Common Terms in Sale & Purchase Agreements

Sunday, July 28, 2019 0 Comments A+ a-

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.