Concluding Contracts for Sale of Land Learning Objectives List the requirements for a valid contract for sale

of land List and explain the different ways in which a contract for sale of land may be reached Describe the status and duties of a solicitor who holds money as stakeholder Ascertain the stamp duty payable and whether withholding tax and GST apply Explain when the risk in the property passes Explain when & why a caveat should be lodged Requirements for Validity - • General contract law applies • Section 6(d) Civil Law Act No action shall be brought … upon any contract for the sale … of immovable property … unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith, or some other person lawfully authorised by him (solicitors? Are they authorized to enter into such contracts on behalf of clients? Power of attorney – can appt reptive to transact on ur behalf. See cases later) • Email satisfies requirement of “in writing” and “signed” - SM Integrated Transware v Schenker Singapore [2005] 2 SLR 651 (Judith prakash) – System throws up name as sender. HC held that this was sufficient signature by the sender for purpose of s6(d) civil law act. – Far reaching conseq for rest of contract for sale of land!! Prev - No formal requirements for land contracts except the 3 “P”s • Party • Property • Price • now - 4 Ps: Parties, Property, Price, Provisions – see Tay joo seng below!!!!!!! Look at conveyancing manual

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Ways of reaching a Contract • In Singapore, a contract for the sale and purchase of immovable property may be reached between vendors and Purchasers in one of the following ways: 1. 2. 3. 4. 5. Entering into sale and purchase agreement Option to purchase Exchange of correspondence Exchange of duly signed documents Exchange of duly signed agreements for sale and purchase 6. By vendor granting to purchaser call option and purchaser granting to vendor put option and ex of call or put option 7. licence under housing development sale under Commercial Properties Act 8. by Tender 9. By public auction 10. An oral contract evidenced by memorandum in writing

Note: Where the Vendor is a developer and the property is a unit in a development within the provisions of The Housing Developers (Control and Licensing) Act (Cap 130) or The Sale of Commercial properties Act (Cap 281), then the contract for the sale and purchase of such property will have to be in the form prescribed by the relevant statutory provisions and he regulations thereunder. Most common - Sale and Purchase Agreement (see last week: developers issuing this, but they also deal with option – so they have two of these documents; way the proced is structured is actually an

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option to purchase)/ Option to Purchase (completed properties usually transacted by option to purchase)

Not so common: Exchange of Correspondence / Put and Call Option Agreement / See last lec Prescribed Agreements under HD(C&L)A & SCPA/ Tender Public Auction/ Oral Contracts evidenced by memo in writing (try to avoid this form and exchange of corresp) Subject to contract if there is no contract in existence then the solicitor must be very careful as to how he communicates with the solicitor on the other side he has to take the precaution to state that his offer or acceptance is subject to contract subject to contract:

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Tan Chwee Boon v Koh Peng Moh (1962) MLJ 353:  firstly, there was no concluded contract between the parties; and  secondly, there was no question of any exchange of contract in Singapore as both parties signed both copies of the contract Facts: On 8 May 1961 in consideration of $500 the defendant granted to one HYK an option in writing to sell certain lands at Tanah Merah Kechil and Upper Bedok at the price of $79,000. On 9 May 1961 the plaintiff`s solicitors wrote to the defendant to the effect that HYK had found a purchaser for the properties in question subject to contract. The letter also requested for the title deeds as the plaintiff`s solicitors were acting for the intending purchaser. The defendant`s solicitors wrote to the plaintiff`s solicitors on 17 May 1961 enclosing the draft contract (in duplicate) and the title deed requesting the plaintiff`s solicitors to treat the draft contract as fair copies for signature by their clients if they had no substantial amendment to make. On 13 June 1961 the plaintiff`s solicitors wrote to the defendant`s solicitors enclosing the schedule of deeds, and contract duly signed by the plaintiff together with a cheque for $7,900 being the 10% deposit money on the undertaking of the defendant to sign and return one copy of the contract to the plaintiff`s solicitors. The defendant did not sign the contract. The defendant`s solicitors wrote to the plaintiff`s solicitors on 14 June 1961 returning the cheque for $7,900 and informing them that the defendant did not wish to sell the properties to the plaintiff. The letter further requested the return of the title deeds. Subsequently after further correspondence between the solicitors, the title deeds were returned to the defendant`s solicitors. In this action the plaintiff claimed specific performance of the contract alleged to have been entered into by the defendant with the plaintiff. Holdings: Held in Singapore when an offer to sell land is accepted "subject to contract" there are various methods whereby the parties could enter into a binding contract. As the defendant did not sign either of the two copies of the contract, an essential part of the method adopted was omitted in this case and there was no concluded contract between the parties. SM Integrated Transcare Pte Ltd v Schenker Singapore (Pte) Ltd (2005) SGHC 58 Facts The parties to the action were in the business of providing third party logistics services. The plaintiff operated a warehouse with the capacity to store dangerous goods on land that had been leased from the Jurong Town Corporation (“the JTC”). In October 2002, the warehouse was occupied by Richland Logistics Pte Ltd (“Richland”). As Richland’s lease was about to expire shortly, the plaintiff looked for a new occupant for the warehouse. It subsequently entered into negotiations with the defendant, who was at the time trying to obtain a contract from Merck Pte Ltd (“Merck”) to handle its dangerous goods in Singapore. The defendant was looking to lease some additional warehouse space to receive the Merck goods. On 5 November 2002, the plaintiff sent an e-mail to the defendant with an attached letter of intent marked

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“Subject to Contract” in relation to the lease of the warehouse. The letter stated that the plaintiff was seeking a monthly rental of $48,000, and that it wished to enter into a service agreement with the defendant from 1 January 2003 with other terms and conditions to be discussed. The defendant did not sign the letter of intent as it was still waiting for an answer from Merck as to whether it would be awarded the contract to handle Merck’s goods. On 19 December 2002, Merck indicated to the defendant that the latter would most probably be awarded the contract. The defendant therefore informed the plaintiff that it wanted to lease the warehouse. At the plaintiff’s request, the defendant sent an e-mail confirming its intention to take the lease on 20 December 2002. The plaintiff then drafted a “Handling Service Agreement” (“handlingagreement”) for the defendant’s consideration. The handling agreement provided that, from 1 February 2003 to 31 January 2005, the plaintiff was to provide the defendant with warehousing and logistics services and such other services as might be required from time to time during the term of the agreement. The defendant was to pay $43,000 per month as rental/handling charges for the exclusive use of the warehouse. Having vetted the draft agreement, the defendant requested the plaintiff to amend the agreement to include various matters including the provision of a one-month rent-free period for the setting up of operations. The plaintiff agreed to a two-week rent-free period. The defendant forwarded the draft handling agreement to its solicitors for their comments and advice, which included the following: (a) the handling agreement should contain a provision as to which party was to bear the stamp duty; (b) interest on late payments should be fixed as the average of the prime rates of the three local banks; (c) there should be a provision providing for the time period in which the deposit payable under the agreement should be refunded and for interest to be paid by the plaintiff for a late refund; (d) the plaintiff should obtain JTC’s permission to the proposed lease; and (e) the plaintiff should obtain the approval of its mortgagee, the United Overseas Bank (“UOB”). The parties held a meeting on 27 January 2003 to discuss the solicitors’ comments. After the meeting, the plaintiff sent an e-mail to the defendant attaching a revised handling agreement re-titled “Logistics Service Agreement” (“the draft LSA”). The draft LSA did not incorporate any of the comments and advice of the defendant’s solicitors but simply provided that the plaintiff was to supply the defendant with warehousing facilities at the warehouse and integrated logistics services for a period of two years from 1 March 2003 at the monthly rental of $43,000. The defendant replied by e-mail on 4 February 2003 to state that the contents of the draft LSA appeared satisfactory and requested the plaintiff to send an amended copy of the draft LSA incorporating minor changes. An amended draft LSA was sent as instructed, but the defendant did not respond to or comment on the amended draft LSA. The defendant then informed the plaintiff that Merck had pulled out of the project at the last minute and that it had accordingly decided not to proceed with the lease of the warehouse. The plaintiff therefore commenced the present action claiming loss and damage it had suffered by reason of the defendant’s repudiation of the lease. The defendant denied liability on three main grounds. First, whilst it had negotiations with the plaintiff between October 2002 and February 2003 for a grant of a lease of the warehouse, these negotiations had never been completed, and consequently, there was no concluded contract between the parties. Second, even if there had been a concluded contract between the parties or one that was evidenced by the exchange of e-mail correspondence and the draft LSA, none of these exchanges complied with the requirements of s 6(d) of the Civil Law Act (Cap 43, 1994 Rev Ed) (“the CLA”). Finally, the performance of the contract was subject to the fulfilment of the implied conditions that Merck would appoint the defendant to handle its dangerous cargo and the plaintiff would seek JTC’s and UOB’s approval to lease the warehouse to the defendant. Held, giving judgment for the plaintiff: (1) In order for there to be a concluded contract for a lease, the essential terms of that contract must have been agreed to unconditionally by both the prospective landlord and tenant. The essential terms were that the premises to be leased and the landlord and tenant had to be identified, the commencement and duration of the term had to be fixed, and the rent and other consideration to be paid (if any) had to be agreed. If any other

