Real Estate Practice Completion Accounts Types and Computation PDF

Real Estate Practice Completion Accounts Types and Computation Case Study Scenario Vendor owns Condominium Purchaser using: apartment subject to: CPF Charge Cash Mortgage CPF money Tenancy...

Real Estate Practice Completion Accounts Types and Computation Case Study Scenario Vendor owns Condominium Purchaser using: apartment subject to: CPF Charge Cash Mortgage CPF money Tenancy Loan 2 Completion Account Per Chua J in Frans Furniture Pte Ltd v Good Property Land Development Pte Ltd “An account rendered by Vendor’s solicitors to Purchaser’s solicitors to inform Purchaser of the amount payable on completion.”  Types of Completion Accounts 1. Vendor’s Solicitors to Purchaser’s Solicitors (amount payable by Purchaser to Vendor) 2. Vendor’s Solicitors to Vendor (receivable nett sale proceeds by Vendor) 3. Purchaser’s Solicitors to Purchaser (amount required by Purchaser to finance purchase) Vendor’s Solicitors to Purchaser’s Solicitors Information required to prepare account Completion date = 18/8/YY Sale price = $1,000,000.00 Option monies = $10,000.00 Stakeholder monies = $40,000.00 Rental deposit = $2,000.00 Rental per month = $2,000.00 Rental paid todate = 1/8/YY to 31/8/YY Vendor’s Solicitors to Purchaser’s Solicitors Information required to prepare account Property tax per month = $200.00 Property tax paid to date = 1/1/YY to 31/12/YY Maintenance & sinking fund charges per month = $150.00 Maintenance & sinking fund charge paid to date = 1/7/YY to 30/9/YY Vendor’s Solicitors to Purchaser’s Solicitors Information required to prepare account Amount to refund Vendor’s CPF a/c = $600,000.00 Amount to repay Vendor’s mortgagee = $300,000.00 Vendor’s Solicitors to Purchaser’s Solicitors Sale Price $1,000,000.00 Less: 1% option monies $10,000.00 4% stakeholders monies $40,000.00 Rental deposit $ 2,000.00 Rental proceeds $ 838.71 * $ 52,838.71 $ 947,161.29 Add: Refund of property tax $ 883.87 * Refund of maint./sink fund $ 212.90 * Due from Purchaser to Vendor $ 948,258.06 * Computation 31 19 Jan Feb Mar Apr May Jun Jul Aug RENTAL 19 31 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec PROPERTY TAX 19 30 Jan Feb Mar Apr May Jun Jul Aug Sep MAINTENANCE 9  Computation Rental proceeds of $838.71 $2,000.00 ÷ by 31 days of August × 13 days (i.e. 19/8 to 31/8) Refund of property tax of $883.87 $200.00 ÷ by 31 days of August × 13 days (i.e. 19/8 to 31/8) Plus $200.00 × 4 months (i.e. Sept to Dec) Refund of maintenance of $212.90 $150.00 ÷ by 31 days of August × by 13 days (i.e. 19/8 to 31/8) Plus $150.00 × 1 month (i.e. Sept) Mode of payment required by the Vendor Cashier’s orders required to pay the sum of $948,258.06 to the Vendor: $600,000.00 in favour of CPF Board $300,000.00 in favour of XYZ Bank $48,258.06 in favour of the Vendor Vendor’s solicitors to Vendor Information required to prepare account same information in preparing account from the Vendor’s Solicitors to the Purchaser’s Solicitors + Amount of commission payable by the Vendor’s real estate agent = $10,000.00 Legal fees payable by Vendor = $2,500.00 Vendor’s solicitors to Vendor (reproduce a/c from V’s sol. to P’s sol) $ 948,258.06 Add: Stakeholder monies $ 40,000.00 $ 988,258.06 Less: Refund to CPF account $600,000.00 Repayment to the Bank $300,000.00 Commission to agent $ 10,000.00 Legal fees $ 2,500.00 $ 912,500.00 Nett proceeds due to Vendor $ 75,758.06 Vendor’s solicitors to Vendor (reproduce a/c from V’s sol. to P’s sol) $ 948,258.06 Add: Stakeholder monies $ 40,000.00 $ 988,258.06 Less: Refund to CPF account $600,000.00 Repayment to the Bank $300,000.00 Commission to agent $ 10,000.00 Legal fees $ 2,500.00 $ 912,500.00 Nett proceeds due to Vendor $ 75,758.06 At legal completion, Vendor will receive the Purchaser’s cashier’ order for $48,258.06 & cashier’s order from the Conveyancing Account or SAL for $27,500.00 ALTERNATIVE – Vendor’s Solicitors to Vendor Sale Price $1,000,000.00 Add: Refund of Property Tax $ 883.87 Refund of Maintenance $ 212.90 $1,001,096.77 Less: Option monies received by Vendor $ 10,000.00 Transfer of Rental Deposit $ 2,000.00 Transfer of Rental Proceeds $ 838.71 Refund to CPF account $600,000.00 Repayment to the Bank $300,000.00 Commission to agent $ 10,000.00 Legal fees $ 2,500.00 $ 925,338.71 Nett proceeds due to Vendor on completion $ 75,758.06  Purchaser’s Solicitors to Purchasers Information