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Q I recently bought a private property through a housing agent.

It is still tenanted. The sale/purchase process will be completed soon.

Through my lawyer, on numerous occasions, I have insisted that the tenant’s security deposit be transferred to me but the seller’s lawyer has refused to do so.

What can I do about this?

Do I have the right to insist on the transfer of the security deposit prior to the completion of the sale/purchase process?

A It is usual for the security deposit to be transferred to the purchaser of a property.

You should inquire as to why the security deposit has not been transferred to you. It may be because there are arrears of rental by the tenant to the seller.

But you do not have the right to insist on the transfer of the security deposit unless this was expressly included in the terms of the agreement for the purchase of the property.

If the security deposit is not transferred to the purchaser, there is no obligation for the purchaser to return the security deposit to the tenant.

The obligation remains with the seller of the property to return it to the tenant and the tenant is entitled to ask the seller for the return of the deposit.

As you purchased subject to the tenancy, the tenant is entitled to stay until the term of the tenancy expires so long as he pays the rent promptly and does not breach any of the terms of the tenancy agreement.

You should therefore monitor the payments carefully until the term of the tenancy expires as you will not have the security deposit to offset against any arrears of rent.

If the tenant falls into arrears, the tenancy should be terminated under the terms of the tenancy agreement as soon as possible.

Lim Choi MingLawyerTM Hoon & Co

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

Source : Sunday Times - 25 Jun 2006

Q MY HUSBAND and I share a joint account containing about $70,000.

Only one of our signatures is required if we need to withdraw money from this account - that is, it is a joint-alternate account.

We are also joint owners - that is, joint mortgagors and joint tenants - of a private property worth about $460,000.

Both of our signatures are required if we decide to sell our property. We are servicing a mortgage of about $360,000.

I am the sole person servicing the loan using my CPF money, as my income is higher than my husband’s.

Neither my husband nor I have written a will.

If my husband should die suddenly, what would happen to the money in our joint account? What would happen to our property?

Would the Government freeze all the money in the joint account and seize my property as well?

How much of the money in the joint account rightfully belongs to me, and what percentage of the property value belongs to me?

A EACH bank has its own policies and procedures regarding the treatment of joint accounts when one or both joint-account holders die. While the ‘rule of survivorship’ may allow the bank to ultimately pay to the surviving joint-account holder, frozen account or otherwise, the money in the joint account may be deemed to belong to the estate of the deceased to the extent that he had contributed to the account when he was alive.

If that is the case, the rule of intestacy regarding the money in the account would apply.

That means the money deemed to belong to the deceased will be inherited by family members in proportions spelt out by the law of intestacy.

In addition, the amount deemed to belong to the deceased may be added to the estate for estate duty purpose.

This is important from the children’s standpoint. We also cannot assume that the children (if any) do not want their share (which totals 50 per cent) if it can be proven that the deceased did contribute money to the joint account, and did not withdraw that sum from the account.

If the bank does freeze the account, it will only allow deposits into and withdrawals out of the account by the executor or administrator (in the case of intestacy) of the estate of the deceased person, according to the terms of the Grant of Probate by the court or Grant of Letters of Administration given to the executor or administrator.

If the deceased had contributed a portion to the joint account and had subsequently withdrawn a portion, that sum has to be deducted from the amount due to his estate.

It is not quite straightforward in the case of joint accounts.

But if you, the surviving spouse, are able to withdraw the amount, you still have to declare the withdrawal in the estate duty affidavit of your husband when applying for his Letter of Administration in respect of his estate. This is necessary even though there may not be any estate duty liability.

The bank account and property that are held by you and your husband do not come under the will, as a will deals only with what is under an individual’s control.

As your residential property is held in joint tenancy (as opposed to tenancy-in-common), you as the survivor will automatically become the property’s sole owner.

Irene YeeCertified Financial PlannerLife Planning Associates

Advice provided in this column is not meant as a substitute for comprehensive professional advice. E-mail questions to lorna@sph.com.sg

If your late father did not leave behind any assets, there may be no need for you to apply for Probate.

As neither you nor your brother are guarantors of your late father’s ready credit, you would not be liable for his debts incurred thereunder.

Source : Sunday Times - 4 Jun 2006

Q MY WIFE and I jointly purchased a freehold maisonette of 2,350 sq ft in 1996 for $1 million. It was repossessed by the bank in 2001 after my business failed.

To date, this property remains unsold and interest on the outstanding amount owing to the bank is rising.

Recently, we learned that an agent was advertising to sell our property for only $650,000.

Our neighbour sold her 2,290 sq ft unit for $788,000 in 2003.

Is it possible to stop the bank from charging interest as we feel that it is unfair since we are not living there? The amount owing to the bank was $625,000 at the end of 2001 and $827,000 at the end of last year.

The management corporation is also charging management fees and worse, interest on the unpaid management fees. Is it also possible to stop it from charging interest?

