Do you really need a lawyer when buying property?
Buying property is a complex and time-consuming process involving several stages. It is essential that you hire a competent lawyer who understands the nuances of real estate transactions to help you conclude the deal successfully.
A single misstep can have grave consequences. If the sale and purchase agreement is defective, your title to the property may be at stake. A documentation error could lead to legal problems. You may have to bear a significant financial burden as a consequence of faulty documentation.
It is absolutely vital that you engage an experienced legal expert to help with the purchase. The expense will be insignificant in comparison to the cost of the property that you are buying.
Every dollar that you pay in legal fees towards your real estate transaction is money well spent.
What is the lawyer’s role in a real estate transaction?
Option to Purchase
Once you have zeroed in on a property, you will need to enter into an Option to Purchase. This is a legally binding document that should be drafted by a lawyer.
An Option to Purchase gives you the right to purchase a property within a period of three weeks. If you are buying a flat, it could be issued by the individual who is selling it to you. It could also be issued by the developer from whom you intend to purchase the property.
At the time the Option to Purchase is made, you will have to pay 1% of the purchase price to the seller. You then need to come up with the balance within the stipulated three-week period. In the event that you cannot, your deposit may be forfeited.
It is for this reason that buyers arrange for financing before entering into an Option to Purchase.
Certificate of title
This is the document that establishes your ownership of a property. After the Option to Purchase has been signed, the Certificate of Title of the property, which will certify the seller as the owner, will be made available to you.
At this time your lawyer plays a crucial role. The Certificate of Title will need to be carefully inspected to verify that it is in order. If there are flaws in this document, they will be spotted by your lawyer and a clarification sought from the seller.
According to the accepted practice, your lawyer will continue to hold on to the Certificate of Title till the sale is complete. At that point in time, an application will be made to the Singapore Land Authority for a new Certificate of Title which confirms you as the owner.
Sale and Purchase Agreement
Your lawyer plays a key role at this stage. The Sale and Purchase Agreement is the document which transfers the property to you. It has to be drafted carefully and needs to take into account all eventualities that may have an impact at a later date.
Among other details, it will mention the payment schedule that you will be required to follow for buying the property. It will also state the exact price at which the deal is being finalised.
Your mortgage details will also find a place in the Sale and Purchase Agreement.
This document identifies the property that you are buying. It is important that it contains an elaborate description of the property.
Other essential activities that your lawyer will perform
A lawyer is indispensable in a real estate transaction. The lawyer’s role includes:
- Checking for any outstanding property tax – when the property is transferred to you, the responsibility for payment of property tax is also yours. But the sum payable may include arrears that should be paid by the seller. Your lawyer will determine the outstanding property tax amount.
- Apportion the property tax – after the tax amount is known, your lawyer will help you in settling the outstanding amount with the seller.
- Payment of stamp duty – this needs to be paid within 14 days of the agreement. Your lawyer will help in arranging payment.
Get the finest legal help that you can afford
Remember that there are several parties involved in a real estate transaction. In addition to you, there would be the seller, the bank that is providing you with the loan for the property, and the real estate broker.
While each of these parties would be keen that the transaction is completed successfully, they will be looking out for their own interests. You need to engage a lawyer so that your interests are protected too.
Getting the best possible legal help for yourself is the most sensible step that you can take.
Disclaimer: The author is not a licensed law practitioner in Singapore. This article is based on the author's personal research and understanding into the topic, and does not constitute legal advice.