What are sub-sale properties?
According to the Urban Redevelopment Authority (URA), a sub-sale refers to the sale of a unit by an individual who has agreed to purchase it from a developer or a subsequent buyer before the property’s official completion and the issuance of all necessary certificates.
These certificates include the Certificate of Statutory Completion and the Subsidiary Strata Certificates of Title or the Certificates of Title for all units in the development.
To put it simply, a sub-sale property occurs when the initial buyer of a new launch property opts to sell it to another buyer before the construction of the unit is completed.
Recommended article: Sub-sale: What property sellers and buyers need to know
What is the difference between sub-sale properties and resale properties?
As mentioned previously, sub-sale properties involve transactions where a buyer of a new development chooses to sell the unit to another buyer before the development is completed or before the issuance of all necessary certificates.
In contrast to resale properties, sub-sales also entail the participation of three parties:
- The original buyer (or seller).
- The buyer of the sub-sale property (or sub-purchaser).
- The developer.
This three-party involvement sets sub-sales apart from the more straightforward resale property transactions where the seller simply puts a completed unit up for sale.
Additionally, it’s important to note that the original buyer may be required to pay Seller’s Stamp Duty (SSD) since they haven’t owned the property for at least 4 years, which might lead to an increased price to cover costs and break-even.
How do sub-sale properties function?
To initiate a sub-sale, the original buyer must sign the Sale and Purchase Agreement (S&PA) and settle the relevant stamp duties. Since the property is not yet completed, the original buyer lacks the property’s legal title (or the Certificate of Statutory Completion). After expressing the intent to sell, the original buyer informs the developer.
Once a sub-purchaser shows interest in buying from the original buyer, they both enter into an Option to Purchase Agreement (OTP). Upon the sub-purchaser’s request, the developer creates a new S&PA with the sub-purchaser, mirroring the terms and conditions of the original S&PA between the original buyer and the developer.
Once the sub-purchaser signs the S&PA, they will receive the keys to the unit upon completion. Here’s the typical sequence of a sub-sale property:
- The original buyer signs the S&PA with the developer.
- The original buyer pays the relevant stamp duties to the Inland Revenue Authority of Singapore (IRAS).
- The original buyer informs the developer of the intention to make a sub-sale to the new buyer (sub-purchaser) and becomes the seller.
- The seller and sub-purchaser enter into an OTP agreement with a sub-sale clause.
- The developer needs to enter into a new S&PA with the sub-purchaser.
- The seller/buyer provides a cashier’s order to the other party, depending on the difference between the selling price and the original price of the unit.
The information provided was accurate at the time of publication. For the latest changes and updates, head over to the official websites.
