Buying a new launch EC or condo direct from a property developer? Before you sign off on your new property purchase and commit to a significant financial outlay, be sure you go through your Sales & Purchase Agreement (S&PA), which is a private contract between the developer and yourself. The S&PA is sent within 2 weeks from the date of the Option to Purchase (OTP) and has a three week deadline from the date of receipt.
In Singapore, all S&PAs are governed by the Housing Developers (Control and Licensing) Act, and as such, developers utilise standard form contracts provided to them by the Housing Developers Act. While any changes and amendments to the standard form have to be approved by the Controller of Housing before they can be validly issued to you, you should nevertheless look through your S&PA, and ensure that everything’s in order before signing on the dotted line.
Read on to learn more about the common terms that you’ll find in your S&PA:
Vacant Possession Date
This is the latest date where you can collect the keys to your unit. If your developer does not deliver vacant possession of the property to you by this date, they’ll have to pay a “late completion interest” as liquidated damages to you (at an interest of 8% per annum pro-rated according to the number of days delayed). That said, most new launch buyers will likely collect their keys well before this date, barring some serious setbacks.
Once you take over possession of your property, you’ll have to pay for your maintenance fees, property tax, and title survey fees. Your lawyers will get in touch to inform you about the amount payable, and they’ll also tell you who to issue the cheques to.
Specifications of Unit
These specifications include the type of materials, finishes, fittings, appliances, and furnishings to be used or provided for a unit, as well as the common facilities of the unit. Your developer is required to build your unit in accordance with these specifications, so make sure that everything’s documented properly.
If your developer says that they’ll throw in certain free items for you (eg washing machine), but this isn’t included in the Specifications section, either get them to revise the section to include these, or obtain some other sort of written confirmation.
In terms of the actual floor area of your unit, take note that developers have a leeway whereby they do not have to compensate owners if the floor area of the unit is smaller than specified by 3% or less in the sales documents.
As a buyer, it’s up to you to ensure that you pay your developer promptly and according to the payment schedule. If you don’t meet your payments by the deadlines specified, you’ll incur additional interest (determined by the formula set out in the S&PA).
You’ll have an additional three weeks after the S&PA delivery deadline to make the 20% downpayment for the property. Do note that in the event where you delay your payment for over 14 days, your developer has the right to annul your S&PA. Once your developer does this, they’ll be able to forfeit 20% of the purchase price, recover all outstanding interest owing and unpaid by you, and resell the unit to any other person.
[Recommended article: 99.co guides: All you need to know about private condo payment schedule]
Defects liability period
On the date you receive Notice of Vacant Possession for your unit, your 12 month Defects Liability Period begins. Your developer is responsible for correcting any defects that become apparent during these 12 months.
Upon identifying a defect, immediately notify your developer. They’ll have to rectify this within a month of receiving your notification; if they fail to do so, you can get a price quotation from a contractor of your choice, and give your developer written notice that you’ll be carrying out rectification works using your own contractor (at the quoted price).
Assuming your developer doesn’t carry out rectification works within 14 days of receiving your written notice, you can now get your own contractor to carry out the works. You can then claim the costs for this from your developer.
[Recommended article: You’ve found defects in your new property; now what?]
Have any more questions about your Sales & Purchase Agreement? Ask us in the comments section or on our Facebook community page.
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