3. Preparing and Concluding Contracts

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Questions and Answers

What is the purpose of conducting bankruptcy searches during the Sale & Purchase Agreement process?

To assess the insurance coverage for the property

To investigate potential legal disputes related to the property

To verify the financial stability of the vendor or purchaser (correct)

To ensure the property is in a desirable location

Under what condition is a property sold on an 'as is where is' basis?

When the property is vacant and not subject to any tenancy

When the title to the property is free from encumbrances

When the property is under review for legal requisitions

When the buyer agrees to accept all defects and conditions of the property (correct)

What must the title of the property ensure upon completion of the Sale & Purchase Agreement?

It is fully developed according to the latest regulations

It is free from encumbrances and properly deduced (correct)

It has been approved by both solicitors involved

It is subject to a tenancy agreement for additional value

What is the timeframe typically expected for completion after the conclusion of the contract?

8 to 10 weeks Signup and view all the answers

What is the implication of the Law Society's Conditions of Sale regarding 'time is of the essence'?

All procedures must be completed promptly as per the agreed timelines Signup and view all the answers

Which of the following best describes the process of concluding a contract through an Option to Purchase?

The Purchaser pays a small percentage of the purchase price to the Vendor in exchange for a signed Option. Signup and view all the answers

What is a potential risk associated with paying option money before seeking legal advice?

The Purchaser may be bound by unfavorable terms that could have been amended if legal advice was sought. Signup and view all the answers

How is the further payment typically structured once the Purchaser decides to exercise the Option?

The Purchaser pays an additional fee which is usually a fraction of the initial option payment. Signup and view all the answers

What document outlines the standard terms and conditions regarding the sale in real estate transactions?

The Law Society’s Conditions of Sale provides a legal framework for transactions. Signup and view all the answers

What should the Purchaser consider regarding the Vendor's obligations once the signed Option is exchanged?

The Vendor can retain the option money if the Purchaser does not exercise the Option within the specified time. Signup and view all the answers

What happens if the seller fails to pay seller's stamp duty under Cond 7.4 of the 2020 conditions?

The purchaser's lawyer can deduct it from the amount due to the seller. Signup and view all the answers

In which scenario does the withholding tax apply?

When the vendor is assessed to be a property trader. Signup and view all the answers

What are the GST implications when a vendor is a taxable person selling non-residential properties?

GST must be charged on the sale or lease of such properties. Signup and view all the answers

According to 7.2 of LSCS 2020, who is responsible for paying GST on the purchase price?

The purchaser is liable to pay GST if applicable. Signup and view all the answers

What is the primary purpose of lodging a caveat?

To serve as notice of the purchaser’s interest to third parties. Signup and view all the answers

How does lodging a caveat affect conflicting claims?

It can give priority if lodged early among conflicting claims. Signup and view all the answers

Which of the following is a requirement for a caveat to be effective?

It must be lodged before any other interests are claimed. Signup and view all the answers

What stipulation does Section 45D impose on the purchaser's solicitor?

They are liable to withhold tax in certain circumstances. Signup and view all the answers

Study Notes

Concluding Contracts

Option to Purchase: Vendor prepares draft, Purchaser reviews and amends, parties negotiate, Vendor signs, Purchaser pays option money (usually 1% of purchase price), Purchaser exercises option within 2 weeks by signing acceptance copy and paying further sum (usually 4% of purchase price).
Sale and Purchase Agreement: Vendor prepares draft, Purchaser reviews and amends, parties negotiate, agreement is signed. Completion is usually within 8 to 10 weeks. Searches are updated on the day the contract is concluded (bankruptcy, company winding up, judicial management, title search).

Major Terms

Title: Must be properly deduced and free from encumbrances on completion.
Possession: Vacant possession or subject to tenancy.
"As is Where is" Basis: Buying with full notice of state, condition, access, repair, drainage, and area, and all other respects.
Legal Requisitions: Questions sent to various government departments. Define clearly what constitutes “unsatisfactory” replies.

Law Society’s Conditions of Sale 2020

Outgoing apportionment (property tax, levies, rent).
Late completion interest.
Time is of the essence.
Procedure of serving Notice to Complete.

Stamp Duty

Payable within 14 days of concluding the contract.
Cond 7.4 of the 2020 Conditions provides for the purchaser’s lawyer to deduct from the monies due to the seller should the seller fail to pay seller’s stamp duty.

Withholding Tax

Applies when vendor is not resident in Singapore for income tax purposes or is assessed as a property trader.
Purchaser's solicitor is liable to withhold tax in these situations.

Goods and Services Tax (GST)

Chargeable on the sale or lease of non-residential properties where the vendor is a taxable person.

Caveat

Serves as notice to third parties of the purchaser’s interest.
Enables the purchaser to be notified of subsequent dealings.
Prohibits registration of any other instrument claiming a conflicting interest.
Gives priority if lodged early and there are conflicting claims.

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Description

Test your knowledge on concluding contracts, particularly focusing on options to purchase and sale agreements. The quiz covers major terms and essential processes involved in contracts, from vendor preparations to legal requisitions. Perfect for anyone studying real estate law or contract management.