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terms were mentioned by one party, these also had to be unconditionally accepted by the other: at [39]. (2) On 20 December 2002, when the defendant informed the plaintiff by e-mail that “[the defendant would] proceed with the leasing of the warehouse as per our discussion”, two of the essential terms had been agreed: the identity of the premises to be leased and the identities of the prospective landlord and the prospective tenant. By 30 December 2002, the amount of rental and the duration of the lease had also been agreed upon, as stated in the handling agreement. Finally, the defendant had accepted the commencement date of the lease as 1 March 2003 when it agreed to the commercial terms of the draft LSA via the e-mail of 4 February 2003: at [42] and [48]. (3) There was no evidence to show that the defendant had insisted that the plaintiff accept the various comments and suggestions made by its solicitors. In fact, the defendant had confirmed on 4 February 2003 that it generally had no objections to the contents of the draft LSA even though the revised draft LSA did not incorporate any of its solicitors’ comments. Thus, as at 4 February 2003, the matters raised by the defendant’s solicitors did not prevent the conclusion of the lease agreement: at [56] to [60]. (4) There was no merit in the argument that the parties had failed to come to an agreement on the classes or types of dangerous goods that the defendant was allowed to bring into or store in the warehouse. The defendant had already received an in-principle approval from the authorities to store dangerous cargo in the warehouse and there was nothing to indicate that an actual approval would not be forthcoming: at [61] to [63]. (5) The defendant could not substantiate the contention that even if the parties had reached an agreement on the proposed lease, they had been negotiating on a “subject to contract basis”. The only document that was marked “subject to contract” was the letter of intent, which was sent out at a very early stage of the negotiations. The defendant gave no sign to the plaintiff that it was negotiating on a “subject to contract” basis in the subsequent e-mails and detailed drafts of the agreement. When the defendant accepted the terms of the draft LSA on 4 February 2003, its acceptance was not subject to contract: at [66] to [69]. (6) The plaintiff’s e-mail of 27 January 2003 together with its attachment, the draft LSA, and the defendant’s reply dated 4 February 2003 accepting the terms of the draft LSA, constituted the necessary memorandum required under s 6(d) of the CLA. All the agreed terms were reflected in those documents when read together and these included the essential terms of a lease. It was established law that the plaintiff could rely on two or more documents to constitute the necessary memorandum: at [73]. (7) The Electronic Transactions Act (Cap 88, 1999 Rev Ed) did not change the common law position in relation to s 6 of the CLA. Thus, whether an e-mail could satisfy the requirements of writing and signature found in that provision would be decided by construing s 6(d) of the CLA itself, which simply required the “promise or agreement” or a “memorandum thereof” to be “in writing” and “signed by the party to be charged therewith”: at [76] and [77]. (8) The definition of “writing” under s 2 of the Interpretation Act (Cap 1, 2002 Rev Ed) could be extended to include modes that were not in existence at the time the Interpretation Act was enacted but were available at the date of interpretation. In any case, e-mails could be classified as falling within the meaning of “other modes of representing or reproducing words … in visible form”. This was because although e-mails were files of binary (digital) information in their transmitted or stored form, they also had another form when they were displayed on the monitor screen. At that stage, they were “words in a visible form”. Moreover, recognising electronic correspondence as being “writing” for the purpose of s 6(d) of the CLA would be entirely consonant with the aim of the CLA and its predecessor, the UK Statute of Frauds 1677 (c 3), as long as the existence of the writing could be proved. In this case, the parties readily admitted that they had sent and received each other’s e-mail messages. It was also not argued that the printed copies of the e-mails that appeared in the bundle of documents were not true copies of the e-mails that they had seen on-screen and responded to electronically. Consequently, the e-mail correspondence which constituted the memorandum of the contract was “in writing” for the purpose of s 6(d) of the CLA: at [78] to [81], [85]. (9) The common law did not require handwritten signatures for the purpose of satisfying the requirements of

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s 6(d) of the CLA. A typewritten or printed form was sufficient. Given that no real distinction could be drawn between a typewritten form and a signature that had been typed onto an e-mail and forwarded with the e-mail to the intended recipient of that message, the signature requirement in this case was satisfied by the inscription of the defendant’s representative’s name next to his e-mail address at the top of his e-mails: at [91] and [92]. (10) The defendant’s argument that the lease agreement was subject to an implied condition precedent that Merck had to appoint the defendant to handle its dangerous cargo was unsustainable. The term to be implied was neither necessary for the business efficacy of the lease nor represented the obvious, but unexpressed, intention of the parties. On the evidence, the lease agreement was also not subject to an implied condition precedent that the plaintiff had to seek the approval of the JTC and UOB to lease the warehouse to the defendant: at [97] to [101], [104], [113] and [114]. Whilst the Electronic Transactions Act does make it plain that electronic records will be adequate to satisfy legal rules relating to writing and signature in most commercial matters, its conservative approach in not extending these provisions to contractual matters falling within s 6 of the CLA does not mean that, as a matter of law, electronic means of communication cannot satisfy the requirements of s 6. The ETA does not change the common law position in relation to s 6 of the CLA. Whether an e-mail can satisfy the requirements for writing and signature found in that provision will be decided by construing s 6(d) of the CLA itself and not by blindly relying on s 4(1)(d) of the ETA. This is a view that has supporters. As part of their review of the ETA, on 25 June 2004, the Infocomm Development Authority of Singapore and the Attorney-General’s Chambers released a public consultation paper dealing with the exclusions under s 4 of the ETA. Paragraphs 2.1.3 and 2.1.5 of the consultation paper state: 2.1.3 The effect of section 4 is that, in such excluded transactions, one cannot rely on the provisions in the ETA that enable electronic records and signatures to satisfy legal requirements for writing and signature. For example, sections 6 and 7 of the Civil Law Act impose legal requirements for writing and signature in the case of certain land transactions and for trusts respectively. 2.1.5 Even where legal form requirements apply, exclusion under section 4 of the ETA may not necessarily prevent such transactions from being done electronically. Electronic records or signatures could still possibly satisfy the legal requirements without reliance on the provisions of the ETA. It would be a matter for legal interpretation whether an electronic form satisfies a particular legal requirement for writing or signature. Some legislative provisions, by reason of their detailed specifications, would clearly exclude the use of electronic means even if the ETA were applicable. ... 77 I now turn to the provisions of s 6(d) of the CLA. In respect of the requirements for writing and signature, this subsection simply states that the “promise or agreement” or a “memorandum or note thereof” must be “in writing” and “signed by the party to be charged therewith”. SMI submitted that this language did not mean that the use of electronic forms was excluded. By way of contrast, it pointed to other legislative provisions where the requirements for writing or signature come with certain specifications. For example, in s 6(2) of the Wills Act (Cap 352, 1996 Rev Ed) it is provided that every will has to be signed “at the foot or end thereof” by the testator who has to sign the will in the presence of two or more witnesses who are present at the same time. Secondly, para 17 of the Third Schedule of the Land Titles (Strata) Act (Cap 158, 1999 Rev Ed), specifies that an instrument appointing a proxy has to be in writing “under the hand” of the appointer or his attorney and in the case of a company, the instrument has to be under seal or “under the hand” of an officer of the company. The third example cited was the requirement in s 40(2)(b) of the Companies Act (Cap 50, 1994 Rev Ed) that an alteration made in the memorandum or articles of association of the company has to be indicated “in ink” on a printed copy of the memorandum or articles. In these three cases and others like them, the use of electronic forms would, necessarily, be precluded. That, argued SMI, was not the case with s 6(d) of the CLA. It did not require handwriting or a signature in a certain place in the presence of certain people or the writing to be in ink. All it required was for the document concerned to be “in writing”. 78 Section 2 of the Interpretation Act (Cap 1, 2002 Rev Ed) provides the following definition of “writing”: “writing” and expressions referring to writing include printing, lithography, typewriting, photography and other modes of representing or reproducing words or figures in visible form. Referring to this definition, SMI submitted that it included not only the specific forms of writing mentioned but also the natural meaning of that term. It argued that the natural meaning should be construed to reflect technological developments since one of the canons of statutory construction is that there is a presumption that “Parliament intends the court to apply to an ongoing Act a construction that continuously updates its wording to allow for changes since the Act [in this case, the CLA] was initially framed (an updating construction). While it remains law, it is to be treated as always speaking” (see Bennion, Statutory Interpretation (Butterworths, 4th Ed,

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2002) at p 762). Thus, the definition of “writing” can be extended to include modes that were not in existence at the time the Interpretation Act was enacted but are available at the date of interpretation. 79 In any case, SMI submitted that e-mails can be classified as falling within the meaning of “other modes of representing or reproducing words … in visible form”. This is because although in their transmitted/stored form, e-mails are files of binary (digital) information, they also have another form when they are displayed on the monitor screen. At that stage, they are “words in a visible form”. The sender of an e-mail is able to see the text that he has created on the screen of his computer monitor before the message is sent. Similarly, the recipient is able to view the message on his own screen. A visible representation of the words which form the message is therefore available to both the sender and the recipient. The same is true of any attachment that is sent, opened and read. Thus while the underlying digital information will not be “writing”, the screen display will satisfy the Interpretation Act definition. The sender or the recipient or both may also print out the message and any attachment. This was what happened in the present case, given that the e-mails and the attachments were disclosed in the list of documents filed both by Schenker and SMI in these proceedings. Further, printed copies of the e-mail correspondence were contained in the agreed bundle. 80 I find the above submissions, based on the observations of the UK Law Commission in an advisory paper entitled Electronic Commerce: Formal Requirements in Commercial Transactions (December 2001) (“the advisory paper”), to be persuasive. The aim of the Statute of Frauds was to help protect people and their property against fraud and sharp practice by legislating that certain types of contracts could not be enforced unless there was written evidence of their existence and their terms. Recognising electronic correspondence as being “writing” for the purpose of s 6(d) of the CLA, would be entirely consonant with the aim of the CLA and its predecessor, the Statute of Frauds, as long as the existence of the writing can be proved. 81 In this case, the parties readily admitted that they had sent and received each other’s e-mail messages. No one argued or testified that the printed copies of the e-mails that appeared in the bundle of documents were not true copies of the e-mails that they had seen on-screen and responded to electronically. Neither Mr Tan nor Mr Luth objected to the contents of the printed copies of their respective e-mail messages. In fact, they confirmed that they had sent out those various messages and attached the printouts as exhibits to their respective affidavits. Mr Tan did not resile from any of his e-mails. He did not deny receiving the e-mail messages and attachments sent by Mr Tan and Ms Yong (in particular he did not deny receiving Ms Yong’s email of 27 January 2003 and the draft LSA that was an attachment to that e-mail). He specifically confirmed he had sent out his response in the e-mail of 4 February 2003 and commented in court on the contents of that email. 82 I should also state that counsel for SMI has been able to buttress its arguments by citing the views of foreign law commissions and foreign courts. In the UK, the definition of “writing” as found in the Interpretation Act 1978, Schedule 1 is in pari materia with the Singapore definition as cited in [78] above. The UK Law Commission’s view, as expressed in the advisory paper, is that e-mails satisfy the definition of “writing” under the Interpretation Act and the functions of writing, although it recognises that there is a lack of consensus on the issue. In particular, the UK Law Commission has commented (at para 3.17): A number of commentators have expressed the view that the Interpretation Act definition of writing requires there to be some physical memorial, meaning that an electronic communication cannot satisfy a writing requirement. We do not share this view. First, the creation of a physical memorial is just one function of paperbased writing: it is not clear that it is one of the more important functions. Secondly, in practice, both parties will usually be able to store and to print a copy of an electronic communication. 83 In the US, the Court of Appeals of Iowa had to consider in Wilkens v Iowa Insurance Commissioner 457 NW 2d 1 (Iowa App 1990) whether an insurer had complied with the requirements of the Iowa Insurance Code § 515.57 which provided that an insurance company had to keep a “written record” of each insurance policy it issued. The insurer concerned had maintained the required information in its computer system. The insurance commissioner considered that the insurer had kept adequate records on the relevant business and that nothing in § 515.57 precluded the keeping of these records in a computer. This determination was challenged before the Court of Appeals. The court held that since the enactment of § 515.57 in 1939, methods of doing business had changed considerably and the advent of the computer age had resulted in businesses making substantial changes in record-keeping procedures. The court noted that the insurance commissioner, who was the person charged with the responsibility of assuring that insurance company procedures complied with statutes, had determined that the records as kept were sufficient for his purposes. The court found no reason to interfere with the commissioner’s decision on the issue. Although the court did not say so expressly, it must have considered a computer record to be a “written record”. 84 In another American case, this time decided by the District Court for South Carolina, it was held that a computer floppy diskette could constitute “written notice” to an insured’s agent under the terms of a statute. Delivering his judgment in Clyburn v Allstate Insurance Company 826 F Supp 955 (DSC 1993), Senior District Judge Blatt noted that the information on the floppy diskette could be retrieved and printed as “hard copy” on

