Lesson 14 Flashcards
What does “Caveat Emptor” mean?
“Caveat Emptor” means “Let the Buyer Beware,” indicating that the buyer assumes the risk for the condition of the property being purchased.
Can a buyer recover damages for defects under “Caveat Emptor”?
No, the buyer could not recover damages from the seller for defects that made the property unfit, as the risk is on the buyer.
Whose responsibility is it to check for defects under the “Caveat Emptor” principle?
It is the buyer’s duty to conduct due diligence and checks for defects.
What are “patent defects”?
Patent defects are visible and easily noticeable defects that can be discovered with ordinary vigilance, like chips on walls or water leaks.
What are “latent defects”?
Latent defects are hidden defects not easily discoverable even with careful inspection, such as internal structural damage.
Under “Caveat Emptor,” is the seller required to disclose defects?
The seller is not required to disclose patent or latent defects affecting the property’s value, except latent defects of title required by law.
What constitutes an exception to “Caveat Emptor”?
Exceptions occur if the seller or agent actively conceals latent defects or makes fraudulent misrepresentations.
What is required by law concerning latent defects of title?
The seller must disclose latent defects of title, which are not apparent or discoverable on inspection, to the buyer.
What clause is commonly incorporated in sales agreements under “Caveat Emptor”?
The “As Is Where Is” clause is often included in sales agreements, as referenced in the Law Society Condition of Sales 2012 – Clause 5.
What are the Stages of Sale & Purchase of Resale Properties (Residential, Commercial or Industrial)?
- Pre-contract stage
- Contract stage
- Legal completion
What is an Option Fee and what does the buyer receive in exchange?
An Option Fee, usually 1% of the property’s price, is paid by the buyer in exchange for an Option to Purchase (OTP) from the seller.
What is the duration of the Option Period, and what restriction does it impose on the seller?
The Option Period typically lasts 14 days, during which the seller cannot sell the property to another buyer.
What happens if the buyer does not exercise the OTP during the Option Period?
If the buyer does not exercise the option, the Option Fee is forfeited by the seller, and neither party can make any claims against each other. The seller is free to sell to another buyer.
How does a buyer exercise the OTP?
The buyer exercises the OTP by paying an Exercise Fee (usually 4% or 9%) and signing the Acceptance Copy in the OTP.
What is done with the exercised OTP and the Exercise Fee by the buyer’s lawyer?
The buyer’s lawyer sends the exercised OTP and the Exercise Fee to the seller’s lawyer before the due date.
Who can hold the amount paid by the buyer to exercise the OTP during the Contract Stage?
The amount can be held by the seller’s lawyer or the Singapore Academy of Law as a stakeholder.
What are the stages following the exercise of the OTP?
The stages following the exercise of the OTP are the Contract Stage and Completion of the transaction.
What is “conveyancing money”?
It refers to money involved in the purchase, sale, and lease of land, including option deposits, balance purchase price, CPF money, stamp duties, and other related payments.
Where must conveyancing money be deposited?
In special conveyancing accounts held with appointed banks or with the Singapore Academy of Law.
What is required for the withdrawal of conveyancing money?
The signatures of two lawyers are required for withdrawal.
What do the Conveyancing Rules 2011 permit solicitors to use for complex transactions?
Jointly managed escrow accounts to hold conveyancing money.
What is the Agreement for Sale & Purchase in the Contract Stage?
It is a legal document outlining the terms of the property sale and purchase, following which the buyer’s lawyer takes actions to protect the buyer’s interests.
What action does the buyer’s lawyer take to protect the buyer’s interest in a property?
The lawyer lodges a caveat with the Singapore Land Authority (SLA).
What is the purpose of a title search and legal requisitions on a property?
To inquire about any encumbrances and obtain necessary information from relevant authorities.
Name two authorities to which legal requisitions are commonly made during a property purchase.
Inland Revenue Authority of Singapore (IRAS) and Land Transport Authority (LTA).
Can a buyer rescind a sale based on legal requisition findings?
Yes, a buyer is entitled to rescind a sale if legal requisitions reveal unsatisfactory results.
What is the first step in the legal completion process?
The buyer’s lawyer prepares a draft transfer of the property.
What document does the seller’s lawyer prepare during the legal completion?
The seller’s lawyer prepares a completion statement outlining the financial details of the sale.
What typical items are included in the seller’s completion statement?
Sales price, loan deductions, CPF proceeds, solicitor fees, property tax, MCST fee, and agent’s commission.
What are the net sales proceeds?
Net sales proceeds are the total amount the seller receives after all deductions (loan, fees, taxes, etc.) from the sales price.
What happens to the keys on the completion date?
The seller delivers the keys to his lawyer, who then hands them over to the buyer’s lawyer.
What occurs on the completion date regarding financial transactions?
The balance sales proceeds are issued to the seller, and the buyer picks up the keys from their lawyer.
