Podcast
Questions and Answers
What is a common requirement when a purchaser decides to exercise an option to purchase?
What is a common requirement when a purchaser decides to exercise an option to purchase?
- Pay a 1% option fee to the vendor directly
- Obtain financing approval before proceeding
- Sign a memorandum of understanding
- Pay a 4% deposit to the vendor or their solicitor (correct)
What happens if the purchaser does not exercise their option within the specified period?
What happens if the purchaser does not exercise their option within the specified period?
- The option fee is refunded to the purchaser
- The vendor retains the 1% option fee (correct)
- The option is extended by another week
- The contract automatically converts to a sale agreement
Which of the following is NOT a typical method for concluding a contract?
Which of the following is NOT a typical method for concluding a contract?
- Tender
- Exchange of correspondence
- Initial public offering (correct)
- Public auction
What role do solicitors play in the option to purchase process?
What role do solicitors play in the option to purchase process?
What aspect of prepared contracts may pose a risk to the purchaser during a viewing?
What aspect of prepared contracts may pose a risk to the purchaser during a viewing?
Which of the following statements about the option fee is true?
Which of the following statements about the option fee is true?
In the option to purchase scenario, when is the 1% option fee typically paid?
In the option to purchase scenario, when is the 1% option fee typically paid?
What best describes an option to purchase?
What best describes an option to purchase?
Which of the following actions is NOT indicated as a way to conclude a contract?
Which of the following actions is NOT indicated as a way to conclude a contract?
What is the primary purpose of conducting searches on the vendor at the time of completing a sale and purchase agreement?
What is the primary purpose of conducting searches on the vendor at the time of completing a sale and purchase agreement?
Which clause is crucial for a purchaser intending to occupy the property themselves?
Which clause is crucial for a purchaser intending to occupy the property themselves?
What are legal requisitions primarily concerned with in a sale and purchase agreement?
What are legal requisitions primarily concerned with in a sale and purchase agreement?
The law society's conditions of sale serve what purpose in a contract?
The law society's conditions of sale serve what purpose in a contract?
What does purchasing a property on an as-is, where-is basis imply for the buyer?
What does purchasing a property on an as-is, where-is basis imply for the buyer?
If a purchaser receives unsatisfactory replies to legal requisitions, what can they do?
If a purchaser receives unsatisfactory replies to legal requisitions, what can they do?
What type of search would be conducted if the vendor of the property is an individual?
What type of search would be conducted if the vendor of the property is an individual?
What major term in a sale and purchase agreement relates to ownership claims on the property?
What major term in a sale and purchase agreement relates to ownership claims on the property?
What happens if the property has outstanding property tax at the time of sale?
What happens if the property has outstanding property tax at the time of sale?
Which of the following is NOT typically a focus area for searches conducted on the vendor?
Which of the following is NOT typically a focus area for searches conducted on the vendor?
Which condition addresses the procedure regarding service of notice to complete?
Which condition addresses the procedure regarding service of notice to complete?
What is the timeframe for paying stamp duty on the contract?
What is the timeframe for paying stamp duty on the contract?
What does a caveat protect the purchaser against?
What does a caveat protect the purchaser against?
In which situation is a purchaser's solicitor liable to withhold tax?
In which situation is a purchaser's solicitor liable to withhold tax?
Who is accountable for the Goods and Services Tax under the Law Society's conditions of sale?
Who is accountable for the Goods and Services Tax under the Law Society's conditions of sale?
What is the impact of lodging a caveat after the contract is signed?
What is the impact of lodging a caveat after the contract is signed?
What type of properties is Goods and Services Tax applicable to?
What type of properties is Goods and Services Tax applicable to?
What constitutes a failure for the seller regarding stamp duty according to condition 7.4?
What constitutes a failure for the seller regarding stamp duty according to condition 7.4?
What is the main purpose of charging interest for late completion?
What is the main purpose of charging interest for late completion?
Which section of the Income Tax Act refers to withholding tax where the vendor is a non-resident property trader?
Which section of the Income Tax Act refers to withholding tax where the vendor is a non-resident property trader?