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paper and stated that in today’s “paperless” society of computer-generated information, the court was not prepared, in the absence of a legislative provision, to find that a computer floppy diskette would not constitute a “writing” within the meaning of a statute that required written notice of the cancellation of a policy to be given to the insured. 85 I therefore find that the e-mail correspondence which constituted the memorandum of the contract (as specified in [73] above) was “in writing” for the purpose of s 6(d) of the CLA. I am pleased to be able to come to this conclusion which I think is dictated by both justice and common sense since so much business is now negotiated by electronic means rather than by letters written on paper and, in the future, the proportion of business done electronically will only increase. I think that the ordinary man in the street, who not only conducts business via computer but who is being encouraged to use technology in all areas of life and to become more and more technologically proficient, would be amazed to find that the law would not recognise a contract he had made electronically even though all the terms of the contract had been agreed and the parties were perfectly ad idem. If parties who negotiate electronically do not wish to be bound until a formal document is signed, they can have recourse to the “subject to contract” endorsement that can easily be added to their e-mail correspondence. Was Mr Tan’s e-mail of 4 February 2003 signed? 86 Schenker drew my attention to the evidence of Mr Tan and Mr Luth that neither of them had ever signed a letter or any document during the period of negotiation with SMI. Mr Heng had also agreed that no “hardcopy” letter or document was ever exchanged between himself and the representatives of Schenker during that period. Thus, Schenker submitted, there was no memorandum that had been signed by someone lawfully authorised to sign on its behalf. 87 SMI’s response to this submission was that the common law takes a pragmatic approach as to what will satisfy a signature requirement. The courts look to whether the method of signature used fulfils the function of a signature, viz demonstrating an authenticating function, rather than whether the form of signature used is one which is commonly recognised.

Law v. Jones [1973] 2 WLR 177 Tiverton Estates Ltd v Wearwell [1974] 2 WLR 177 Facts: A document setting out the terms of a contract for the sale of land, and expressed to be "subject to contract," cannot be a sufficient note or memorandum for the purposes of the Law of Property Act 1925 s. 40(1), since it does not acknowledge the existence of a contract. V Co. made an oral agreement to sell leasehold property to P Co. P Co.'s solicitors wrote to V Co. regarding the proposed sale "... subject to contract. We look forward to receiving the draft contract for approval." V Co.'s solicitors sent the draft contract which contained all the essential terms. V Co. then refused to go ahead with the sale. P Co. claimed that the oral contract was enforceable, sufficient note or memorandum for the purposes of s. 40 (1) of the Law of Property Act 1925 being the draft contract, read in conjunction with the letter from P Co.'s solicitors. Held: For the purposes of the Law of Property Act 1925 s. 40(1), the note or memorandum relied on must contain not only the terms of the contract, but also express or implied recognition that a contract had in fact been entered into. Documents which are part of a correspondence expressed to be subject to contract could not, therefore, constitute a sufficient memorandum. Griffiths v. Young [1970] Ch. 675 not followed and Law v. Jones [1974] Ch. 112 not followed). • • Residential Property Act (Cap. 274) Housing Developers (Control and Licensing) Act (Cap. 130); Sale of Commercial Properties Act (Cap. 281)

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Mary-Ann Arrichiello v Tanglin Studio Pte Ltd [1981] 2 MLJ 60, held that there was an enforceable contract between the parties even though the parties did not sign the prescribed form of the contract Facts: The plaintiff in this case sought for specific performance by the defendants who were housing developers, of an agreement between them for the sale by the defendants of a maisonette unit at Leonie Hill. In the alternative the plaintiff claimed damages for breach of the said agreement. The facts revealed that the plaintiff had already paid a booking fee of $2,000 payable to the defendants` solicitors through one Mr Zee. The price

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of the maisonette was confirmed at $130,000 in a letter of 13 January 1979 by the defendants addressed to the plaintiff. The plaintiff wrote a letter of 11 September 1979 regarding the purchase of the said maisonette. On 1 October 1979 she received a letter from the defendants stating that they had decided not to sell the maisonette and they accordingly returned her said cheque. On 26 October 1979 the plaintiff commenced proceedings. Holdings: Held , allowing the plaintiff`s claim: (1).The Housing Developers (Control & Licensing) Act (Cap 250) merely prescribed a method of performance by the housing developer for the protection of a class of persons - the purchasers - as far as possible from the risk of exploitation. The Act did not in any way prohibit the making of a contract for the sale and purchase of flats. (2).In this case the contract between the plaintiff and the defendants was not illegal and was enforceable.

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Similar view taken by Privy Council in Daiman Development Sdn Bhd v Mathew Lui Chin Teck & Anor [1981] 1 MLJ 56 Facts: The respondent had paid a booking fee of $700 and signed a booking pro forma, according to which the parties agreed the purchase price of the house was $26,000. The respondent also agreed that on receiving notice he would sign the agreement for sale. The appellants, the housing developers, subsequently informed the respondent that the price of the building was increased to $35,100 because of "amendments to the building plans and increase of material and construction." The respondent did not agree to the increased price and subsequently applied to the court for specific performance. The High Court gave judgment in favour of the respondent and the appellant`s appeal to the Federal Court was dismissed. On appeal to the Privy Council it was submitted (a) that upon its true construction the pro forma was "subject to contract" in the sense that until a further document was mutually agreed and signed no contractual obligation arose from the pro forma itself; (b) that even if the pro forma was not "subject to contract" the purported agreement in the pro forma remained inchoate for want of agreement between the parties as to the terms and conditions to which the agreement of sale prepared by the solicitors was to be subject; (c) that even if upon its true construction the pro forma did give rise to a legal obligation it did no more than give the respondent a right to receive an offer to purchase the lot and house thereon, if the appellant at its option should decide to offer the property for sale. Holdings: Held , dismissing the appeal: (1) What might be properly included by the solicitors in the agreement for sale is a question which can be judicially resolved by a court construing the pro forma , in the event of any objection by the respondent to any term or condition included by the solicitors in the contract of sale. Thus upon its true construction the pro forma did not make either the obligation to purchase or the obligation to sign conditional on the making of some other agreement as to the terms and conditions to be inserted in the contract of sale; (2).the pro forma cannot be construed so as to treat its terms as contractually ineffective until some further agreement had been made by the parties. Nor could it properly be said that the agreement contained in the pro forma was inchoate for want of consensual definition of the terms and conditions to be inserted in the contract of sale; (3).the appellant was clearly bound by the pro forma and could not argue that it did not create an obligation to purchase and sell the land.

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APPEALThis was an appeal from the decision of the Federal Court reported in [1978] 2 MLJ 239 .

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SM Integrated Transcare Pte Ltd v Schenker Singapore (Pte) Ltd: the exchange of emails constituted a binding contract notwithstanding there was no formal signatures by the parties Entering into Sale and Purchase agreement V’s sol prepares draft -- P’s sol peruses draft and propose amendments -- Parties negotiate terms -parties sign Sale and Purchase Agreement (may have signing ceremony for big transactions where both parties present)-- Contract is concluded Trad, purchaser signs first. Then sent to vendor to sign. Supposing lapse bet purchaser signing and vendor signing. When is contract concluded? – only when both parties sign: trad way of transacting by sale and purchase agreement o Koh Peng Moh v Tan Chwee Boon [1962] MLJ 353 o Quek Choon Huat v RM Seow [1981]2 MLJ 3

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 Common for draft agreement to be prepared by the Vendor’s solicitors, and sent to the Purchaser’s solicitors… take instructions, advise and negotiations over the phone etc.  then come to an agreement on actual terms of the contract  In practice, signing often takes place simultaneously, in the presence of both parties or  properly engrossed contract will be sent by the Vendor’s solicitors to the Purchaser’s solicitors… and the P places his signature on the contract and it is then concluded  the contract is not concluded until the purchaser attests his signature on the contract

Koh Peng Noh v Tan Chwee Boon [1962] MLJ 353: in Singapore, when the parties engage in purchase agreement, this is what happens …  If any of the steps set out by the judge is missing, then there is no contract

Held in Singapore when an offer to sell land is accepted "subject to contract" there are various methods whereby the parties could enter into a binding contract. As the defendant did not sign either of the two copies of the contract, an essential part of the method adopted was omitted in this case and there was no concluded contract between the parties.

there is also another CA case which held that if the parties contemplated that there will be no concluded contract before signing of formal contract [Quek Choon Huat v RM Seow (1981) 2 MLJ 3], then there will be no concluded contract until that event takes place

Held , allowing the appeal: In the letter of 9 July 1979 from the appellant`s solicitors the penultimate sentence which referred to the `Agreement for Sale in duplicate` enclosed with that letter was a clear indication that up to that stage the appellant had contemplated and intended that the bargain would be struck in the usual manner by the parties signing and exchanging an agreed agreement for sale and purchase prepared by solicitors.

