While buying a house from housing developer is subject to sale and purchase agreement regulated under the Housing Development (Control and Licensing) Act 1966, if you buy a house from a private individual or company (not a developer), you will need to have a sale and purchase agreement being the contract document for the purchase of the house.

We lawyers refer to this type of sale and purchase agreement as “Subsale Agreement”.

Even though it is not regulated, there is a standard format used for the Subsale Agreement.

Normally, an initial payment of 10% of the purchase price is required as the deposit when the Subsale Agreement is signed while the balance of 90% of the purchase price is paid within 90 days with an automatic extension of 30 days with interest.

The vacant possession of the house will be delivered once the payment is made and any outgoings relating to the house (e.g. quit rent, assessment and maintenance charges (if applicable) will be apportioned upon delivery of vacant possession of house.

But those terms and any other standard terms may be revised. Transacting parties may change any of the standard clauses. For example, the deposit may be a lesser or higher amount, the period of payment may be shorter or longer or payment may be by way of instalment.

This is the beauty of Subsale Agreement. It is not regulated. Transacting parties are free to negotiate the terms and conditions, although generally, the revised terms and conditions do not stray too far from the standard terms and conditions of Subsale Agreement.

So, do you still need a lawyer when you purchase a house in a subsale transaction?

My answer is Yes. 

A lawyer is required not only to draft the Subsale Agreement and whenever necessary, to negotiate terms and conditions in the Subsale Agreement to meet your requirements.  For example, you want the seller to repair the house up to a certain standard, that term has to go in. You want to make sure any renovation to the house received the relevant approval, the clause for such requirement is to be inserted.

Once all terms are agreed by the transacting parties, only then the Subsale Agreement will be finalized for parties to sign.

Lawyers would also be able to explain to you any terms in Subsale Agreement that may be considered as confusing or difficult to understand by a layperson before you even sign the dotted line, and you would be comfortable knowing what are committed to.

Besides preparing the Subsale Agreement,  your lawyers will prepare the Memorandum of Transfer form, attend to submission of RPGT retention amount and RPGT declaration form, attend to the adjudication of Memorandum of Transfer, present the Memorandum of Transfer for registration and provide the necessary confirmations to seller’s lawyers and bank’s lawyers, whenever required, and advise you along the way on the requirements under the Subsale Agreement and for the title of the house to be registered in your name. Lawyers will also make sure those messy encumbrance (e.g. caveat!) do not hinder your purchase of the house by ensuring necessary searches are done before you even enter into the Subsale Agreement.

So, know your rights before entering into a Subsale Agreement. There may be a standard format used for the Subsale Agreement but it is not set in stone. Lawyers may negotiate and draft other terms and conditions in the Subsale Agreement which would be acceptable to the transacting parties. And you may need an experience conveyancing lawyer for that!