Flashcards
Option to Purchase
Option to Purchase
A contract that gives a potential buyer the right, but not the obligation, to buy a property within a specified time.
Sale and Purchase Agreement
Sale and Purchase Agreement
A legally binding contract that details the terms of a property sale.
Option Fee
Option Fee
A payment (usually 1%) made by the potential buyer to the seller to secure the right to buy the property. If the buyer doesn't exercise the option, this fee is forfeited.
Exercise the option
Exercise the option
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Draft
Draft
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Solicitor
Solicitor
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Negotiate terms
Negotiate terms
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Standard Form Contract
Standard Form Contract
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Ready-Made Option
Ready-Made Option
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Correspondence
Correspondence
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Completion Time
Completion Time
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Bankruptcy Searches (Vendor)
Bankruptcy Searches (Vendor)
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Company Winding Up Searches (Vendor)
Company Winding Up Searches (Vendor)
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Title Search
Title Search
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Property Title
Property Title
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Vacant Possession
Vacant Possession
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As-is, Where-is
As-is, Where-is
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Legal Requisitions
Legal Requisitions
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Law Society's Conditions of Sale
Law Society's Conditions of Sale
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Apportionment of Outgoings
Apportionment of Outgoings
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Time being of the Essence
Time being of the Essence
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Service of Notice to Complete
Service of Notice to Complete
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Stamp Duty
Stamp Duty
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Buyer Stamp Duty (BSD)
Buyer Stamp Duty (BSD)
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Seller Stamp Duty
Seller Stamp Duty
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Withholding Tax
Withholding Tax
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GST (Goods and Services Tax)
GST (Goods and Services Tax)
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Caveat
Caveat
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Early Notification
Early Notification
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Study Notes
Contract Preparation and Conclusion
- Contracts are concluded in various ways, including options to purchase, sale and purchase agreements, correspondence, prescribed agreements (Housing Developers Control and Licensing Act, Sale of Commercial Properties Act), auctions, and put-in-call options.
- Oral contracts can be evidenced by written memoranda.
- The vendor solicitor drafts a purchase agreement, the buyer's solicitor reviews and amends it, and both parties negotiate terms.
- Once agreed, the vendor signs the option, and the buyer pays a 1% option fee. The buyer has two weeks to exercise the option by signing an acceptance copy and paying an additional 4% or to the vendor or vendor's solicitor.
- If the buyer doesn't exercise the option, the seller retains the 1% fee and can resell the property.
- Housing agents often prepare ready-made options for buyers, aiming to gain a 1% fee to expedite the deal.
- Sale and purchase agreements specify crucial details like property and price, good title free from encumbrances, vacant possession or tenancy, and "as-is" conditions.
- Legal requisitions are important questions addressed to relevant government agencies, ensuring no outstanding notices affect the property.
- Completion usually takes 8–10 weeks after exercising an option or signing the agreement.
- Bankruptcy, company winding-up and judicial management, and title searches are conducted during this period.
- The completion date is significant as the sale is concluded and all payments are made.
Essential Contract Terms
- Major Contract Terms: Property description, price, title, encumbrances, vacant possession/tenancy, "as-is" condition, access, repair, drainage, and area are key agreement clauses.
- Legal Requisitions: Crucial questions by the buyer's solicitor addressed to various government agencies to ensure no outstanding notices affect the property.
Timelines and Procedures
- Completion: The period for the sale agreement's completion usually takes 8-10 weeks.
- Searches: Thorough searches for bankruptcy, company status, and title defects are crucial during that period.
- Caveats: Purchasers lodge caveats to protect their interests, informing third parties of their claim and preventing conflicting claims to the property. This is often done upon signing the purchase agreement or exercising an option.
Taxation and Duties
- Stamp Duty: Calculated on the contract within 14 days upon either exercising an option or signing agreement.
- Withholding Tax: Applied to vendors not residing in Singapore, assessed as property traders (Section 10.1a) of the Income Tax Act.
- Goods and Services Tax (GST): Chargeable on sales or leases of non-residential properties.
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