 The Purchase’s solicitors return the Sale and Purchase agreement duly signed by the Purchaser for the Vendor’s Signature thereafter.  S & P agreements are usually used for bigger properties, like whole building, whole floor etc… where parties want to ensure that all conditions are covered etc 2. Options to purchase V grants Option to P in exchange for option fee. Offer is open for specified period (2 wks eg). o -> P does not exercise Option - Option lapses o -> P exercises Option within option period - P signs & returns Acceptance - Copy to V & pays 10% deposit less option fee – contract is concluded. Purchaser then becomes equitable/beneficial owner of property

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 A lot more common, in fact the most common way for parties to enter into a contract for the sale and purchase of immovable property.  The V grants to the P an offer to purchase the property, upon terms and conditions set out in the option, in consideration of (Usually) a small sum of money called the option fee or option money.  The offer is usually open for a period of 2 weeks (option period).  in this 2 weeks, the V cannot sell the property to any one else… otherwise, will be in breach of contract

However, the P has the option to choose whether to complete or not… if not, then the option fee will be forfeited to the Vendor and option lapses.  However, if he accepts before the expiry of the option period, then he will sign an acceptance copy of the option and delivering it to the vendor’s solicitors together with payment of an amount which is often 10% of the purchase price of the property, less the option fee. . … and if the P exercises the option like this, this signifies the conclusion of the contract. The exercise of the option is accompanied by the payment of deposit  Conclusion of contract = payment of deposit + signing of option  this is a very good time for the P to do searches to see if the land if free of encumbrances etc  however, it better for the P to negotiate before the option fee is paid because after it paid, V is not obliged to change any of the terms of the contract (up to the V to decide whether to change)… all will then depend on the skills of the negotiations of the P’s solicitors.  He may negotiate the terms in light manner as negotiating on the terms of a Sale and Purchase Agreement and pay the option fee after he is satisfied with the terms.  Ideally, Vendor’s solicitors should explain terms and advise Purchaser before the Option is granted and ensure that all special clauses are included. e.g. subject to LD(A)U approval or planning approval, or together with furniture or fittings. e.g.  client paid option fee already then went to lawyers  the contract was drafted as though TOP issued etc… however, turned out that property still under construction, TOP not issued  Lawyer wrote to V’s lawyers to ask for terms to include certain terms into the contract… they refused.  So the P’s lawyers exercised option which provided that payment only upon completion… and “completion” requires transfer of legal interests… because there was no TOP, and the V not ready to transfer legal interests… therefore the P did not have to pay until “completion”  If the P exercises option and tenders a cheque, if the P stops payment on the cheque … the contract was still concluded because it was concluded upon return of option signed… the V can still sue for breach of contract 3. Exchange of correspondence V or sols ---Exchange correspondence -P or sols Exactly when contract is concluded depends on facts in question - Yeo Gek Lang v Alice Wee [1979] 1 MLJ 95

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 contract of sale and purchase may come into being when the P and V themselves, or by solicitors, exchange correspondences  the exact time when contract comes into existence depends on the facts of the case  Yeo Gek Leng v Alice Wee [1979] 1 MLJ 95  meeting between parties, and then correspondence between the solicitors  the contract was stated to be subject to contract  because the parties had intended to proceed subject to formal contract, then this should be the case  since the parties did not have a formal contract, they argued on the contract through correspondence  whether the solicitors had authority to conclude the contract on their behalf?  On the facts of the case, there was no such authorisation

Held, allowing the appeal:

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   4.    

(1).The law was settled that solicitors were not, in the absence of specific authority, agents of their clients to conclude a contract for them. (2).There was no evidence in this case that the appellant had authorised her solicitors to negotiate and conclude such a bargain for her. (3).The respondent had therefore failed at the trial to prove that there was a binding agreement between her and the appellant for the sale of the said property.

Exchange of duly signed agreements Not common. Parties negotiate and agree on terms. involves each of the parties signing their own respective agreements and sending to the other party the contract is concluded upon receipt by the other party  this also means that the terms in the agreement would have had to be agreed by the parties prior to sending  but not important, because rarely used 5. Put and Call Option Agreements

commonly adopted in recent yrs where sale and purchase continent on satisfaction of certain reqt or occurrence of certain events – known as conditions precedent  Conditions Precedent set out in put and call option agreement entered into bet v and p whereby

     

Vendor grants call option to purchase and on ex of option by purchaser, vendor obliged to sell immoveable property to purchaser and Purchaser grants put option to vendor and on ex of such option by vendor, purchaser obliged to buy immoveable property fr vendor Ie P ex call option; V must sell to P OR V ex put option; P must buy from V (respective to the above)

Either party can ex put or call option when conds precedent are satisfied On ex of either call or put option by one party other party obliged to enter sale and purchase agreement iro property

Terms usually negotiated and agreed bet parties prior to signing of put and call option agreement

Contract concluded when both parties sign sale and purchase agreement

6. Oral contract, evidenced by memorandum in writing (can ignore because rarely sue on oral contracts but read both cases – be careful when act for clients and exchange corresp with parties)

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Memorandum must contain all the terms agreed orally To satisfy the CLA, the document must have (1) terms of the oral agreement (2) property price (3) other agreed terms When contract is concluded depends on the facts:

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Tay Joo Sing v Ku Yu Sang [1994] 3 SLR 719 Facts The appellant Tay and his brother TJM were joint owners of a property in equal shares. On 2 May 1987, Tay and the respondent Ku signed a document under which Tay offered to sell the property to Ku. Ku then gave Tay a cheque for $5,000 pursuant to the agreement. On 4 May, Tay’s solicitors informed Ku’s solicitors that Tay was not agreeable to selling the property to Ku and Ku’s cheque for $5,000 was returned. Ku refused the cheque and then proceeded to send Tay’s solicitors a cheque for the balance of the 10% of the purchase price and re-tendered the earlier cheque for $5,000. Both these cheques were returned to Ku’s solicitors. In June 1989, Ku initiated proceedings against Tay alleging that the agreement gave him an option to purchase the property and sued Tay for specific performance, although only in respect of Tay’s undivided half share in the property, and/or damages

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for breach of the agreement, or damages for breach of warranty and, alternatively, damages for misrepresentation. Tay appealed. Held, allowing the appeal in part: (1) There was no reason to disturb the trial judge’s findings of fact. The trial judge was also correct in categorizing the agreement as an option to purchase. (2) Although Ku did not plead rectification, the judge was entitled under s 94(b) of the Evidence Act (Cap 97, 1990 Ed), to rectify the document to reflect the mode of exercising the option. Here, the court was not prevented from exercising its jurisdiction to grant relief where appropriate by rectifying the document to conform to the antecedent agreement. Part of judgement: “The learned judge concluded this part of his judgment (at p 944) in the following words: Looking at the document, at the terms in which it is couched, and considering the circumstances, I have no hesitation in finding that the parties had reached a firm and binding contract for the sale of the property, and that any further, formal, agreement that they or either of them might have had in mind would be merely to implement what the parties had firmly agreed in relation to the sale of the property. At the hearing before us, learned counsel for the appellant urged us to reopen the question of what PB1 in fact was and to review the evidence, discounting the advantages the learned judge may have had in seeing and hearing the witnesses at the trial. We see no reason whatsoever for doing so The real bone of contention, as we understand the appellant’s argument, is that the learned judge had construed PB1 to be an option which had not truly expressed the agreement the parties had reached at the meeting on 2 May 1987 …Once PB1 had been rectified in this way, and the respondent having exercised the option contained in PB1 by paying the sum of $42,000 on 13 May 1987 and also returning the cheque for $5,000 on the same day, which was within the 14 days limited by PB1 as rectified, for exercising the option, the question arises whether PB1 as rectified was a sufficient note or memorandum for the purposes of s 4 of the Statute of Frauds. In our judgment it was. Quite clearly a note or memorandum evidencing the sale of property to satisfy the requirements of s 4 of the Statute of Frauds must evidence in writing all the material terms of the agreement, that is to say, the parties, the property, the price and any other agreed provisions. PB1 identified the appellant and Tay Joo Meng as the sellers; it identified the respondent as the buyer; it identified the property to be sold, notwithstanding the typographical error on which there was no issue; it identified the price to be paid. In other words PB1 was evidence in writing of the parties, the property and the price but it did not evidence the other agreed provisions except that a deposit of $5,000 had been paid “as part of the option fee” and that the property was sold with vacant possession. In particular it did not evidence the date of completion. In Lee Christina v Lee Eunice (executors of the estate of Lee Teck Soon) at p 16, this court, commenting on the note or memorandum in writing in that case evidencing the sale of property, said: Mrs Lee’s note contains the requisite ‘P’s, that is the parties, property and price. Other normal conditions pertaining to sale and purchase of immovable property would then be implied, one of which would be completion within reasonable time. Notwithstanding that it was a note addressed to her solicitors, it is a sufficient memorandum evidencing the sale.” Christina Lee v Eunice Lee [1993] 3 SLR 8 Court considered the note on instructions to act Held that the note contained all the requisite Ps, and hence, there was a concluded contract Comments if client writes such a note to you, then the court would find that there was a concluded contract on such terms already … not on the terms of later contract you draw up always have at top right hand corner – subject to contract. This will reserve status – contract terms under negotiation! Then there will be no contract yet. Special procedures to be followed (if not may be offence): -

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7.   