Why can’t our bank wait for prices to pick up? Is there any way to stop it from selling at so low a price? We bought this property with our CPF funds and the CPF Board has the first charge on the property.

I am 47 years old now. Can the bank wait for me to reach 55 before recovering the amount owing to it?

Alternatively, can I negotiate with the bank, give it one portion of my CPF savings and buy an HDB flat with the rest?

A YOU have a legal obligation to pay the bank interest on the outstanding amount even though you are not occupying the property. The loan agreement between you and the bank continues to be valid and binding though it has repossessed the property.

The bank is entitled to charge you interest on the outstanding amount up to the date of full payment at the contractual rate specified in the loan agreement.

The management corporation is entitled, under the law, to charge interest on the maintenance/sinking fund and management fees payable.

The interest accrues from the expiry of 30 days after the date the fees become due and is payable unless the management corporation decides at a general meeting that any unpaid fees shall be free from interest.

Your bank has a duty to take reasonable steps and exercise its power of sale with prudence.

However, it is not your trustee and does not owe you any fiduciary duty. Hence, it is entitled to consider its own interest - that is, to realise the security and to choose the time of sale.

The bank is not bound to watch the market so as to sell at the highest price.

On the other hand, it has a duty to take precautions to secure a proper price and if it is reckless or does not sell with proper precautions, you can look to it for the resulting loss.

For example, to prevent the bank from selling at an unreasonable price, you can send it updated valuation reports and evidence of prices of recent transactions of similar properties to put it on notice of the estimated market price of the property.

On possessing the property in 2001, the bank should have leased it out and accounted to you for the rents and profits received. If it is unable to lease it out, it has to prove that it tried and failed.

The bank usually has to show that it consistently and regularly made reasonable efforts to lease the property out.

You can certainly negotiate with the bank for an amicable resolution of the matter but I think the bank is unlikely to agree to delay the debt recovery for a further eight years without condition.

As the CPF Board has first charge on the property, the bank has no rights to the sale proceeds until the CPF funds used for the purchase have been fully repaid to your CPF accounts.

If you are willing to use some of the CPF funds to pay the bank, you may consider reversing the priority of the CPF charge from first to second charge so that the bank takes first charge.

If the CPF Board’s charge ranks after the bank, the sale proceeds will first be applied towards payment of the outstanding housing loan before being refunded into your CPF accounts.

Thus the shortfall of repayment to the bank from the sale proceeds will be reduced and the bank will naturally be better off.

It will then be easier to explore better settlement terms with the bank.

Note that such an arrangement will be subject to the CPF Board’s consent.

Lie Chin ChinPartnerLie Kee Pong Partnership

Source : Sunday Times - 28 May 2006

Q MY HOME, a two-bedroom private apartment, is owned 40 per cent by my sister and the rest by myself. She is having difficulty paying the mortgage since she got married because she already owns another property with her husband.

To lighten her burden, I’d like to buy her share at the market rate and have 100 per cent ownership of the house.

Since we are not selling the property but merely changing the owner’s name to just my name, will there be any stamp duty or legal fees and if so, how much and what is the cheapest way to settle them? Can I pay these fees with my Central Provident Fund (CPF) savings?

A A TRANSFER of an interest in an immovable property is chargeable with stamp duty, regardless of whether the interest transferred amounts to 100 per cent share in the property or less.

Your plan involves a sale of 40 per cent of the property from your sister to you.

The stamp duty payable on such transfer would be based on either the purchase price or the market value of the 40 per cent share, whichever is the higher, at the following rates:

For the first $180,000 in value or consideration - 1 per cent.

For the next $180,000 in value or consideration - 2 per cent.

Thereafter, for the value or consideration in excess of the first $360,000 - 3 per cent.

For example, if the market price of the property is $500,000 and you buy your sister’s 40 per cent share at $200,000 (40 per cent of $500,000), the stamp duty would be calculated in the following manner:

For the first $180,000, it is $1,800.

For the next $20,000, it is $400.

Total stamp fee payable is $2,200.

CPF funds and mortgage loans can be arranged to finance up to 95 per cent of the purchase price of the 40 per cent share.

CPF funds can also be used to pay the stamp fee and the legal fee payable by you as the purchaser. Your total CPF withdrawals will be subject to a housing withdrawal limit.

To determine the limit applicable to you, you may refer to the explanatory notes at www.cpf .gov.sg

But CPF funds cannot be used to pay legal fees incurred by your sister as the seller. The legal procedures involved in the whole transaction include the:

Sale by your sister of her 40 per cent share to you;

Purchase, charge and/or mortgage of the 40 per cent share by you; and

Refinancing of 60 per cent of the outstanding mortgage. This is necessary because there is a change of mortgagors from two names to one.

This means the mortgage of your 60 per cent share also has to be redeemed and re-mortgaged simultaneously.

There are no fixed costs to govern how much lawyers would charge. You can check with lawyers on their fees before you engage them. As a guide, the Law Society’s recommended fees are:

For sale - 0.15 per cent of the sale price subject to a minimum of $900;

For purchase and mortgage - 0.4 per cent of the purchase price subject to a minimum of $2,500; and

For refinancing - 0.4 per cent of the loan refinanced subject to a minimum of $2,500.

