Property Law Overview and Rights

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Questions and Answers

What is a key characteristic of unconstructed properties?

They are always completed before they are sold.

Sellers transfer legal title at the point of sale.

Buyers typically purchase units before construction is completed. (correct)

They require no government regulations during sale.

What must real estate agents ensure when acting on behalf of their clients?

They can ignore market trends.

They need to act in their clients' best interests. (correct)

They should always keep their knowledge to themselves.

They must prioritize their own interests.

Which characteristic distinguishes real property from personal property?

Real property includes movable assets.

Real property cannot be removed or relocated. (correct)

Real property can be created or destroyed.

Real property is generally homogeneous.

Which certificate is issued when the construction of a property is completed?

Certificate of Statutory Completion Signup and view all the answers

What does the 'bundle of rights' in property ownership refer to?

The set of legal rights associated with ownership. Signup and view all the answers

Which of the following is a true statement regarding personal property?

Personal property can be reproduced in unlimited amounts. Signup and view all the answers

Which of the following is a responsibility of real estate agents?

To disclose conflicts of interest. Signup and view all the answers

In the context of property law, what does 'partial performance' imply?

Some obligations of the contract can be enforced. Signup and view all the answers

What does a Government Land Sale (GLS) refer to?

An auction process for state-owned land. Signup and view all the answers

What is a defining characteristic of real property?

It is finite, and no more land can be created. Signup and view all the answers

What is a major issue that led to the regulation of developers before 1965?

There was a lack of transparency and ethical practices. Signup and view all the answers

What defines a 'cowboy developer'?

A developer who operates without any transparency. Signup and view all the answers

Which right is NOT included in the bundle of rights associated with property ownership?

Right to profit Signup and view all the answers

How often must real estate agents maintain their knowledge of market trends?

Regularly through continuing education. Signup and view all the answers

How does personal property generally differ from real property in terms of production?

Personal property is destructible and reproducible. Signup and view all the answers

What must be fulfilled for a contract to be discharged in some cases?

A specified time frame or conditions must be met. Signup and view all the answers

What is the primary purpose of performing checks in the Land Registration System during Stage 1?

To verify the seller's legal right to sell the property Signup and view all the answers

Which of the following is NOT a check conducted by the buyer during Stage 1?

Property Value Appraisal Signup and view all the answers

What could an outstanding mortgage on a property indicate to a buyer?

The buyer must clear the mortgage before the transfer Signup and view all the answers

Why is it important for the buyer to check for easements during the Contract Stage?

To understand limitations on property use Signup and view all the answers

What can result from not conducting checks during the Contract Stage?

Legal complications such as co-ownership disputes Signup and view all the answers

What does the term 'caveat emptor' mean in relation to property purchase?

Buyer beware; the buyer is responsible for due diligence Signup and view all the answers

During the checks, what could indicate a problem with co-ownership?

Finding multiple names on the title during ownership verification Signup and view all the answers

What aspect of the property is verified to ensure safe transfer of ownership?

Legal clarity of the property's title Signup and view all the answers

What is the primary purpose of depositing buyer payments into a Project Account?

To ensure the funds are reserved for project-related expenses Signup and view all the answers

What happens to the funds in the Project Account if the developer goes into liquidation?

They are protected and not included in the developer's assets. Signup and view all the answers

What is the doctrine of Caveat Emptor related to completed properties?

Buyers need to perform due diligence as sellers aren't liable for hidden defects unless asked. Signup and view all the answers

What does the term 'betterment' refer to in real estate development?

The increase in land value from external improvements like re-zoning. Signup and view all the answers

What is the Land Betterment Charge (LBC)?

A tax on the increase in land value due to public planning improvements. Signup and view all the answers

Unearned increment refers to what type of gains for landowners?

Increases in property value from external improvements like new infrastructure. Signup and view all the answers

What type of tax often applies to unearned increments?

Betterment tax Signup and view all the answers

Which of the following is true about the responsibilities of sellers under the doctrine of Caveat Emptor?

Sellers must disclose hidden defects only if queried by buyers. Signup and view all the answers

What is the main responsibility of the Management Corporation in a strata scheme?

They act as the legal entity representing the entire development. Signup and view all the answers

Which of the following is an example of a statutory by-law?

Guidelines for noise levels. Signup and view all the answers

What constitutes grounds for termination of a strata scheme?

Severe damage or destruction of the building. Signup and view all the answers

What is required for an en bloc sale to occur within a strata scheme?

A majority vote among unit owners. Signup and view all the answers

How does the Management Corporation address individual disputes regarding common property?

They represent the collective interests of the entire development. Signup and view all the answers

What is the typical Loan-to-Value (LTV) ratio for first-time home buyers using a mortgage?

Up to 75% Signup and view all the answers

In the recent case at Mandalay Mansion, what was the reason for litigation against the Management Corporation?

Neglect of maintenance responsibilities for the roof. Signup and view all the answers

Which type of by-law can be implemented by the Management Corporation at their discretion?