Agreements under Housing Developers (Control and Licensing) Act Agreements under Housing Developers (Control and Licensing) Act Cap. 130 Option to Purchase – Form B Agreement for Sale and Purchase – Form D or E

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Agreements under Sale of Commercial Properties Act Cap. 281  Option to Purchase – Form B  Agreement to Purchase – Form D  These licensed developers pay a booking fee, commonly 5% of purchase price  the form of option is found in Form B  i.e. the V’s solicitors to send to P’s solicitors the sale and purchase agreement within 2 weeks from the option  and the P’s solicitors, upon receipt, to have the P to return the signed agreement within 3 weeks plus the rest of the deposit  normally, 20%

common for developers to amend the forms slightly for extension for deposit to be paid  still need to sign the agreement within 3 weeks, but can pay later  however, the contract is still crystallised and concluded on the return of the sale and purchase agreement… the payment is merely postponed  if you fail to return the signed sale and purchase agreement, the option will lapse  once the sale and purchase agreement returned, bound by the concluded contract 9.    Tenders Tender must be in approved form Vs will prepare conditions of tender and open the tender for a period of time Interested Ps will fill up tender form, sign, pay a tender fee and to return it to the V’s solicitors.  Have to comply with the requirements e.g. cashiers’ orders  the Vs can choose which they want, and then accept the tender, vendor not obliged to take lowest or highest tender, can choose as he pleases.  V sends letter of acceptance to Purchaser. Date of letter of acceptance = date of contract.  the V’s acceptance is the conclusion of the contract, notwithstanding the failure to pay deposit yet • P pays V deposit within stipulated time, failing which V may rescind and retain tender fee - • V’s letter of acceptance = conclusion of contract when tender is published – merely invitation to treat. Tender submitted as an offer. • Date of letter of acceptance = date of contract • Where can the terms of the contract be found? – in approved form 10. Auction Sale by auctions are done by. … either the auctioneers or the vendor’s solicitors will prepare the conditions of auctions o • Subject to reserve price being reached, highest approved bidder is P o • P signs Memorandum of Contract and pays 10% deposit immediately o • Conditions of sale are incorporated by the Memorandum of Contract if you are Vendor’s solicitors, whether or not you prepared the conditions of auctions, you can collect double the amount If tenant there may be sold subj to tenancy Banks like to use this because conditions of sale – may be subj to any charge issued against property/ must take it as it is/ Not subj to satisf replies etc. so some very stringent conditions of sale may be inserted. Buyers may think it is a good price. But may in fact buy subj to self paid reinstatements etc/ probs with building control. lawyers to alert clients that these are risks that client has to take. - • Can you identify the steps that lead to the formation of a contract? o if the mortgagor is a GST registered company or entity, the mortgagee will have to collect GST and account to the Comptroller o NB: GST usually only for non-residential property

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WHAT HAPPENS WHEN CONTRACT IS CONCLUDED?

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Solicitor holding Stakeholder money/ Interests earned as stakeholder normally, if you are V’s solicitors, would usually be holding stakeholder’s moneys • Stakeholder holds money for both parties • Cannot hand over/release money to either party without the other’s consent • In absence of contrary agreement, because not trustee, solicitor can keep the interest earned – not liable to acct for interests (where money put as fixed deposits - interest earning deposit acct) (- Law Society’s Conveyancing Rulings and Directions but so little. Wld earn more gdwill by returning to client and just charging admin fee) of course, out of good will, the V’s solicitor can return the deposit to the V… and to ask him to declare it for income tax purposes • If disputed, solicitor should hold money until person entitled is established, or take out interpleader summons (under OS – to ask who is entitled to money; ask court) • Not necessarily held by V’s solicitors – vendor may have to agree tt even balance will be held by purchaser’s solicitors. Stamp Duty – stamping of contract • Payable on contract for sale and purchase of immovable property – ad valorem on purchase price P must furnish V’s letter to Commissioner confirming P as original Purchaser. Stamp Duty – payable by the purchaser o From 19 Nov 1997: suspension of payment of stamp duty by seller. However, in the light of the “Off-Budget Measures” announced by the Minister of Finance in Parliament on 29th June 1998, with effect from 30th June 1998 payment of stamp duty in respect of contracts for the purchase of immovable duty has been deferred in the following manner: (a) Where Temporary Occupation Permit (TOP) for the immovable property is issued at the time the contract was concluded, stamp duty is payable within 14 days from the date of transfer of the property and (b) Where Top is not issued at the time the contract was concluded, stamp duty is payable within 14 days from the date of issuance of the TOP. • But if there’s a subsale, then 14 days from date of contract of subsale • See pages 69 to 72 of your manual – very impt circulars by IRAS and attachments as to when stamp duty payable in various situations IRAS circular on 28th October 2003: With effect from 1st November 2003, the requirement for Statutory Declaration (to ascertain whether the Purchaser or his solicitors is required to withhold tax on an immovable property sale by a vendor) was removed in respect of all immovable property transactions where the contract is concluded on or after 1st November 2003. See pp 72-75 of manual (for all the tables and diagrams). • Stamp duties act: Rate of stamp duty ad valorem o 1% on first $180,000 o 2% on next $180,000 o 3% thereafter o => If pp is ≥ $360,000, apply this formula: Stamp duty = 3% of pp less $5,400 see s21, 22 of the Stamp Duties Act below

a) b)
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Conveyances and transfers in contemplation of sale 21. —(1) Subject to this section, any instrument whereby property is conveyed or transferred to any person in contemplation of a sale of that property shall be treated for the purpose of this Act as a conveyance or transfer on sale of that property for a consideration equal to the value of that property. (2) If, on a claim made to the Commissioner not later than one year after the making or execution of an instrument chargeable with duty in accordance with subsection (1), it is shown to his satisfaction —

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(a) that the sale in contemplation of which the instrument was made or executed has not taken place and the property has been reconveyed or retransferred to the person from whom it was conveyed or transferred or to a person to whom his rights have been transmitted on death or bankruptcy; or (b) that the sale has taken place for a consideration which is less than the value in respect of which duty was paid on the instrument by virtue of this section, the Commissioner shall repay the duty paid by virtue of this section — (i) in a case falling under paragraph (a), so far as it exceeds the duty which would have been payable apart from this section; and (ii) in a case falling under paragraph (b), so far as it exceeds the duty which would have been payable if the instrument had been stamped in accordance with subsection (1) in respect of a value equal to the consideration in question. (3) In a case falling under subsection (2) (b), duty shall not be repayable if it appears to the Commissioner that the circumstances are such that a conveyance or transfer on the sale in question would have been chargeable with duty under section 16 (3). (4) No instrument chargeable with duty in accordance with subsection (1) shall be deemed to be duly stamped unless the Commissioner has been required to express an opinion thereon under section 37 and has expressed his opinion in accordance with that section. (5) Subsections (1) to (4) shall apply whether or not an instrument conveys or transfers other property in addition to the property in contemplation of the sale of which it is made or executed, but the provisions of those subsections shall not affect the duty chargeable on the instrument in respect of that other property. (6) For the purpose of subsection (1), the value of property conveyed or transferred by an instrument chargeable with duty shall be determined without regard to — (a) any power (whether or not contained in the instrument) on the exercise of which the property, or any part of or any interest in the property, may be revested in the person from whom it was conveyed or transferred or in any person on his behalf; or (b) any annuity reserved out of the property or any part of it, or any life or other interest so reserved, being an interest which is subject to forfeiture. (7) If, on a claim made to the Commissioner not later than one year after the making or execution of the instrument, it is shown to his satisfaction that any such power as is mentioned in subsection (6) (a) has been exercised in relation to the property and the property or any property representing it has been reconveyed or retransferred in the whole or in part in consequence of that exercise, the Commissioner shall repay the duty paid by virtue of subsection (6) — (a) in a case where the whole of such property has been so reconveyed or retransferred, so far as it exceeds the duty which would have been payable apart from subsection (6); and (b) in any other case, so far as it exceeds the duty which would have been payable if the instrument had operated to convey or transfer only such property as is not so reconveyed or retransferred. Contracts, etc., to be chargeable as conveyances on sale 22. —(1) Every contract or agreement for the sale of — (a) any equitable estate or interest in any property; or (b) any estate or interest in any property except property situated outside Singapore or goods, wares or merchandise, or stock or marketable securities, or any ship or vessel, or part interest, share or property of or in any ship or vessel, shall be charged with the same ad valorem duty, payable by the purchaser, as if it were an actual conveyance on sale of the estate, interest or property contracted or agreed to be sold. (2) Where such ad valorem duty has been paid in accordance with subsection (1) and, before having obtained a conveyance or transfer of the property, the purchaser assigns his equitable estate or interest in that property or enters into any contract or agreement for the sale of that property, the assignment, contract or agreement shall be charged with ad valorem duty in respect of the consideration moving from the sub-purchaser of that estate, interest or property as if it were an actual conveyance on sale to the sub-purchaser. (3) Where any purchaser or sub-purchaser has paid ad valorem duty upon any assignment, contract or agreement in accordance with subsection (1) or (2), the conveyance or transfer made to the purchaser or sub-purchaser, as the case may be, shall be chargeable with a duty of $10. (4) Where a person, having contracted jointly or otherwise for the purchase of any property but not having obtained a conveyance thereof, directs the vendor of the property in writing to convey or transfer the property or any share therein — (a) to another person; or (b) where the person contracted for the purchase of the property jointly with another, to the joint purchasers in shares other than as specified in the contract for the purchase of the property,

