

Mode of Payment for Vendor

Vendor receives payment in the form of cashier's orders.
Cashier's order for Vendor's CPF account
Cashier's order for vendor's mortgagee
Cashier's order for the vendor's remaining balance

Information Needed for the Vendor's Solicitor to Vendor Account

Same information as Vendor's Solicitor to Purchaser's Solicitor
Commission payable to real estate agent
Legal fees payable by the vendor

Calculation of Vendor's Nett Proceeds

Begin with the amount due to the vendor from the purchaser (as per Vendor's Solicitor to Purchaser's Solicitor account).
Add Stakeholder Monies
Subtract the following:
- Refund to CPF account
- Repayment to bank
- Commission to real estate agent
- Legal fees
The result is the nett proceeds due to the vendor.

Alternative Completion Account for Vendor's Solicitor to Vendor

This alternative approach directly calculates the net proceeds by:
- Adding the sale price, property tax refund, and maintenance refund.
- Subtracting option monies, rental deposit, rental proceeds, CPF refund, bank repayment, commission, and legal fees.
The resulting amount will be the same as the vendor's nett proceeds calculated in the traditional completion account.

Information Needed for Purchaser's Solicitor to Purchaser Account

Same information as Vendor's Solicitor to Purchaser's Solicitor
Legal fees payable by purchaser
CPF monies available for use
Mortgage loan
Legal subsidy (no longer provided by banks)

Calculation of Cash Payable by Purchaser

Begin with the amount due to the vendor from the purchaser (as per Vendor's Solicitor to Purchaser's Solicitor account).
Add legal fees payable by the purchaser.
Subtract the following:
- CPF lump sum
- Bank loan
- Legal subsidy
The result is the cash amount payable by the purchaser.

Payment Sources for Purchaser

Purchaser's CPF Money: A cashier's order from the CPF Board is issued in favor of the CPF Board to refund the vendor.
Purchaser's Bank Loan:
- A cashier's order from the bank is issued in favor of the CPF Board to refund the vendor's CPF.
- Another cashier's order from the bank is issued in favor of the vendor's mortgagee.
Purchaser's Cash Difference: Paid into the purchaser's solicitor's conveyancing account. Cashier's order:
- One in favor of the vendor's mortgagee.
- Another in favor of the vendor.

Payment Process of Stakeholder Monies

Electronic filing using STARS elodgment platform.
Vendor's solicitor prepares and files a Payout Form BC.
Vendor authorization through a Letter of Authority.
Purchaser's solicitor verifies and approves the Payout Form BC.
Vendor's solicitor's bank issues cashier's orders for collection by the vendor's solicitor.

Payment Process of Cash Difference

Purchaser's solicitor: Prepares and files a Payout Form BC through the STARS elodgment platform.
Vendor's solicitor: Verifies and approves the Payout Form BC.
Purchaser's solicitor's bank: Issues cashier's orders in favor of the vendor and vendor's mortgagee.

Payment Process of Purchaser's CPF Monies

CPF Board solicitor: Prepares and files a Payout Form BC through the STARS elodgment platform.
Purchaser's solicitor: Verifies and approves the Payout Form BC.
CPF Board solicitor's bank: Issues cashier's orders in favor of the CPF board for collection by the CPF board's solicitor.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz will test your knowledge of completion accounts used in property transactions. You'll learn about the types of completion accounts, their purpose, and the necessary information required for different parties involved. Understanding these concepts is essential for anyone working in real estate or property management.