required to prepare account same information in preparing account from the Vendor’s Solicitors to the Purchaser’s Solicitors (excluding Vendor’s CPF refund & repayment of loan) Legal fees payable by Purchaser = $3,500.00 CPF monies available for use = $200,000.00 Mortgage loan from the bank = $650,000.00 *Legal subsidy from the bank = $3,500.00 *Banking industry removed this practice in late 2012 Purchaser’s Solicitors to Purchasers (reproduce a/c from V’s sol. to P’s sol) $ 948,258.06 Add: Legal fees $ 3,500.00 $ 951,758.06 Less: (i.e. financing available to P) CPF lumpsum $200,000.00 Bank loan monies $650,000.00 Legal subsidy $ 3,500.00 $ 853,500.00 Cash payable by Purchaser $ 98,258.06 Where is the Purchaser’s source of funds coming from for the balance due to the Vendor on legal completion amounting to $948,258.06 and how will each of the parties be releasing the source of funds in the manner which the Vendor prescribed? Purchaser’s CPF monies of $200,000.00 CPF Board will issue a cashier’s order of $200,000.00 in favour of CPF Board Purchaser’s bank loan of $650,000.00 The Bank will issue :- A cashier’s order of $400,000.00 in favour of CPF Board A cashier’s order of $250,000.00 in favour of XYZ Bank Purchaser’s cash difference of $98,258.06 paid into the Purchaser’s solicitors’ conveyancing a/c Purchaser’s solicitors will issue :- A cashier’s order of $50,000.00 in favour of XYZ Bank A cashier’s order of $48,258.06 in favour of the Vendor Where Did The Purchaser’s Money Go?  Stakeholder Monies Paid Into Vendor’s Solicitors’ Conveyancing A/c, how to Pay Out? 1. Vendor’s solicitors prepare and e-file the Payout Form BC into the ePI system on STARS elodgment platform. 2. Vendor signs the Letter of Authority authorising the third party payments. 3. Purchaser’s solicitors receive the email notification. 4. Purchaser’s solicitors verify, approve and countersign the Payout Form BC. 5. Vendor’s solicitors’ Bank receives an email notification and issues the cashier’s orders for collection by the Vendor’s solicitors. Cash Difference Paid Into Purchaser’s Solicitors’ Conveyancing A/c, how to Pay Out? 1. Purchaser’s solicitors prepare and e-file into the ePI system on the STARS elodgment platform, a Payout Form BC to request pay out to the Vendor and his mortgagee. 2. Vendor’s solicitors notified via email of e-filed Payout Form BC, logs into ePI system, verifies the payment requests and if it is in order, approves and countersigns it. 3. Purchaser’s solicitor’s Bank notified by email of Vendor’s solicitors’ approval, issues cashier’s orders to pay the Vendor and XYZ Bank for Purchaser’s solicitors to collect on legal completion. Purchaser’s CPF Monies Paid Into CPF Board’s Solicitors’ Conveyancing A/c, how to Pay Out? 1. CPF Board’s solicitors prepare and e-file into the ePI system on the STARS elodgment platform, a Payout Form BC to the Purchaser’s solicitors to request to pay out to CPF Board (i.e. refund the Vendor’s CPF monies). 2. Purchaser’s solicitors notified via email of e-filed Payout Form BC, log into ePI system, verify the payment and if it is in order, approves and countersigns it. 3. CPF Board’s solicitor’s Bank notified by email of Purchaser’s solicitors’ approval, issues cashier’s orders to pay the CPF Board and for the CPF Board’s solicitors to collect on legal completion. Purchaser’s CPF Monies Paid Into CPF Board’s Solicitors’ Conveyancing A/c, how to Pay Out? 1. CPF Board’s solicitors prepare and e-file into the ePI system on the STARS elodgment platform, a Payout Form BC to the Purchaser’s solicitors to request to pay out to CPF Board (i.e. refund the Vendor’s CPF monies). 2. Purchaser’s What if allsolicitors notified these monies were paidvia intoemail of e-filed the Singapore Payout Academy Form BC, log into ePI system, verify the payment and if it is of Law instead? in order, approves and countersigns it. 3. CPF Board’s solicitor’s Bank notified by email of Purchaser’s solicitors’ approval, issues cashier’s orders to pay the CPF Board and for the CPF Board’s solicitors to collect on legal completion. Notice Copyright © 2024, Singapore Institute of Legal Education. All rights reserved. The Course materials are developed by the Singapore Institute of Legal Education, based on the content, syllabus, and guidance provided by the Chief and Principal Examiners and their teams. 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