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the direction shall, for the purpose of this Act, be treated as a contract or an agreement for the sale of that property or share therein for a consideration equal to the value of that property or share therein and shall be chargeable with duty as if it were an actual conveyance on sale of that property or share therein. (5) Where more than one contract or agreement for sale is executed by a purchaser in respect of the same sale of the same property, only one such contract or agreement for sale of the property shall be chargeable with ad valorem duty under this section and any other contract or agreement for the same sale of the same property shall be chargeable with a duty of $10. (6) Subject to subsection (7), the ad valorem duty paid under this section upon any contract or agreement for the sale of property shall, on application, be refunded by the Commissioner where the contract or agreement is later rescinded or annulled on the ground that — (a) the vendor is unable to prove his title to the property; (b) a purchaser, being a foreign person, is unable to obtain approval under the Residential Property Act (Cap. 274) to acquire or purchase the property; (c) the property is acquired or is proposed for acquisition by any public authority pursuant to the provisions of any written law authorising or empowering the public authority to acquire land compulsorily; (d) the purchase of the property is conditional upon permission by the competent authority to develop or subdivide the property and such permission is refused; (e) either vendor or purchaser fails to obtain the approval of any public authority to sell or purchase, as the case may be, the property; (f) the Commissioner of Building Control made an order under section 24 of the Building Control Act (Cap. 29) in respect of the property; or (g) a Strata Titles Board refused an application for the sale of the property under section 84A, 84D or 84E of the Land Titles (Strata) Act (Cap. 158). (7) The refund under subsection (6) shall be made if and only if — (a) the application for refund is made by the person by whom the instrument was solely or first executed within — (i) 6 months after the date of the stamp, or in the case of an executed instrument, after the date of the instrument; (ii) if the instrument is not dated, 6 months after the execution thereof; (iii) in the case of a contract or an agreement that is rescinded or annulled on the ground referred to in subsection (6) (g), 2 months after the refusal of a Strata Titles Board; or (iv) such further time as the Commissioner may deem reasonable when, in unavoidable circumstances, the instrument cannot be produced within that period; and (b) in the case of an executed instrument, the instrument is given up to be cancelled. (8) Subject to the provisions of this Act, this section shall apply to instruments made on or after 15th May 1996. (9) In this section — "Commissioner of Building Control" has the same meaning as in the Building Control Act (Cap. 29); "competent authority" has the same meaning as in the Planning Act (Cap. 232); "public authority" means the Housing and Development Board constituted by the Housing and Development Act (Cap. 129) or the Jurong Town Corporation constituted under the Jurong Town Corporation Act (Cap. 150); "Strata Titles Board" means a Strata Titles Board constituted under Part VI of the Land Titles (Strata) Act (Cap. 158). however, in practice, it is done differently because of the existence of “off-budget” measures… however, if these are no longer in force, then the statute will prevail Stamp duty is also payable on o • Transfer – already paid ad vol stamp duty so becomes nominal $10 o • Mortgage – capped at $500 max Stamp Duties Act (Cap. 312), a contract for sale and purchase of immovable property made after 15 May 1996 must be stamped by the purchaser within fourteen (14) days of being concluded, after which a penalty will be levied by the Stamp Office • Copies of the following are attached: 1) “Attachment C”, “Attachment C1”, and “Attachment D1” to IRAS’ Circular dated 30th June 1998 on “Deferment of Payment of Buyer’s Stamp Duty Payable on Agreements for Purchase of Real Properties”; 2) “Attachment D” to Inland Revenue Authority of Singapore’s letter to the Law Society of Singapore dated 27th July 1998 on “Deferment of Payment of Buyer’s Stamp Duty Payable on Contracts for Purchase of Real Properties dated on or after 30 June 98”; and

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3)

IRAS’ Circular dated 28th October 2003

• Let’s compute stamp duty. • Property A - Contract dated 1st July 2006. TOP issued. Price = $1,980,500. Completion scheduled for 1st September 2006. Just use formula highlighted above, due 15 september. (note stamp dees now paid electronically) • Property B - Contract between Developer and Original P dated 20th Dec 2005. TOP not issued yet. Price = $320,000. Original P now selling at $500,000 to Sub P. Sub P exercised option on 21st Jul 2006. Treat orig and sub differently 320000 – take first 1%, then 320000-180000, next 2% etc sub purchaser – 500000. payable within 14 days fr 21 july 1. Calculate the amount of stamp duty payable by the purchaser of Property A and state when it is due. 2. Calculate the amount of stamp duty payable by the OP and Sub P of Property B and state when it is due. May appear as exam qn! Ask if not clear 3)

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Withholding Tax • Withholding tax applies where V is not resident in S’pore for income tax purposes, but is assessed to be a property trader within the meaning of S10(1)(a) of the Income Tax Act Cap. 134. Such withholding is an obligation of P or P’s solicitor – S45D Income Tax Act Income Tax Act (Cap. 134), if the vendor is not a resident of Singapore and s a trader of immoveable properties (as defined in the Income Tax Act), the purchaser or his solicitors will have to withhold up to 15% of the gross consideration or of every instalment of the purchase price and pay the same to the Comptroller of Income Tax within ten (10) days of the date of payment of that portion of the purchase price Payment of amount withheld must be accompanied by a prescribed form IR37A (form downloadable from www.iras.gov.sg), duly completed If the purchaser or his solicitor fails to withhold from the purchase price the tax due on any instalment of the purchase price and to pay the same to the Comptroller, such purchaser or his solicitor will be personally liable to the Comptroller for the said amount Singapore Law Society’s Condition of Sale 1999, these conditions provide that the vendor who is not a resident in Singapore and is liable for such tax must allow the purchaser or his solicitors to deduct from the purchase price the tax charged for payment to the Comptroller – Condition 7.2 The vendor must indemnify the purchaser or his solicitors against all loss and damage suffered by either of them if the vendor does not notify the purchaser or his solicitor of the vendor’s tax liability and the Comptroller makes a claim then If the contract for sale of the property is made by way of an Option, need not withhold any tax in respect of the option fee when the Option is granted as there is at that time no contract for the sale of the property Need only withhold tax on payments on or after the exercise of an Option Upon the exercise of the Option, the tax due in respect of the deposit paid to the vendor is to be withheld and paid to the Comptroller Whether or not the vendor is a trader in immoveable properties is a question of fact Last paragraph of the IRAS Circular dated 28th October 2003, if the purchaser or his solicitor has reason to believe that the vendor may be a non-resident property trader, they should ask for a Letter of Confirmation from the vendor stating that the vendor has not been treated as a property trader for the purposes of the Income Tax Act (Cap. 134) also look up provisions of the act!!!

From IRAS website What is withholding tax? A non-resident is liable to pay income tax on Singapore-sourced income. Under the law, a person has a legal obligation to withhold a percentage of the payment, when he makes payments of a specified nature under the Singapore Income Tax Act, to a non-resident.

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The withheld amount has to be remitted to the Comptroller of Income Tax by the 15th of the month following the date of payment. For example, if the payer is liable to make an interest payment to the non-resident person on 5 April, he has to notify the Comptroller of Income Tax and remit the tax withheld to IRAS by 15 May. Types of payment subject to withholding tax When a person makes payments of the following nature to a non-resident, he has to withhold tax. The amount of tax to withhold (i.e the withholding tax rate) is dependent on the nature of payment. The payer also has to report the tax withheld by submitting certain forms to IRAS by the 15th of the month following the date of payment. Tax is to be withheld for the following types of payment:

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Interest, commission, fee in connection with any loan or indebtedness; Royalty or other payments for the use of or the right to use any movable property; Payment for the use of or the right to use scientific, technical, industrial or commercial knowledge or information or for the rendering of assistance or service in connection with the application or use of such knowledge or information; Management fee; Rent or other payments for the use of any movable property; Payment of any remuneration to a non-resident director; Consideration for real property to a non-resident seller who is a property trader; and Professional service fees for non-resident professionals.

Charge of income tax 10. —(1) Income tax shall, subject to the provisions of this Act, be payable at the rate or rates specified hereinafter for each year of assessment upon the income of any person accruing in or derived from Singapore or received in Singapore from outside Singapore in respect of — (a) gains or profits from any trade, business, profession or vocation, for whatever period of time such trade, business, profession or vocation may have been carried on or exercised; (b) gains or profits from any employment; (c) (Deleted by Act 29/65); (d) dividends, interest or discounts; (e) any pension, charge or annuity; (f) rents, royalties, premiums and any other profits arising from property; and (g) any gains or profits of an income nature not falling within any of the preceding paragraphs. s10(1)(f) and 45D of Income Tax Act

- 45D. —(1) Where any person whose income arising from the disposal of any real property is chargeable to tax under section 10 (1) (a) is a non-resident person, any designated person shall, before paying to the non-resident person any money which is the whole or part of the consideration for the disposal of the real property, notwithstanding any other written law, immediately deduct therefrom tax at the rate of 15% on every dollar of such payment. [37/2002] (2) Any designated person who has deducted any money under subsection (1) shall immediately give notice of the deduction of tax in writing to the Comptroller and shall, notwithstanding any other written law, pay the amount so deducted to the Comptroller by the 15th day of the month following the month in which the deduction was made and every such amount shall be a debt due from him to the Government and shall be recoverable in the manner provided under section 89. [37/2002;21/2003] (3) Section 45 (2) to (8) shall apply, with the necessary modifications, to any designated person as those provisions apply to any person referred to therein. [37/2002]

