For the average Singaporean, the buying and selling of real estate in Singapore is very likely to be one of the most financially significant transaction in their lives. With the myriad of rules and regulations governing the sales of real estate, the buyer/seller should consider seeking legal advice from a qualified advocate and solicitor of the Courts of Singapore.

What is Conveyancing?

Conveyancing is a legal term of art, meaning the transfer of legal title of property from one person to another, including the granting of encumbrances (a claim on the property by another party) such as mortgages.

However, the term is nowadays used to refer to the branch of law specializing in the preparation of documents for the transfer of property. The title of a property refers to the bundle of rights in a property in which a party may hold an interest in. For houses, titles are split into 2 types:

• Freehold- The owner will enjoy the ownership of the real estate in perpetuity; and
• Leasehold- The ownership of the real estate will revert back to the government after a set period of time. Leases in Singapore can last between 6 months to 99 years. (Leases of 999 years exist too, but are considered equivalent to freehold for all effects and purposes)

In Singapore, titles to a piece of land is registered in a central registry (this is known as the Torrens system, and also practiced in Australia and New Zealand). The Land Titles Register and the Register of Deeds of the Singapore Land Authority handles registered land and common law land respectively. The majority of land in Singapore is registered land. Under the law, registration in the land title registration is necessary to effect a transfer in the ownership or interest of the land, and a registered title is indefeasible (unless obtained by fraud). Hence, when purchasing real estate, it is essential to have one’s agents do a search on these 2 registries to check if the seller has a valid title to the land before entering a transaction.

Who Can Buy Real Estate?

Under the Residential Property Act, a “foreign person” may not acquire landed residential property without the express permission of the Minister of Law. A foreign person refers to an individual who is not a citizen/PR of Singapore, or a foreign company/converted foreign company. A foreign company refers to a company which is not incorporated in Singapore, or has foreign members or directors (even if it’s incorporated in Singapore). This restriction applies even if the property is received as a gift or inherited from a deceased’s estate. A foreign person who receives a property in such a manner is legally required to sell it within a set period of time. However, these restrictions do not apply to foreigners who intend purchase units in a flat or condominium of 6 or more stories high, as they do not count as landed residential property.

For HDB flats, HDB has a diverse range of regulations governing the eligibility to purchase, depending on the scheme one chooses to apply under, and whether one is applying for a new flat built to order or buying off the resale market. Depending on the scheme one is applying under, one must meet certain criteria with regards to his/her citizenship status, age, or marital status to purchase a flat. One of the most important regulations one should take note of is the Ethnic Integration Policy and SPR Quota. To prevent the formation of ethnic/PR enclaves, the HDB tightly controls the racial/PR percentages within every HDB block. Hence, should one’s ethnic group be overrepresented within the block, one may not be allowed to purchase that property. Generally, transactions that take place between individuals of the same ethnic group/citizenship status should be unaffected. Buyers and sellers are advised to check the eligibility of their transactions before proceeding.

Option to Purchase

An Option to Purchase (OTP) is a valid and binding legal contract in written form, entered into between a buyer and seller of a residential property. The OTP gives the buyers the exclusive rights to purchase at a fixed price, within a fixed period of time (usually 2-3 weeks). Usually, the sellers of a property may not back out of an OTP agreement and refuse to sell once the OTP is signed, while the buyers may do so. In exchange, the prospective buyers are required to put down a 1% deposit, known as the option fee, which they will forfeit to the sellers if they choose to withdraw for the deal. Hence, both parties are advised to consider carefully before coming to an OTP.

In addition, buyers are strongly advised to carefully inspect the property they wish to purchase before entering into an OTP agreement. The legal principle of “caveat emptor” (Latin for “buyers beware”) applies in such situations, as the responsibility is placed on the buyer(s) to make sure that the property is free of defects before purchasing it. Sellers and their agents have no legal obligation to ensure the property is in good condition, although they may not defraud or mislead buyers.

Exercising the Option

If the buyers decide to proceed with the transaction, they may choose to exercise the option to purchase, and come to a sales and purchase agreement with the sellers. The conditions of this agreement is generally governed by the Law Society’s Condition of Sales 2012, which is an update to the 1999 Condition of Sales (note that the 2012 Condition does no supersede the 1999 Condition). However, parties may mutually agree to contract out of any, or all of the Conditions as they may see fit. Usually, an additional deposit of 4% of the agreed price will be paid to a neutral party, such as the Singapore Academy of Law. The stamp duties payable by both parties should be paid within 14 days of signing the sales and purchase agreement.

With the acceptance of the OTP, the buyer’s lawyers may examine the certificate of title, which verifies the ownership of the property by the seller. At the same time, they should make legal requisitions to check if the property will be affected by any governmental developmental plans. If so, this may invalidate the entire transaction.


The seller will hand over the keys of the property to the buyer, in exchange for the payment of the remaining 95% of agreed price. The 4% deposit will also be released by the intermediary to the sellers. The property should be delivered in the same condition (notwithstanding fair wear and tear) as it was on the date of the option or contract, whichever is earlier, unless otherwise agreed between both parties.

The seller’s lawyers will also hand over the transfer documents, with the details of the change in ownership of the property, to the buyer’s lawyers. This will allow the buyer’s lawyers to apply for a Certificate of Title with the SLA.

The above rules apply only for private completed residential properties. Do note that when purchasing HDB flats, it is compulsory to use the standard OTP contracts provided. Any other agreements or arrangements made will be deemed invalid under the Housing and Development Act

For assistance regarding Conveyancing matters, do contact us to make an appointment.

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Fung Peen Lim

Author Fung Peen Lim

Fung peen is a 20 year veteran of the legal industry. A peace-maker at heart, Fung Peen proficiency in litigation makes him a valuable ally and counsel in helping his clients find amicable legal solutions, in estate planning, debt recovery, disputes, divorce. One wise saying he believes in is “A Will is a great way to love your family with the last thing they read from you”.

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