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Q I HAVE been a bankrupt since Aug 8, 2003. I still own a property as a joint tenant with my former wife. Under the Decree Nisi, it was to be transferred to me 100 per cent, with me assuming the balance in liability.

I was unable to do the transfer then due to refinancing problems. Before my bankruptcy about 1 1/2 years later, in order for the bank not to go after my former wife for the deficit, we did a reverse mortgage that resulted in the bank having priority over the Central Provident Fund (CPF) Board.

We had also made a variation to the Decree Nisi that the property was to be sold on the open market at a mutually agreed upon price and time. Until then, I would pay the monthly loan instalment from my CPF account. If there was not enough money in my account, my former wife would pay.

When the property is sold, the proceeds will first be used to pay any outstanding debts to the bank and then go to the respective CPF accounts. Any excess is to be shared equally.

I have since remarried and now have three children. My questions are:

a) Upon my death, does the property automatically go to my former wife under joint tenancy law or the Official Assignee (OA)? If it goes to the OA, will the OA get 50 or 100 per cent?

b) If I sign a sale and purchase agreement, but it has not reached completion, upon my death, what will the distribution status be?

A As you are a bankrupt, all of your property vests automatically in the OA without the need for any further conveyance, assignment or transfer.

In short, you no longer own anything in your property, and any attempt by you to dispose of your property would be void because you have no title to pass or give. Therefore, any share that you have in the property will form part of your estate available for distribution to creditors.

However, HDB flats are exempted, provided both owners are Singapore citizens.

If the HDB flat is wholly- or jointly-owned by a permanent resident, then the bankrupt’s interest will vest in the OA as well.

As your interest was already vested in the OA when you were made a bankrupt, your former wife has really no right of survivorship to whatever might have been your share.

You should also not sign any sale and purchase agreement without the OA’s consent as you really have no capacity to contract and to pass title.

If there is any refund to your CPF account upon the sale of the property, the CPF Act affords considerable protection in the event of bankruptcy.

Under the Act, a person’s CPF monies do not vest in the OA. If you are an undischarged bankrupt upon reaching 55, withdrawal of your CPF monies would be at the discretion of the Board.

Generally, you would be allowed to withdraw a lump sum less the Minimum Sum, Medisave and any other sum you might be required to set aside, subject to the Manpower Minister’s approval.

If there is insufficient money in your CPF account even for the Minimum Sum and Medisave, then you would be allowed to make monthly withdrawals instead of a lump sum.

Amolat Singh Lawyer Amolat & Partners

Advice in this column is not meant as a substitute for comprehensive financial advice.

Source : Sunday Times - 27 May 2007