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(4) For the purpose of payment of any tax due from any income which is chargeable to tax under section 10 (1) (a) in respect of any disposal of any real property which is owned by 2 or more persons as joint owners, the designated person deducting the tax shall retain such amount as is presumed under subsection (5) to be owned by any non-resident person and pay over the tax due from such amount to the Comptroller. [37/2002] (5) It shall be presumed, until the contrary is proved, that the persons who own any real property as joint owners shall share the proceeds of disposal of the real property in equal shares. [37/2002] (6) In this section — "designated person" , in relation to any disposal of any real property — (a) in the case where an advocate and solicitor acts for the buyer of the real property in such disposal, means that advocate and solicitor; and (b) in any other case, means the buyer of the real property; "land" includes land of any tenure wherever situated in Singapore, whether or not held apart from the surface, and buildings or parts thereof (whether completed or otherwise and whether divided horizontally, vertically or in any other manner) and tenements and hereditaments, corporeal and incorporeal, and any estate or interest therein; "non-resident person" means a person who is not known to be resident in Singapore to the designated person; "real property" , in relation to a disposal of which the income is chargeable to tax under section 10 (1) (a), means any land and any interest, option or other right in or over any land. Withholding of tax in respect of interest paid to non-resident persons 45. —(1) Where a person is liable to pay to another person not known to him to be resident in Singapore any interest which is chargeable to tax under this Act, the person paying the interest shall — (a) deduct therefrom tax at the rate of 20% or the rate specified in section 43 (3) or (3A), as the case may be, on every dollar of the interest; and (b) immediately give notice of the deduction of tax in writing and pay to the Comptroller the amount so deducted, and every such amount deducted shall be a debt due from him to the Government and shall be recoverable in the manner provided by section 89. [37/75;31/86;1/90;20/91;28/92;26/93;28/96;24/2001;37/2002] (1A) Notwithstanding subsection (1), tax shall be deducted at the rate of 22% on every payment (other than payment subject to tax at the rate specified in section 43 (3) or (3A)) made on or after 1st January 2004 which would be assessable on the person receiving the payment for the year of assessment 2004. (2) The Comptroller may — (a) if he thinks fit, allow any bank or financial institution to give notice of the deduction of tax and make payment of the amount so deducted within such other period and subject to such conditions as the Comptroller may determine; (b) by notice in writing require any person who pays such interest to deduct and account for tax at a higher or lower rate than 20% or the rate specified in section 43 (3), as the case may be, on every dollar of such interest or permit such interest to be paid without deduction of tax. [1/90;20/91;28/92;26/93;28/96;24/2001;37/2002] (3) Where a person fails to make a deduction of tax which he is required to make under subsection (1) any amount which he fails to deduct shall be a debt due from him to the Government and shall be recoverable as such. (4) If the amount of tax which is required to be deducted under subsection (1) is not paid to the Comptroller — (a) by the 15th day of the month following the month in which the interest from which the tax is to be deducted is paid, a sum equal to 5% of such amount of tax shall be payable; and (b) within 30 days after the time specified in paragraph (a), an additional penalty of 1% of such amount of tax shall be payable for each completed month that the tax remains unpaid, but the total additional penalty under this paragraph shall not exceed 15% of the amount of tax outstanding. [26/93;21/2003] (5) Without prejudice to any other provision of this Act, if any person after deducting the tax required to be deducted under subsection (1) fails to give notice of such deduction to the Comptroller by the time specified in subsection (4) (a), he shall be guilty of an offence and shall on conviction pay a penalty equal to 3 times the amount of tax so deducted and shall also be liable to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 3 years or to both. [26/93;21/2003] (6) Where an individual has been convicted for 3 or more offences under this section the imprisonment he shall be liable to shall be not less than 6 months.

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(7) The Comptroller may — (a) compound an offence under subsection (5) and may before judgment stay or compound any proceedings thereunder; and (b) for any good cause remit the whole or any part of the penalty payable under subsection (4). (8) For the purposes of this section — (a) the manager or principal officer of a company shall be answerable for doing all such acts, matters and things as are required to be done by the company under this section; and (b) interest shall be deemed to have been paid by a person to another person although it is not actually paid over to the other person but is reinvested, accumulated, capitalised, carried to any reserve or credited to any account however designated, or otherwise dealt with on behalf of the other person. (9) This section shall not apply to any interest derived from any qualifying debt securities issued during the period from 27th February 1999 to 31st December 2008, subject to such conditions as the Minister may impose. [32/99;21/2003] (10) In this section, “qualifying debt securities” has the same meaning as in section 13 (16).  former imposes income tax on what was previously known as capital gains  latter is the obligation of the P’s solicitor to hold the tax and not pay it to the V (if V is not a resident of Singapore and is a trader of immovable property), but to pay it to IRAS directly instead… irrespective of whether the V has made money  The purchaser or his solicitors will have to withhold up to 15% of the gross consideration or of every instalment of the purchase price and pay the same to the Comptroller of Income tax within 10 days of the date of payment of that portion of the purchase price.  if V sells within 1 year of acquisition, have to withhold 50% of the purchase and pay it to IRAS within 10 days  there are 2 payments… option fee and payment of deposit… you are required to withhold upon the exercise and payment of deposit 10%, not at the time of 1%, the option fee.  withhold tax based on 10% at this time, not on the 100%, and then on completion, to withhold tax based on the remaining 90%  there is a prescribed form of statutory declaration for you to know whether you need to withhold tax or not  If more than 1 year but less than 3 years  If more than 3 years, then no need to withhold, unless the Vendor has been assessed as a property trader  As long as he has declared whether he is or is not, you are entitled to rely on his declaration, whether or not it is accurate  remember, that the with-holding must be done whether or not he makes or loses money  however, if he loses $$$, then can write in to IRAS to ask for refund  because the whole idea of Income Tax Act is to tax you on gains … but have to pay first, and then ask for refunds later  Prior to 2002, S10F Income Tax Act imposed capital gains tax on profits made in sale of immovable properties within 3 years of its acquisition. This has since been repealed.

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However, withholding tax still applies where V is not resident in Singapore for income tax purposes but is assessed to be a property trader within the meaning of S10(1)(a). Such withholding is an obligation of P or P’s solicitor-S45D Income Tax Act. See above for provision. If the Purchaser or his solicitor fails to withhold from the purchase price the tax due on any instalment of the purchase price and to pay the same to the Comptroller, such purchaser or his solicitor will be personally liable to the Comptroller for the said amount. In the case where the contract is governed by the Law Society’s Condition of Sale 1999, these conditions provide that the vendor who is not a resident in Singapore and is liable for such tax must allow the purchaser or his solicitors to deduct from the purchase price the tax charged for payment to the Comptroller. Further, the vendor must indemnify the purchaser or his solicitors against all loss and damage suffered by either of them if the vendor does not notify the purchaser or his solicitor of the vendor’s tax liability and the Comptroller makes a claim then. If the contract for sale is made by way of an Option, the purchaser and his solicitor need not withhold any tax in respect of the option fee when the option is granted as there is at that time no contract for the sale of the property. The purchaser or his solicitor need only withhold tax on payments made to the vendor or his

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solicitor on or after the exercise of the option. Upon the exercise of an option, the tax due in respect of the deposit paid to the vendor is to be withheld and paid to the Comptroller. Whether or not the vendor is a trader in immovable properties is a question of fact. In accordance with the last paragraph of the IRAS Circular dated 28th October 2003, if the purchaser or his solicitor has reason to believe that the vendor may be a non-resident property trader, they should ask for a Letter of Confirmation from the vendor stating that the Vendor has not been treated as a property trade fro the purposes of the Income Tax Act (Cap 134). See Pg 79 of manual. Goods and Services Tax Goods and Services tax – payable on transactions involving land A grant, assignment or surrender of any interest in or right over land is treated as a supply of goods – GST Act Sch 2 para 4

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MATTERS TO BE TREATED AS SUPPLY OF GOODS OR SERVICES Interest in land 4. The grant, assignment or surrender of any interest in or right over land or of any licence to occupy land is a supply of goods. • Exemptions in Sch 4 paras 2 & 4(3)(c) Land 2. The grant, assignment or surrender of any interest in or right over land of any of the following descriptions or of any licence to occupy such land: (a) any vacant land zoned “Residential” or “Rural Centre and Settlement” in the Master Plan under the Planning Act (Cap. 232) and used or to be used for residential purposes or for the purposes of condominium development; (b) any vacant land approved exclusively for residential or condominium development where the supply is made by such public or statutory authority as may be approved by the Minister or such other person as he may appoint; or (c) any land or part thereof with any building, flat or tenement thereon, being a building, flat or tenement which is approved exclusively for residential purposes under the Planning Act (Cap. 232). Application 4. —(1) Paragraph 1 (other than sub-paragraph (q)) and paragraph 2 shall not apply to any services consisting of arranging, broking, underwriting or advising on any of the activities specified therein in return for a brokerage fee, commission or other similar consideration. (2) Paragraph 1 (m), (n) and (o) shall not apply to any supply which section 37 provides are to be disregarded for the purposes of this Act. (3) Paragraph 2 shall not apply to that part of the supply comprising — (a) the sale and lease of any furniture, furnishings, fittings, appliances or effects; (b) services consisting of the maintenance, repair and upkeep of the building, flat or tenement or any common property or limited common property connected therewith; and (c) any building, flat or tenement which is not approved exclusively for residential purposes under the Planning Act (Cap. 232).

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GST is chargeable on sale or lease of (1) commercial properties (non residential) (2) where V is a GST taxable person  Should advise clients to take this amount into consideration when negotiating on the price.  GST will be chargeable on sale of non-residential property if the V is GST registered  Before the Law Society came up with the new regulations, a lot of negligence suits because failed to provide who to pay GST

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However, now the Law Society’s standard conditions… provides for the party to pay for it. Law Soc Conditions of Sale 1999 deem P is liable to pay GST if payable. Under the Goods and Services Tax Act (Cap 117A), the Vendor is liable to Inland Revenue Authority of Singapore for the payment of any GST payable.

However in the case where a contract is governed by the Singapore Law Society’s Condition of Sale 1999, the Vendor is entitled to claim such GST from the Purchaser.

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 Under sale of commercial property, even the payment of option fee (even if option not exercised) … GST has to be accounted for here.  GST must be accounted for when V receives option fee, when P pays deposit (if held by stakeholder, V must account for GST when deposit is released to him.) payment is received at each stage of the progress payment OR at date of tax invoice, whichever is earlier. 5)

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Insurance: when risk passes • Where contract is silent as to when risk in respect of the property passes to P & Law Soc Conditions of Sale apply, risk is deemed to pass to P upon conclusion of contract – Condition 23********* o s23.1 purchaser entitled to benefit of any subsisting insurance if a) he obtains the consent of the relevant insurers and b) he pays due propoeriton of premium fr date of contract o s23.2 vendor under no oblig to purchase to keep insurance policy in force o s23.3 s3.13 of CLPA will not apply to sale • If contract does not defer passing of risk to P, P’s solicitor should advise P to take up necessary insurance try to get coverage somewhere or get risk not to pass first • Please note that S3(13) CLPA which provides that benefit of fire insurance policy will be paid to P is excluded by Condition 23(3) of law soc conditions of sale (!!!).

