Lecture 10: Sale and Purchase of Land 2: Registration of Title and Stamp Duty Flashcards
Legal Description of Land
Boundary & Survey Maps Act: Land Demarcation
District –> Lots
30 Town Sub-divisions
34 Mukims
Time lag between Stage 1 & 2: 9-12 weeks
Due to encumbrances on land/burdens on land, there may be multiple interests on land (covenant/easement/mortgage) –> Who will have the priority right? –> Due to the principle of caveat emptor, as a buyer, he has to have requisition of property to make sure that property has a good title during the 9-12 weeks after buyer has exercised the option –> need for land registration systems
Old System: Registration of Deeds Act
Due to flaws under RODA, where registration of deed was not compulsory reflecting covenant/easement/mortgage to be registered –> due to caveat emptor, no record of of name of people who has bundle of right in the same parcel of land –> hampers buyer’s search of encumbrances which affects his priority
New System: Land Titles Act (Torrens System)
All land transactions had to be in deed written in the English language: Section 45(1) of LTA: Registration is a pre-requisite to ensure that transfer of estate/title is effective –> all instruments in Approved form for bundle of rights to be registered
Certificate of Title
Buyer’s task is facilitated as when buyer solicitors apply to LTA for details pertaining to the property –> they will extract the relevant CT which will include all vital information –> these information include whichever person holding that bundle of right registered interest in land in the approved form –> New system (LTA) facilitated easier/accurate/ convenient office system of checking and ensuring that purchaser went into purchase of parcel of land with his eyes open & aware who have multiple interests in land prior to buyer’s purchase, which was not possible under the old system as not compulsory to register Deed
CT provides information on registrable interest such as Lot Number, type of title, land area, name of registered owners, form of co-ownership, address, mortgage, easement, negative covenants
Effect of CT
Grants an Indefeasible title: CT can be relied on
- Mirror principle: unless he and his bundle of rights reflect & appear on CT –> then his bundle of rights will be recognized and he would be indefeasible & have prevailing rights
- Curtain principle: operate/block other people who are not on CT –> do not have rights & interest in land that is recognised
Frazer v Walker: established principle of immediate indefeasibility to title –> buyer needs to complete the purchase in good faith
UOB v Bebe: Was there fraud on UOB? –> need to prove that the party was actively participating in fraud
Held: not fraudulent, just negligent –> UOB will receive priority over Bebe due to the mirror principle of mortgage as UOB is registered as mortgagee –> UOB has priority right over buyer
Section 46(2): Immediate indefeasibility is in favour of any person who registered the title and will have prevailing rights, provided if he did not know about the fraud and completed purchase & registered the transfer of land title in good faith
Exception to Immediate Indefeasibility
Section 46(2)a: only fraud or forgery to which such proprietor or his agent was a party will prejudice his indefeasibility
If want to topple II, will need to have the burden to give evidence and prove that the person with the title was also involved actively participate in fraud, not only being aware of it. Need to show more than negligence as mere notice and just knowing about frau is not enough to topple the person indefeasible title & to constitute a fraud –> UOB v Bebe
Caveat: Equitable Interest
Section 115 of LTA: Any person claiming an interest in land may lodge with registrar a caveat in the approved form due to mirror principle –> recognise caveator as his name will be reflected in the CT
Caveat: short-term protection for equitable interest title
- Purchaser who exercised OTP to purchase land and has paid deposit and proceed with contract –> protect caveator’s right and interest in the property until officially conveyed to buyer as the new owner
- 2 parties who have an interest in the proceeds of the sale can lodge a caveat to protect their equitable interest
- Beneficiary under trust –> in the event where the trustee abuses his position and sells the property for his own benefit, caveat signifies that the beneficiary have an equitable interest in property –> will alert others before they choose to proceed with the transaction with trustee
- Mortgagor with equity of redemption
- In a mortgage, any provision that is inconsistent with the mortgagor’s right to redeem may not be enforceable and considered a clog on Equity of Redemption –> Hence lodging a caveat will protect mortgagor and his equitable interest in property
Effect of lodging a caveat
- Provides statutory notice to person dealing with registered land of caveator’s interest in property to let him know that caveator has stake/equitable interest
- Enable caveator to be notified of subsequent dealings by other people who has interests
- Forbids the registration under the Act of any dealing affecting the land against which the caveat is directed at –> until caveator is notified, no subsequent registration can be made with regards to land which conflicts caveator’s rights under a caveat
Stamp Duty
Tax on commercial and legal document, payable on document described in First Schedule
- Conveyance: Purchaser
- Lease: Lesse
- Mortgage: Mortgagor
Additional Buyer’s Stamp Duty
Buying more property –> higher tax rates to curb property speculation/prevent formation of property bubble/control foreign investment/no runaway property market/no run up in housing price fueled by demand speculation, exuberant spending to point of collapse
Seller’s Stamp Duty
The longer the owner holds in, the lower the stamp duty –> incentivise seller to hold onto property longer –> if it is done on a mass scale, the property bubble is less likely to form with a runaway price
Other measures
Prudent view of buyer’s position to repay based on his income level and ability to repay debt
- Total debt servicing ratio framework: tool used by IRAS/MAS to work out ratio based on individual egibility to determine how much loan one can be entitled to & to control the amount of debt one is taking upon himself –> feasibility of repayment
- Increase minimum cash down payment: Many foreclosures as minimum cash down payment is merely 10% and 90% loan financed by bank –> many mortgagors could not repay
- Tightening minimum loan to value (LTV) limits: LTV limits tightened by 5% for all housing loans granted –> amount that can be borrowed is lowered
- When property purchased –> have to be valued by bank’s valuers based on tenures/restrictions - Loan Limits –> only able to borrow 75% (the older you are, the lesser loan % you can loan)
