How Can I Buy My Co-Owner’s Share of the Property?
There are various reasons why a co-owner might want to buy another co-owner’s share of the property that they own, the process of which is known as “de-coupling”. De-coupling results in the property being solely owned by a single owner, with the previous co-owner usually becoming an authorised occupier.
This process has been called an “open secret”, as it effectively allows the previous co-owner to be free to purchase another property without having to incur the Additional Buyers’ Stamp Duty (ABSD) on the second property they share.
This article explores the procedures, as well as any limitations, involved in the de-coupling process.
Methods of De-Coupling
Generally, there are two methods of carrying out de-coupling: ownership in the property may be transferred by way of gift or it may be transferred through a sale of the part share in the property.
1. Transfer by way of gift
Transferring the property by way of gift refers to a transfer in which no consideration is paid to the exiting co-owner, e.g. when a co-owner transfers his share in the property for $0. Generally, such a transfer will only be valid when the property is unencumbered, for example, when there is no outstanding mortgage, or CPF charge on the property. Otherwise, there must be an adequate sum to repay the outstanding loan or refund of CPF funds for the transfer to occur.
2. Transfer by way of sale
The second method of de-coupling involves the sale of the exiting co-owner’s part share to the other co-owner. The rules governing de-coupling for private properties and Housing & Development Board (HDB) flats differ; both of which are explained below.
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De-Coupling for Private Properties and HDB Flats
The procedure for purchasing a part share of private property is rather flexible. Generally, three essential elements to the contract should be specified: the property, price and the parties. It is best for the sale to be concluded by a formal contract in writing, signed by the parties, as this would allow the agreement to be enforceable, fulfilling section 6(d) of the Civil Law Act.
Manner of holding matters: Joint tenancy versus tenancy-in-common
Co-owners who own the property as tenants-in-common can de-couple. This is because tenants-in-common own the property in undivided shares, which essentially means that each co-owner owns his specified share in the property. Thus, it is possible for one co-owner to transfer his specified share in the property to the other co-owner.
In contrast, co-owners who own the property as joint tenants will not be able to de-couple. Joint tenancy is a form of co-ownership in which there are no shares – this means that the co-owners both own the property as a whole interest. Thus, for as long as the manner of holding is a joint tenancy, it would be impossible to de-couple as they are viewed as owning the property as one entire share.
Notwithstanding the above, de-coupling is not completely off the table for joint tenants. Joint tenants can de-couple if they perform the act of severance to become tenants in common.
There are several ways to perform severance for joint tenants. A common way of severance is carried out through deed or registration. This is performed through a unilateral declaration, by lodging and registering the Instrument of Declaration with the Singapore Land Authority. The co-owner must then serve a copy of the Instrument of Declaration personally or by registered post on the other joint tenants.
Please refer to our article on converting a joint tenancy to a tenancy-in-common for more comprehensive article on severance as well as the differences between the two.
Currently, HDB flat owners are not allowed to transfer their ownership (whether joint tenancy or tenancy-in-common) to their spouse through a gift or sale of their part share in the property, with the exception of specific circumstances. For example, the existing flat owners may transfer their flat ownership to immediate family members if the proposed owners meet all the eligibility conditions, which include the following:
- A change in the existing family structure (such as divorce, marriage or the demise of an owner);
- The proposed owners, both remaining and incoming, must be able to take ownership of the flat under one of the existing eligibility schemes, such as the Public Scheme, or the Joint Singles Scheme;
- The proposed owners must not be an existing owner or be listed as the essential occupier of another HDB flat.
In the limited circumstances stated above, the co-owner who wishes to transfer his flat ownership will then have to do the following:
- Consent to the proposed owner(s) taking over the ownership of the flat, and then submit an application for a transfer of flat ownership with the necessary supporting documents to the HDB Branch for assessment and approval.
- Next, if the proposed owners are assessed to be eligible for the transfer of the flat ownership, the existing and proposed owners will receive an in-principle approval letter.
- Finally, the existing and proposed owners will receive a notification to attend an appointment at the HDB Branch office to execute legal documents and to make payment for all fees relating to the transaction. It is compulsory for all existing and proposed owners, along with their spouses, to attend this appointment personally on the same day to complete the transaction.
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