4. Real Estate Practice (Sale of Residential Property)

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Questions and Answers

What happens to the vendor's first claim if the sale proceeds are insufficient?

The vendor can challenge the bank's claim in court.

The vendor retains full ownership of the property.

The vendor can recover all expenses from the bank.

The bank has the first claim on the sale proceeds. (correct)

Which of the following is NOT required by the CPF Board before legal completion?

Bank’s proposal for future lending. (correct)

Valuation report on the property.

Confirmation that the vendor is not related to the purchaser.

Copies of initial and final redemption statements.

When the sale price of a property is $1,000,000 and the outstanding housing loan is $600,000 with a penalty charge of $6,000, what is the total amount owed to the bank?

$600,000

$500,000

$1,000,000

$606,000 (correct)

What is the refund amount to the CPF Board when the vendor's actual CPF used is $500,000?

$400,000 Signup and view all the answers

In the example provided, what amount did the vendor need to provide on legal completion?

$6,000 Signup and view all the answers

If a vendor sold a property but did not provide the necessary documents required by the CPF Board, what would likely happen?

The sale could be delayed or voided. Signup and view all the answers

What could be the potential financial impact on the vendor if the sale price does not cover the outstanding loan and penalties?

The vendor may incur losses related to the shortfall. Signup and view all the answers

What is one of the main purposes of requiring a valuation report at the time of a property's sale?

To compare the sale price with the property's valuation. Signup and view all the answers

What role does V assume after the conclusion of the contract?

V serves as a trustee of the property Signup and view all the answers

Which action must V take if there is a proposed enbloc sale before legal completion?

Consult P and vote according to P's wishes Signup and view all the answers

What is one of the primary duties of the Vendor’s solicitors?

Serve notices of redemption to the Bank and CPF Board Signup and view all the answers

Which document must the Vendor’s solicitors obtain from the vendor?

Copy of the Tenancy Agreement and its stamp duty certificate Signup and view all the answers

What is the purpose of conducting a title search on the property?

To prepare the draft Digital Total Discharge of Mortgage Signup and view all the answers

What should the Vendor’s solicitors do if the sale is aborted?

Return the title deed to the bank without demand Signup and view all the answers

Which responsibility does the Vendor’s solicitor have regarding the stamp duty?

Obtain a cheque for Seller Stamp Duty from the vendor Signup and view all the answers

What is indicated by V's fiduciary duty towards P?

V must act in accordance with P’s instructions regarding the property Signup and view all the answers

What is the primary purpose of the clause that negates oral representations, warranties, or promises made by the Vendor?

To clarify that only written terms govern the agreement. Signup and view all the answers

What does the 'as is where is' condition imply about the property?

The buyer accepts the property in its current state without warranties. Signup and view all the answers

How does the non-merger clause affect the Vendor's liability post-sale?

It guarantees that all obligations remain enforceable even after completion. Signup and view all the answers

Under what condition would a Vendor be liable for an outstanding fine after the completion of the property sale?

If a non-merger clause is included in the agreement. Signup and view all the answers

What is a potential risk for the Vendor related to the non-merger clause?

Being responsible for undisclosed fines even after sale completion. Signup and view all the answers

What must the Vendor's solicitors prepare in relation to Seller's Stamp Duty?

Letter of Confirmation Signup and view all the answers

What does the phrase 'embodies the entire understanding' suggest about the contract?

It confirms that only written terms are relevant to the agreement. Signup and view all the answers

What action is required from the Vendor’s solicitors regarding the Bank’s solicitor?

Obtain the final redemption statement Signup and view all the answers

What would likely happen if no non-merger clause existed in the contract?

The contract’s obligations would void immediately after completion. Signup and view all the answers

What happens if the Vendor is classified as a non-resident Property Trader?

15% of the sale price will be withheld Signup and view all the answers

Which statement accurately relates to representations, warranties, or promises made prior to the execution of the agreement?

They cannot be enforced if specifically negated in the contract. Signup and view all the answers

What is a primary duty of the Vendor’s solicitors after legal completion?

Deliver the cashier’s orders to the Vendor Signup and view all the answers

What document must the Vendor’s solicitors receive from the Purchaser’s solicitor?

Engrossed Transfer Signup and view all the answers

Prior to legal completion, how many business days must completion accounts be forwarded to the Purchaser's solicitor?

