REP 4 - Property Sale Process
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Questions and Answers

What amount is the vendor required to produce if the sale proceeds are $1 million and the amount owing to the bank is $606,000, with $600,000 for the home loan and $6,000 for penalty charges?

  • $100,000
  • $0
  • $106,000
  • $6,000 (correct)
  • Which document is NOT required by the CPF Board before legal completion?

  • Confirmation from the vendor
  • Proof of income (correct)
  • Copies of bank's initial redemption statement
  • Valuation report on the property
  • Upon legal completion, which amount is distributed first if the CPF Board has the first charge?

  • $1 million to the vendor
  • $106,000 to the vendor
  • $600,000 to the bank
  • $500,000 to the vendor's CPF account (correct)
  • If the bank has the first charge and the sale proceeds are $1 million, how much is left after repaying the bank's home loan amount?

    <p>$400,000</p> Signup and view all the answers

    In case the vendor cannot produce the shortfall after the sale, what option do they have regarding the charge order?

    <p>Apply to reverse the charge order</p> Signup and view all the answers

    What is a possible financial obligation the vendor must consider beyond repaying the bank?

    <p>Seller stamp duty</p> Signup and view all the answers

    What action does the bank take concerning penalty charges when the vendor sells the property?

    <p>Does not claim the penalty charges</p> Signup and view all the answers

    What is the consequence for the purchaser if they decide not to proceed with the purchase after signing the sale and purchase agreement?

    <p>They will forfeit their deposit.</p> Signup and view all the answers

    Which of the following is NOT a requirement that should be included in the sale and purchase agreement from the vendor's perspective?

    <p>Lot area of the property</p> Signup and view all the answers

    What must be stated regarding the handling of the deposit in the sale and purchase agreement?

    <p>It should be held by the vendor's solicitors or in a specified escrow account.</p> Signup and view all the answers

    What is the primary obligation of the vendor upon completion as per condition 5.1?

    <p>To deliver the property in its original condition, barring fair wear and tear.</p> Signup and view all the answers

    What is the significance of condition 5.1 concerning unforeseen property damage?

    <p>It allows the vendor to avoid all repairs.</p> Signup and view all the answers

    What does condition 10.1 entail regarding the property?

    <p>The vendor confirms there are no unauthorized alterations to the property.</p> Signup and view all the answers

    What is an essential factor a vendor should consider to bind a purchaser to the property transaction?

    <p>Using a sale and purchase agreement.</p> Signup and view all the answers

    In terms of property descriptions in the sale and purchase agreement, which statement is true?

    <p>The complete address suffices as a description.</p> Signup and view all the answers

    Which currency must be specified in the sale price of the property?

    <p>Singapore dollars</p> Signup and view all the answers

    What is required if a cheque used for the acceptance of an option bounces?

    <p>It is considered late acceptance.</p> Signup and view all the answers

    Why are legal requisitions important before the completion of a property transaction?

    <p>To verify that the property is not landlocked.</p> Signup and view all the answers

    What is the typical redemption notice period for a seller's mortgage?

    <p>2 months</p> Signup and view all the answers

    When must a caveat be lodged by the purchaser's solicitor?

    <p>When the buyer exercises the option or signs the agreement.</p> Signup and view all the answers

    Who must be paid from the balance sale price upon completion of a property sale?

    <p>The vendor's mortgagee, agent, and solicitor.</p> Signup and view all the answers

    What is the first step in ensuring everything is in order before proceeding with the sale?

    <p>Conduct a bankruptcy search on the vendor</p> Signup and view all the answers

    What must be done with the title deed if the sale is aborted?

    <p>Return it to the bank without demand</p> Signup and view all the answers

    Which document must be prepared after receiving drafts from the purchaser solicitors?

    <p>Engross transfer for vendor's execution</p> Signup and view all the answers

    What should happen during the execution of the vendor's documents?

    <p>Witness the vendor sign all transaction documents</p> Signup and view all the answers

    What must the management corporation be informed about after the completion of property transfer?

    <p>Change of ownership notice</p> Signup and view all the answers

    What is required from the purchaser solicitors before legal completion?