Non-statutory by-laws governing pet ownership. Signup and view all the answers

Study Notes

Property Overview

Property is a broad term for various assets, classified as real property (realty) and personal property (personalty/chattels).
Real property (realty) is immovable and includes land and buildings, known for its indestructibility, finite quantity, and heterogeneity.
Personal property (personalty/chattels) is movable, destructible, often reproducible in unlimited quantities, and homogeneous.

Bundle of Rights Theory

Property ownership encompasses a bundle of legal rights, including the rights:
- To possess the land.
- To use the land for specific purposes.
- To transfer the land to others.
- To exclude others from entering or using the land.
These rights are intangible, meaning they can be exercised but not physically seen or touched.
Different stakeholders can have varying rights to a single piece of land (e.g., a tenant's right to live there vs. an owner's right to sell it).

Key Checks the Buyer Conducts at Stage 1 (Contract Stage)

Buyers conduct due diligence during Stage 1 of a property purchase to ensure the legal transferability of the property and identify potential encumbrances.
Ownership Verification: This check ensures the seller legally owns the property and can transfer it, using the Land Registration System.
Encumbrances Check: The buyer investigates for mortgages, liens, or encumbrances that could impact the sale.
Co-ownership or Bankruptcy: This check reveals if the seller co-owns the property with others or is bankrupt, ensuring all necessary parties are involved in the sale.
Property Boundaries and Rights: The buyer checks for easements or rights of way that might affect the property's use or limit its overall "bundle of rights."
Caveat Emptor (Buyer Beware): These checks safeguard buyers from purchasing properties with legal issues or unforeseen obligations.

Why Conducting Checks in Stage 1 is Important

Failure to conduct these checks during the Contract Stage could lead to buying a property with legal issues, such as co-ownership disputes or outstanding mortgages.
Conducting checks allows the buyer to renegotiate or withdraw from the deal before being legally obligated.

Standard Agency Agreements

Standard agency agreements between clients and agents prioritize the interests of both parties.

Duties of Real Estate Agents

Fiduciary Duty: Agents act in their clients' best interests, ensuring transparency and honesty.
Disclosure: Agents must disclose conflicts of interest and provide accurate market information.
Professionalism: Agents maintain updated market knowledge and comply with regulations through continuing education.

Housing Development: Unconstructed vs. Constructed Properties

New Sale (Unconstructed/Completed)

Definition: Units sold before construction begins or is completed, sold directly by developers.
Legal Title: Buyers receive legal title only when the construction is finished and the Certificate of Statutory Completion (CSC) or Certificate of Title (COT) is issued for all units.
Government Land Sales (GLS): Developers may acquire land through GLS auctions, where property sales follow similar uncompleted property guidelines.

Sale Process for Unconstructed Properties

Statutory Regulation of Developers:
- Pre-1965: Developers engaged in unethical practices, prompting the government to regulate the industry.
- "Cowboy Developers": Developers operating without transparency, failing to finish projects or delivering substandard housing.
- Project Account Rules: Buyer payments are deposited into a Project Account, ensuring funds are allocated for project-related expenses, protecting buyers and enforcing financial discipline.

Resale (Constructed/Completed)

Definition: Ready-for-sale units after construction, purchased from developers or the secondary market.
Caveat Emptor (Buyer Beware): Buyers must conduct due diligence as sellers are not obligated to disclose hidden defects unless asked. Sellers are liable for misrepresentation if they intentionally provide false or incomplete information.

Taxation for Real Estate Development

Betterment and Unearned Increment

Betterment: Increased land value due to rezoning or granting development rights (e.g., agricultural land being rezoned for residential or commercial use).
Land Betterment Charge (LBC): Tax on the betterment value when land use is intensified or rezoned, capturing the windfall gain from public planning and infrastructure improvements.
Unearned Increment: Windfall gains from external factors like nearby infrastructure developments (e.g., a new MRT station), which are taxed through betterment taxes.

Strata Law

Management Corporation (MC): MCs are legal entities representing entire developments, handling issues such as defects in common property and breaches of by-laws.
Statutory By-laws: Regulate common property use, including noise levels, parking, obstruction of shared facilities, and damage to flora.
Non-Statutory By-laws: Additional rules implemented by the MC for matters like pet ownership , use of gym facilities , and smoking restrictions.

Termination of Strata Schemes

Destruction or Damage: Severe damage or destruction of the building can lead to scheme termination, requiring owners to decide on repair or sale of the land.
En Bloc Sales: All owners agree to sell the entire development for redevelopment, generally requiring a majority vote and dividing proceeds according to individual unit share values.
Termination by order of court: Legal process for terminating strata schemes under certain circumstances.

Investing in Real Estate and Tax Implications

Purchase of Property for Owner-Occupation

Definition: Buying property for primary residence.
Leverage and Financing: Often involves mortgages with Loan-to-Value (LTV) ratios of up to 75% for first-time buyers.

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Description

Explore the fundamental concepts of property law, including the distinction between real property and personal property. Understand the bundle of rights associated with property ownership and common checks a buyer should perform during the initial stages. This quiz will help reinforce your knowledge of property classifications and ownership rights.