Check out our in-depth guide for purchasing houses on the secondary market. Learn about important factors.
1. Issuance on transfer of ownership
The first concern in a secondary property transaction would often be whether or not there is any title to the subject property. The more accurate question in this matter lies in whether the title to the subject property has been issued at the time of the transaction.
The MOT (memorandum of transfer), which will be handled by the relevant Land Office, is the document transferring ownership if a separate individual or strata title has been issued for the subject property. The registration of the charge on the title will serve as the securitization for the bank in exchange for the loan provided.
If the separate individual/strata title for the subject property has not yet been issued, the ownership will be transferred through a deed of assignment that will be recorded with the developer in anticipation of the title issuing later. Another deed of assignment is needed to be prepared in the bank’s favor, to be used to securitize the loan supplied in exchange for the bank.
In both cases, stamp duty must be paid to the government in order for the transfer of ownership to be recognized.
It is also crucial to be aware that certain banks have rules prohibiting lending for properties over a specific time period for which separate titles have not yet been issued.
2. Freehold or Leasehold
The subject property’s freehold or leasehold status is another frequent query from the buyer. The response to this query is important for determining the subject property’s worth as well as for many banks’ and financial organizations’ policy considerations. Some banks have a policy of refusing to lend if the remaining lease term on a leasehold property is less than a predetermined number of years.
Furthermore, since dealing with leasehold property frequently requires the State Authority’s approval, the transaction will take longer to complete.
The purchaser should also be knowledgeable about the procedures and standards for extending the leasehold tenure and acknowledge that the decision to do so ultimately rests with the authorities.
3. Pre and Post Joint inspection
Making a decision to buy a house requires thorough inspection, yet few people care to conduct a second round of inspection. Be sensible enough to conduct a final joint inspection after the deal is complete in order to transfer vacant possession. Making ensuring that all outstanding concerns about the state of the subject property may be resolved between the parties is a crucial step.
When viewing a furnished unit before making a decision to buy, it’s important to remember that you’re actually buying an unfurnished property, so you should be concerned about how it will look once all the furnishings have been taken out.
If you are buying a furnished unit, you should be worried about whether you are receiving all the furniture and other items you anticipate having in the subject property when you take possession.
To avoid pointless conflict, it’s crucial to compile a thorough list of the furnishings and fixtures that are included in the purchase and speak with your lawyer about the meaning of “as is where is.”
4. Realistic expectation on completion date
Taking into account the loan arrangements, a secondary market deal typically takes three to four months to complete.
The first three months of an interest-free transaction period are referred to as “3+1” and are followed by an automatic one-month extension with a predetermined contractual interest.
First off, “3+1” is not an equation but rather a simplified description of the transaction time subject to the wordings of the SPA.
Only if the contract is unconditional does “3+1” begin to run. If it needs certain consents, it can take longer before the “3+1” process starts since it needs time to obtain those consents.
“3+1” can be delayed and then resumed during the contractual period. The parties are given a set amount of time to complete particular contractual responsibilities, and any delays or additional time needed to comply will be added back in the other party’s favor.
5. Concerns on other ownership record
After a transaction is finished, which includes full payment for the purchase, taking possession, and formalizing the transfer of ownership, most parties will be relieved to move on. It is simple to overlook the fact that the new owner would also need to update other important ownership records after all of that.
These include the renaming of the management office, quit rent, assessment, and all utility companies. Any ownership issues can be avoided by updating these data.