CLPA Lessee or assign not to call for title to freehold. 3. — Implied stipulation as to fire insurance. (13) On a sale of property a stipulation shall be implied that the purchaser shall be entitled to the benefit of any insurance against fire which may be then subsisting thereon in favour of the vendor. 6) Lodgement of caveat*

When & Why to lodge Caveat - • P’s solicitor should lodge caveat immediately after the conclusion of the contract o • Serves to notify third parties of P’s interest and gives priority in time ->

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• Enables P or P’s solicitors to be notified of any subsequent dealing affecting the property but note legal interest will still override equitable interest. – old principles still apply • For LTA properties, caveat prohibits registration of any other instruments claiming a conflicting interest • In the event of conflicting claims, early notification may give priority • Caveats are filed electronically – but still need to submit hard copy Caveats are now filed by lodgement. lodgement is important upon conclusion because you want to notify on the land register to show that your client has interest as a purchaser so that if the V tries to re-sell… your client’s interest will be shown on the land register

How?  no need a plan, if it is a completed property with a lot no/ strata lot no.  need a plan if the property is still under construction, have to identify the property with a plan  for title not issued cases, the address is not good enough…for the purposes of land register, only recognise lot number or strata lot number  lodgement must be done correctly, the client’s name must be accurate, and the grounds of claim must be accurate  the last is the most important  the limbs as caveator, caveatee, the position as purchaser or mortagee etc has to be clearly set out  the caveat usually goes on to say that you prohibit the registration of any other for caveats or interest except with permission of the caveator

see s115 LTA for form of caveat 115. —(1) Any person claiming an interest in land (whether or not the land has been brought under the provisions of this Act), or any person otherwise authorised by this Act or any other written law to do so, may lodge with the Registrar a caveat in the approved form which shall include the following particulars:

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(a) the name of the caveator and the caveatee; (b) an address in Singapore at which notices may be served on the caveator and the caveatee; (c) particulars of the estate or interest claimed by the caveator; (d) the grounds in support of the claim; (e) the nature of the prohibition of the dealing in land; (f) the lot affected by the caveat and, where that lot is comprised in a folio, the folio; (g) where the caveat relates to only part of the land, such description of that part as will enable it to be identified to the satisfaction of the Registrar; (h) if the caveator is a purchaser or sub-purchaser of the interest in the land, the amount of the purchase price and the date of the caveator’s contract or the date on which he exercised the option to purchase the interest in the land, as the case may be; and (i) the particulars required by section 19 of the Residential Property Act (Cap. 274). (2) A caveator may, according to the extent of his interest, forbid the registration under this Act of any dealing affecting the land against which the caveat is directed, either — (a) unless the dealing is expressed to be subject to the interest claimed by the caveator; or (b) unless the caveator or some person nominated by him in the caveat has consented in writing to such registration. (3) For the purposes of this Part, and without limiting its generality, a reference to a person claiming an interest in land shall include a reference to any of the following persons: (a) any person who has an interest in the proceeds of sale of land, not being an interest arising from a judgment or order for the payment of money; and (b) a person who has obtained an injunction in respect of an estate or interest in land. (4) Nothing in this section shall enable a caveator or a person nominated by him in a caveat under subsection (2) (b) to withhold his consent to any dealing which a caveatee may lawfully make.

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liability of wrongful caveat: s128 LTA Compensation payable for wrongfully lodging caveats, etc. 128. —(1) Any person who wrongfully, vexatiously or without reasonable cause — (a) lodges a caveat with the Registrar; (b) procures the lapsing of such a caveat; or (c) being the caveator, refuses or fails to withdraw such a caveat after being requested to do so, shall be liable to pay compensation to any person who sustains pecuniary loss that is attributable to an act, a refusal or a failure referred to in paragraph (a), (b) or (c). (2) The compensation referred to in subsection (1) shall be recoverable in proceedings taken in a court by the person who claims to have sustained the pecuniary loss. (3) A person who is a caveator shall not be entitled to bring proceedings under subsection (1) (b) if that person, having had an opportunity to do so, has failed to take all reasonable steps to prevent the caveat from lapsing. (4) For the purposes of this section, a caveator shall be deemed to allow a caveat to remain without reasonable cause if he fails to withdraw it within 7 days of the day on which his right to the interest claimed terminates.

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When title of the property is registered under the common law system, the caveat lodged in the Registry of Deeds does not serve any purpose except to notify third parties of the Purchaser’s interest in respect of the property. This is because under the Registration of Deeds Act, the lodgement of a caveat in the Registration of Deeds does not prohibit the registration of any other dealing affecting property. However, where there are conflicting claims, if the Purchaser’s interest is notified on the register first and he had no notice of the conflicting claim at the time of the purchase, his claim may take precedence over a conflicting claim that is registered later under the rules relating to priority of interests. Others

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Besides lodging a caveat, is there anything that should be done when concluding a contract?


• Searches? – title search: to check that no one else has lodged caveat by mistake or vendor’s fraud/deceit + bankcruptcy search to check on capacity of seller • Confirm clients’ instructions? • Anything else? – eg arranging for release of bridging loan, then must make sure you check cashier’s order given by bank/ all reqts complied with Send Requisitions on Title to the Vendor’s solicitors


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Draft the Conveyance or Transfer in favour of his client for the approval of the Vendor’s solicitor

“Bridging Loan”

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A short term loan (usually at a higher rate) taken out to cover the financial gap between buying a new property and selling an existing property. www.aaamortgagesolutions.com.au/glossary.htm If a house purchase arrangement involves the sale of one property and the purchase of another it will normally be most convenient if the two deals are concluded simultaneously. If this is not possible and the purchase of the second property is to be concluded before the sale of the first is completed then additional financing may be necessary. This is a 'bridging loan' - it bridges the gap between the two transactions. www.sfs-group.co.uk/glossary-B.html a loan to provide short-term finance, usually to buy property or land, where the loan is to be cleared by longer-term borrowing, or the sale of assets. www.smallbiz.nsw.gov.au/smallbusiness/Resources/Business+Tools/Glossary+of+Business+Terms/ A short-term mortgage loan, the proceeds of which are to be used to purchase a new home, generally secured by a mortgage on the existing home and generally due and payable upon sale of the existing home. www.bankdirect.co.nz/section90.asp A short term loan provided while alternative long-term funding, or the sale of the asset, is completed. www.equusbusinessfinance.co.uk/business-loan-glossary.htm temporary finance 'bridging' the period between completion on the purchase of a property and the sale of an existing property, funds from which are intended to finance/part finance the new purchase. www.haltonkelly.co.uk/glossary.shtml A bridge loan is a type of short-term loan in the financial industry. Bridge loans are typically taken out for a period of 2 weeks to 3 years in order to finance other projects. Uses for bridge loans include real estate purchases, retrieving real estate from foreclosure and business loans for operating capital. en.wikipedia.org/wiki/Bridging_loan

GOVERNMENT ACQUISITION BEFORE COMPLETION Lim Kim Som v Sheriffa Taibah bte Abdul Rahman [1994] 1 SLR 393 Facts In April 1983, the respondent Sheriffa and the appellant Lim entered into a sale and purchase agreement (‘the agreement’) for a piece of property. Completion was to have taken place on 7 July 1983, but this did not happen. On 13 July 1983 Sheriffa’s solicitors sent Lim’s solicitors a 21-day notice to complete. On the same day a declaration was made under s 5 of the Land Acquisition Act (Cap 272, 1970 Ed) (‘the Act’) stating that the property was required for a public purpose. This declaration was gazetted on 19 July 1983. On 1 August 1983 Lim’s solicitors informed Sheriffa’s solicitors that he did not wish to complete the purchase and requested for the return of his deposit. Sheriffa pointed out that as the 21-day notice had expired and Lim still did not intend to complete, his deposit had been forfeited. Sheriffa then brought this action for the balance of the purchase price with interest or in the alternative damages for breach of contract. On 23 August 1984 the Collector of Land Revenue awarded $450,000 as compensation for the acquisition and the sum was paid into court. The Collector took possession of the property on 28 May 1985 and on 1 June 1985 an entry in the Registry of Deeds was made vesting title in the State. The compensation with interest was paid to Sheriffa pursuant to an order made on 5 July 1985 at her instance. The judicial commissioner allowed Sheriffa’s claim and dismissed Lim’s counterclaim. Lim appealed, arguing that: (a) the agreement was frustrated by the compulsory acquisition of the property, the compulsory acquisition commencing upon the issue of the s 5 declaration; and (b) Sheriffa was precluded from delivering good title after the declaration was made. Held, allowing the appeal: (1) The doctrine of frustration applied to contracts for the sale of land. Whether frustration occurred depended on the true construction of the terms of the contract read in light of the nature of the contract

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and the relevant surrounding circumstances when the contract was made. The question was whether: (a) the contract was, on its true construction, wide enough to apply to the new situation; or (b) the supervening event resulted in a fundamental change in the obligation that the thing undertaken would, if performed, be a different thing from that contracted for. (2) In this case, the sale and purchase agreement did not provide for the compulsory acquisition of the property. The declaration under s 5 of the Act did not vest title of the property in the state; such title vested only when notification was made in the relevant register under s 18. Once the declaration was made, the process of acquisition started and its progress led to the vesting of ownership in the state. The position vis-a-vis the property was thus fundamentally altered. In a practical sense it could not be said that Lim obtained that which he had bargained for. (3) As the acquisition frustrated the contract, s 2(2) of the Frustrated Contracts Act (Cap 115) applied and Lim could recover the deposit from Sheriffa. On the issue of title, by reason of the s 5 declaration Sheriffa was unable to deliver a good marketable title to Lim upon completion as the title was a defeasible one. E Johnson & Co. v N.S.R. Ltd [1997] A.C. 400 P.C. Questions

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• When exercising an option, should you impose a condition or amend any of the terms? o – no. this amts to counter offer and orig offer will be revoked. • When should you take clients’ instructions on the manner of holding if there is more than one purchaser? o – before exercising option • Can a Vendor change his mind and revoke the Option after he has collected the option money and granted the Option? o – status of option once granted by vendor – option normally worded as irrevocable; so vendor cannot change mind, once taken option money, bound by term to keep it open to purchaser. (unless both parties agree but rare) • Mr X pays licensed housing developers a booking fee for a condo unit. Before he signs the S&P agreement, he wants to include his fiancee Miss Z as a co-P. Can he? – o no he cannot. One of conditions is that option is not assignable. If put in request at this stage, no. o can only include after you sign sale and purchase agreement. Then under housing developers rules, can subsell. But on subsale, stamp duty kicks in! see above.

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