Paper 2: Lesson 5 Sales of Property Under Construction

Question 1

What are the situations where a Developer’s Licence is required?

Answer 1

1. Developing a housing project with more than 4 units.
2. Developing a mixed residential/commercial project with more than 4 units (e.g. 3 flats and 4 shops)
3. Doing addition and alteration work to an existing residential building. (e.g. increase in number of resi units/gfa)
4. Providing money to develop a project with more than 4 units, & you are not a BANK/or finance company licensed by MAS.

Question 2

What are the 2 different types of Developer Licence?

Answer 2

1. Sale Licence (Allowed to sell after COB Approval)
2. No-Sale Licence. (Allows Construction only - Sale ONLY Upon TOP).

Question 3

What are the conditions of a Sale Licence?

Answer 3

1. Allows developer to commence construction and sell units once it has obtained building plan approval for the project.
2. Company Directors/Persons whose names are in the application cannot be undischarged bankrupt.
3. Min paid up capital of 1m.
4. A copy of the latest audited accounts, verified by statutory account.
5. Have track record as Developer
6. Valid provisional/written permission.
7. Letter from financial institution confirming Project Account is opened.

Question 4

What are the number of housing units VS min. paid up capital/deposit?

Answer 4

< = 50 ——-> $1m
51-200 ——> $2m
201 - 400 ——-> $3m
> 400 ———> $4m

Question 5

What are the conditions for No-Sale Licence?

Answer 5

1. Min paid up capital of $100,000.
2. No Project Account required.

Question 6

What is a Project Account?

Answer 6

1. Managed by bank.
2. Purchasers’ monies.
3. Construction Loan.
4. Property Tax.
5. Stamp&Legal fee
6. Utilities Bills
7. Marketing Cost
8. Development Charges (not allowed)
9. Land Costs (not allowed)
10. Stamp Duty rebates
    to buyer (not allowed)

Question 7

What are the duties of Developer?

Answer 7

1. Submit weekly returns of the register of bookings to Controller of Housing - showing how many units sold.
2. Register bookings to include
   - particulars of purchasers
   - date of option and expiry
   - option fee paid
   - date of delivery of title deeds & draft contract to lawyer
   - nationality of purchaser
3. Submit half-yearly statement not later than 42 days after the last day of each half year showing gross sales.

Question 8

What happens when buyer change their mind after paying the booking fee?

Answer 8

Developer will refund 75% of booking fee and forfeit 25% (of the 5% / 10%).

Question 9

What is the process of exercising the OTP?

Answer 9

Purchaser must:
- Sign all execution copies of the S&P agreement
- return them to Vendor.

Before the OTP expires:
- Vendor shall within 14 days after receiving execution copies, sign the copies of the S&P and return one signed copy of it to the purchaser/solicitor.

Question 10

What happens when OTP is not exercised?

Answer 10

• Vendor shall refund 75% of the booking fee within 4 weeks after the date of expiry of the OTP.
• Purchaser shall return the original
  copies of the title deeds tgt with all the execution copies of S&P agreement.
• Vendor is entitled to withhold the 75% refund until caveat lodged for the ppty is withdrawn