Common Terms in Sale & Purchase Agreements
You
may now have a better understanding of the whole process of buying a house or
HDB such as Tampines HDB after reading about the conveyancing
process. Some days later, you then receive a stack of thick and wordy documents
for your signing. In this article, we will guide you through the salient
terms which you should take note of in your Sale and Purchase Agreement for the
purchase that is still under
construction. In Singapore, all contracts for the sale and purchase of
houses by licensed housing developers are governed under the Housing Developers
(Control and Licensing) Act. All the Option to Purchase (OTP) and Sale and
Purchase Agreements which you are required to sign are standard form contracts
found in the Housing Developers Rules. All changes and amendments to the
standard form found in the Rules have to be approved by the Controller of
Housing before they can be validly issued to purchasers.
1.
Tenure (Clause 2)
This
is understandable but bear in mind that your 99-year or 999-year lease starts
from whenever the developer was granted the land. This means that when you are
signing the agreement, a year or even a few years of your tenure might have
already passed.
2.
Payment Schedule (Clause 5)
For
a building under construction (BUC) purchase, payment is made as and when
certain stages of works have been completed on the building. At the outset, you
will be making payment for the first 20% of the purchase price which is payable
within 8 weeks of the date of the OTP. Subsequently, upon the completion of
each stage of construction as certified by their architects, the developer will
send a notice to your lawyers to inform them that payment is due. Your lawyers
will then arrange for payments to be made by either drawing down on your bank
loan, CPF funds, or instructing you to provide a
cashiers’ order, depending on your source of funds.
Upon
receipt of the developer’s notice, payment is to be made within 14 days. If
not, you will suffer late payment interest as stated under Clause 6. This will
generally only be of concern if you are using cash for such payments.
3. Repudiation (Clause 7)
Non-payment
of purchase price or interest can also lead to the developer treating the
agreement as repudiated by you. The agreement will be treated as annulled if
the amounts owing are still unpaid after the developer gives 21 days’ written
notice.
Upon
termination of the agreement, 20% of the amounts you have paid may be
forfeited, in addition to recovering interest, property tax, maintenance
charges, legal costs and all other amounts owing and unpaid.
4.
Delivery of vacant possession (Clause 12)
Clause
12 states the latest date on which the developer should deliver vacant
possession of your unit. Should they fail to do so, the developer will have to
pay liquidated damages at the rate of 10% per annum on the portions of the
purchase price already paid.
5.
Defects liability period (Clause 17)
Upon
Temporary Occupation Permit, the 12-month defects liability
period begins. During these 12 months, the developer is responsible for any
defects that become apparent. Notify the developer of the defects which the
developer should rectify it within one month of receiving your notification. If
not rectified after one month, you can approach your own contractor for a price
quotation. Give the developer written notice of your intention to carry out
rectification works using your own contractor. Also, provide the developer with
the quotation which you obtained. If the developer fails to carry out
rectification works within 14 days after receiving your written notice with
quotation, you may get your own contractors to carry out the works. Costs
incurred by you in carrying out the rectification works can be claimed from the
sum held by the SAL as stakeholder.
6.
Building specifications and amenities (First Schedule)
The
First Schedule includes terms regarding to the facilities and building
specifications. Almost all Sale and Purchase Agreements will describe the
material to be used in very generic terms. Regardless of what brand or colour
or quality of furniture, doors and other amenities you might have seen in the
show flat, it is the description in this First Schedule that is legally binding.
That means that what you may not be getting exactly the same as what you saw.
7.
Transaction particulars (Fourth Schedule)
It
is essential to check that the transaction particulars reflected here are
accurate. Check that the purchase price, option fee paid, and most importantly,
the unit number, are all correct.