So to sum up, the costs involved in the transfer cannot be avoided. Only your sister’s legal fees in the sale and 5 per cent of the purchase price have to be paid by cash.

The rest of the costs can be paid from your CPF funds and the mortgage. You will have to get quotes yourself from financial institutions and legal firms to establish their rates.

Lie Chin ChinPartnerLie Kee Pong Partnership

Q I AM a retiree of about 60 and a Singapore permanent resident (PR). I want to make a simple will. My wife is Singaporean but a Malaysian PR.

I have three assets in Malaysia: a half-share of a shop lot, a half-share of a condomi-nium unit and a restaurant business.

If I make a will in Singapore, will it be valid in Malaysia? How much will it roughly cost to make the will?

What are the things I need to prepare? Do I have to make a will in the presence of a lawyer?

A THERE should not be any problem with recognition of your Singapore will in Malaysia if it is properly drafted and executed. The formal requirements for legal validity are similar in both countries and based on English law.

However, because you own real estate and a business in Malaysia, it would be worthwhile to get a Malaysian lawyer to look at the will as well, to see if he has any advice in relation to Malaysian law relating to land and business.

You need to agree on the legal costs with your lawyer. The cost of a simple family will may be only a few hundred dollars each for you and your wife.

If your requirements are more complex, it could cost more, depending on how much time your lawyer needs to spend on it.

You may want to call a few law firms to compare prices and the services offered.

There will be additional costs if you also employ a Malaysian lawyer.

You will need to send your lawyer a copy of your identity card and copies of your title deeds, business certificates and other documents if requested.

You will also need to give some thought to the appointment of executors to carry out your wishes after you die, guardians for any children who are minors and, of course, to whom you want to leave your wealth.

Some lawyers may ask you to complete a fairly simple form, so that they can get some relevant information about you and an idea of what you want to say in your will, before meeting you or producing a first draft.

This form is usually designed to help you direct your thoughts on the matters in the will-making process that are most important to you.

You could probably find a sample will in the National Library. But I do not recommend that you just copy it and hope that it will work for you.

Once you are gone, it is too late to do anything about mistakes or misunderstandings in your will. The best thing is to ask for legal assistance to make sure that your will eventually does what you want it to do with the minimum of fuss.

Your lawyer will probably also have some suggestions for you to enhance your will and could offer advice and assistance with CPF nominations and certain types of insurance nominations that cannot be covered by your will.

He can also advise you on the all-important choice of executors, trustees and guardians.

Your lawyer will probably want to witness your will to ensure it is signed in compliance with the proper formalities. But there is no legal requirement in Singapore that your will be witnessed by a lawyer.

If you make a will yourself, you have to get it signed in the presence of two competent witnesses, each of whom is neither a beneficiary nor the spouse of any beneficiary of your will.

However, your DIY will may not achieve everything you want, or cover certain technical points you may not have thought about. A lawyer with experience in probate work, trusts and estate planning would be in a better position to guide you.

Simon Trevethick AssociateColin Ng & Partners

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

Source : Sunday Times - 14 May 2006

Q MY DAUGHTER is over 21, single, has a good job and some estate, including bank deposits, investment funds, insurance and CPF monies and property overseas.

In which scenario below do my husband and I have a definite chance of winning in a claim tussle?

Scenario A: My daughter does not include us in her will, so do we still stand a chance as legal parents to claim her estate under Intestacy rules compared with her boyfriend who is mentioned in her will?

Scenario B: If she includes her parents in her will, but at the same time signs a power of attorney for her boyfriend in the United States, which document will effectively be in force in a claim?

A I MAKE the following assumptions. Your daughter is not married in Singapore or overseas, and she has not made a will.

In such a situation, upon her dying, your husband and you will each be entitled to a half-share of her estate under the Intestate Succession Act in Singapore.

If your daughter has made a will in Singapore and has given all her assets to her boyfriend only, the boyfriend will inherit everything. You have the right to challenge the validity of the will in the Singapore courts.

If your daughter has made a will overseas, Singapore law would still apply to her will and the subsequent probate proceedings, if your daughter is Singaporean and she regarded Singapore as her permanent home.

Probate is the process of completing the legal formalities and distributing the assets according to the will. Under a power of attorney executed in Singapore, a person usually gives another person the power to deal with his assets or matters during his lifetime.

Usually, a power of attorney is not regarded as a will in Singapore as it does not comply with the stringent requirements set out under the Wills Act.

If your daughter executed her last will in Singapore, her will takes effect and her assets will be distributed according to it.

However, if the power of attorney is executed in the US, it would be governed by US law. You may need to obtain legal advice from an American lawyer on the nature and effect of the power of attorney.

Rajan ChettiarLawyerRajan Chettiar & Co

Source : Sunday Times - 23 Apr 2006