So now you have secure the loan and found yourself a lawyer, now its time to exercise the OTP.
Exercising and before completion
“Time to meet my lawyer”
5) Exercise the OTP and pay balance of downpayment
Before the deadline on your OTP, you will need to exercise it to officially become a buyer of the property.
When you exercise the OTP, it is likely that you will have to pay the balance of downpayment, usually comprising 4% of the purchase price.
Apart from these, your lawyer will also conduct a title search to find out more information about the property, such as:
- Property title and tenure: whether the property is freehold (i.e. the property will indefinitely belong to you and your heirs) or leasehold (i.e. the property will belong to you for a fixed term, which may or may not be extendable. You will also need to inquire on the total length of the lease and how many years remain on it);
- Encumbrances, if any: e.g. whether the property is protected by caveats or has been mortgaged. If any encumbrances are found, additional steps will have to be taken to remove such encumbrances from the land (if this is even possible);
- Name of registered proprietor(s): the names of the owners of the property; and
- Manner of ownership holding: i.e. if there are multiple owners of the same property, whether they own the property as joint tenants or tenants-in-common. Joint tenants have equal interests in the flat regardless of their amount of contribution to the purchase of the property, while tenants-in-common own the property in divided shares, the proportion of the split depending on the owners’ contributions to the purchase of the property.
Through the title search, your lawyer will attempt to confirm that the seller has “good root of title”, i.e. his title to the property is not defective to the extent that the property cannot be marketed. If the seller does not have good root of title, it is inadvisable to proceed further until the defects in the seller’s title are remedied (if this is possible).
After that, your lawyer will lodge a caveat on the property with the Singapore Land Authority. The caveat serves to provide notice to third-parties of your interest in the property and also enables both you and your lawyer to be notified of any subsequent dealings affecting the property.
The rest of the down-payment for the property (a percentage of the purchase price minus the amount paid as the booking fee) will also be due. The conveyancing money used to make payment will be collected from you by your lawyer and placed in a conveyancing account to be paid out from there to the seller. This account can be:
- A conveyancing account specially opened by the lawyer’s law firm to receive such monies;
- The Singapore Academy of Law’s Conveyancing Money Service; or
- An escrow account jointly owned by the buyer and seller’s lawyers.
It is also necessary to ascertain if the sale is with vacant possession or subject to an existing tenancy in which case the security deposit would have to be transferred to the buyer on completion and due notice given to the tenant.
Click here to read part 1.
Click here to read part 2.