    <p>Completion account and mode of payment</p> Signup and view all the answers

    What action must be taken with the cashier's orders for sale proceeds after completion?

    <p>Deliver them to the vendor</p> Signup and view all the answers

    What document must be e-filed to notify the inland revenue of the change of ownership?

    <p>Notice of transfer</p> Signup and view all the answers

    What should be included in the preparation of documents for completion?

    <p>All documents required for vendor execution</p> Signup and view all the answers

    What is the purpose of obtaining the draft Digital Total Discharge of ModGage TDM?

    <p>To prepare for the approval process by solicitors</p> Signup and view all the answers

    What is the primary advantage of having the deposit held as stakeholders?

    <p>It may ease the refund process in case of vendor default.</p> Signup and view all the answers

    Which party typically prefers to receive the deposit directly?

    <p>The vendor.</p> Signup and view all the answers

    What action must be confirmed with clients before proceeding with a property purchase?

    <p>Who the purchasers are.</p> Signup and view all the answers

    What is the first payment required upon the issuance of an option to purchase?

    <p>1% of the purchase price.</p> Signup and view all the answers

    What should purchasers' solicitors review regarding properties sold subject to tenancy?

    <p>The terms of the tenancy agreement.</p> Signup and view all the answers

    What condition might lead a purchaser to consider non-stakeholding of their deposit?

    <p>The vendor has no encumbrances on the property.</p> Signup and view all the answers

    What generally happens to the purchase if there is a vendor's default?

    <p>The purchaser has an easier time obtaining a refund.</p> Signup and view all the answers

    What does the possibility of having the deposit non-stakeheld imply for the purchaser?

    <p>There are considerations regarding the property's encumbrances.</p> Signup and view all the answers

    What percentage of the purchase price is typically paid upon the exercise of the option?

    <p>5%</p> Signup and view all the answers

    What should solicitors be particularly cautious about when handling a purchase subject to an existing tenancy?

    <p>Any restrictions on assigning the property by the landlord.</p> Signup and view all the answers

    Study Notes

    Private Residential Property Sale Process

    • This lecture discusses the sale of a private residential property within a condominium, with a separate legal title.
    • The property is owned by a single registered proprietor (vendor) and leased to a tenant, mortgaged to a bank, and charged to the CBF board (or CVF board).

    Factors for Determining Sale Price

    • The vendor must consider several factors when determining the sale price of the property.
    • These include outstanding mortgage loan amounts, including potential penalties for early repayment (lock-in period).
    • Accrued interest on CPF account withdrawals used for the purchase.
    • Seller's stamp duty obligations if the sale occurs within a certain period from the purchase date.
    • Legal fees and commissions for solicitors and real estate agents.

    Insufficient Sale Proceeds

    • If total sale proceeds are insufficient to repay the bank loan and refund CPF monies, it depends on whether the bank or CPF board has first charge on the property.
    • A 2002 rule by the CPF board concerning home financing using CPF funds.

    Additional Considerations for Sale

    • The bank can only claim for the loan and interest but not penalties.
    • The CPF board requires a valuation report confirming the sale price meets or exceeds the valuation.
    • Vendor confirmation that the purchaser is not a relative.
    • The vendor might need to pay additional funds for seller stamp duty or agents fees after the sale price has been finalized.
    • The vendor may incur additional legal fees if they reverse the charge of the bank or CPF board on the property.

    Types of Contracts

    • Option to Purchase: Purchaser pays an initial fee and has a set period to decide to buy the property.
    • Sale and Purchase Agreement: A legally binding agreement to purchase the property.
    • A deposit is paid when the sale and purchase agreement is signed.

    Important Clause in Sale and Purchase Agreements

    • Non-merger clause: This clause ensures that even after the sale and purchase agreement completion, previous agreement terms are still valid. This is useful for correcting errors in the previous agreement between the buyer and seller.

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    Description

    This quiz covers the intricacies of selling a private residential property, particularly in a condominium context. It discusses factors affecting sale price, such as mortgages, outstanding loans, legal fees, and regulatory obligations. Test your understanding of the process and its financial implications.

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