7 Business Days Signup and view all the answers

Which document is NOT directly prepared by the Vendor's solicitors during the sale process?

Engrossed Transfer Signup and view all the answers

What type of Title Deed can be handled by the Purchaser’s solicitor if the property is charged to a bank?

Electronic Title Deed via Authorisation Form Signup and view all the answers

What is the primary responsibility of the Bank's solicitors regarding the TDM?

Review the draft TDM and obtain redemption statements Signup and view all the answers

What must the CPF Board's solicitors do within three working days from completion?

Grant electronic access of the ANDC to Purchaser’s solicitors Signup and view all the answers

Which of the following actions is NOT a duty of the Bank's solicitors?

Review and approve the draft ANDC Signup and view all the answers

What document must the Bank’s solicitors deliver to the Bank before 10 am on the next working day?

Cashier’s orders for redemption monies Signup and view all the answers

Who prepares the Notice to the Management Corporation regarding change of ownership?

The Vendor and endorsed by P Signup and view all the answers

What is the role of the Vendor's solicitor in relation to the ANDC?

Prepare the ANDC for CPF Board approval Signup and view all the answers

Which step follows obtaining the notice of final registration of the ANDC?

Notify the Bank about the final registration Signup and view all the answers

What specific action must the Bank's solicitors take after obtaining the initial redemption statements?

Deliver them to the Vendor’s solicitor Signup and view all the answers

Study Notes

CPF Board’s First Charge

If a property is sold, the bank has first claim on the sale proceeds.
The CPF Board has a second claim on the remaining sale proceeds after the bank’s claim is settled.
The CPF Board may require a valuation report, bank redemption statements, and confirmation that the vendor and purchaser are not related.
If the bank’s claim is higher than the sale proceeds, the CPF Board receives nothing.

Example of Shortfall

Outstanding housing loan: $600,000
Penalty charge: $6,000
Sale price: $1,000,000
After paying the bank 606,000,theCPFBoardreceives606,000, the CPF Board receives 606,000,theCPFBoardreceives500,000.
The vendor receives a $400,000 refund to their CPF account, representing the actual CPF used.
The vendor loses $100,000 of their CPF.

Non-Merger Clause

The non-merger clause ensures that the terms and conditions of the contract remain in effect even after completion of the sale.
This clause is disadvantageous to the vendor because it allows for potential liability even after the property is transferred.
Example: If a building code violation is discovered after completion, the vendor may be held liable despite the violation existing prior to completion.

Vendor’s Position After Completion

The vendor becomes a trustee of the property, meaning they have a fiduciary duty to consult with the buyer regarding the property.
For example, if a potential en bloc sale is proposed, the vendor must inform the buyer and vote according to their wishes.

Solicitor Roles

The vendor, bank, and CPF Board each have their own solicitors involved.
The vendor’s solicitor deals with the bank, the CPF Board, and the purchaser’s solicitor.
The bank’s solicitor handles the bank’s financial interests.
The CPF Board’s solicitor represents the CPF Board’s interests.

Vendor’s Solicitor Duties

Serve notices of redemption to the bank and CPF Board.
Obtain relevant documents from the vendor, including stamp duty certificates, property tax bills, and tenancy agreements.
Conduct title and bankruptcy searches.
Prepare and manage the transfer of the title deed.
Attend completion and deliver the sale proceeds to the vendor.
Inform relevant parties of the change of ownership, including the tenant, bank, and CPF Board.

Bank’s Solicitor Duties

Review and approve the draft TDM prepared by the vendor’s solicitor.
Forward the TDM to the bank for execution.
Obtain initial and final redemption statements from the bank.
Obtain the title deed and forward it to the vendor’s solicitor.
Attend completion and deliver redemption monies to the bank.
Provide electronic access to the TDM to the purchaser’s solicitor.
Inform the bank of the TDM registration.

CPF Board’s Solicitor Duties

Review and approve the ANDC prepared by the vendor’s solicitor.
Digitally sign the ANDC on behalf of the CPF Board.
Obtain the redemption statement from the CPF Board.
Attend completion and deliver redemption monies to the CPF Board.
Provide electronic access to the ANDC to the purchaser’s solicitor.
Inform the CPF Board of the ANDC registration.

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Description

This quiz covers the details of the CPF Board's first charge on property sales, including the order of claims, financial implications, and the non-merger clause. Understanding these elements is crucial for anyone dealing with real estate transactions involving CPF funds.