It is not as simple as “sale of flat” or “transfer flat from husband to wife”. Period.

To have a workable and useful Court Order, you need an experienced family lawyers well-versed in current HDB housing laws, banking rules and rules relating to conveyancing and CPF.

A poorly drafted court order with small but pertinent details missing renders the whole court order useless. It also brings about many problems for HDB officers, CPF Board officers and bankers who assess your mortgage loan.

You will have to spend legal fees again to vary the court order to make it right. This will lead to wasting valuable time and monies and frustration for parties.

Transfer of HDB Flat

Almost every family owns at least one HDB flat in Singapore. When divorce happens, parties will have to split the HDB flat, be it by way of sale or by way of spousal transfer.

Parties will have to consider a list of issues regarding the disposal of the matrimonial home:-

• Which spouse is to retain the flat?
• Whether the spouse who wishes to retain the flat in his/her sole name could meet HDB’s eligibility criteria;
• Whether the spouse who wishes to retain the flat in his/her sole name is financially able to take over the outstanding mortgage loan?
• Whether the spouse who wishes to retain the flat in his/her sole name could obtain a bank loan to finance to pay to the outgoing spouse the cash portion of the transfer?
• Whether the spouse who wishes to retain the flat in his/her sole name could repay parts or all of the outgoing spouse’s CPF funds utilized towards the purchase of the flat?

Parent with care and control of child may retain HDB flat less than Minimum Occupation Period of five (5) years

HDB rules state that for the welfare of a young child in a divorce family, one parent who has the child’s care and control (not just custody) will be able to retain the flat even if all the eligibility is not satisfied. It means that as long as one parent is able to afford to take over the full outstanding mortgage loan of the flat, even if he/she has not reached the age of thirty-five (35) or that the flat has not been occupied for a minimum five (5) years, that parent is eligible to take over the flat.

Partial or Full CPF refunds to outgoing spouse

If parties agree in the divorce settlement that the outgoing spouse shall take only partial or no refunds of the CPF monies used to purchase the flat, the outgoing spouse will not be entitled to receive any further refund to his/her CPF Account even if the ex-spouse subsequently disposes of the flat. However, the ex-spouse would be required to refund his/her and the outgoing party’s portion of the CPF monies withdrawn including interest to the ex-spouse’s CPF Account.

You may seek legal advice from your family lawyer at 62203400 whether you may receive a portion of the sale proceeds in the event that the spouse who retained the flat at the time of divorce sells the flat in the future.

What if the Spouse who wishes to retain the flat cannot afford the loan?

It is not automatic that the ex-spouse gets to keep the HDB flat just because the Order of Court dictates so. If any of the conditions cannot be fulfilled, the transfer cannot take place. For instance, if the person who wishes to retain the flat cannot even get HDB loan or private bank loans, then the reality says that this person cannot buy over the flat. The most common oversight is that the party who wishes to retain the flat is unable to take over the outstanding housing loan and/or pay cash consideration to the outgoing party. Lawyer should advise the party on the financial obligations towards the flat upon the transfer to ensure that the terms in the Order of Court is realistic and also cater to unforeseen circumstances where parties can rely on alternative clauses if they were already in the Order of Court in the first place.

Thus, it is important that you seek legal advice on how you could plan to retain the flat as early in the divorce proceedings as possible.

If the Order of Court does not provide an alternative in the event that transfer of flat ownership cannot take place for whatsoever reasons, parties will have to go back to their divorce lawyer to apply for a summons for variation of order to include an order to either transfer the property to the other eligible party or to dispose of the flat. For example, if parties have completed the 5-year MOP, then they may sell the HDB flat on the open market. However, if the MOP has not been met, parties have to return the HDB flat at the prevailing compensation price, subject to HDB’s approval.

Sale of HDB flat

Upon the sale of the flat in the open market, the sale proceeds will be first used to pay off any outstanding housing loan followed by refund of parties’ CPF monies withdrawn together with accrued interest to their CPF Account(s). However, if the selling price (at market value) is insufficient for parties to make the CPF refund, parties need not meet the shortfall with cash. The remaining balance, if any, will be divided between parties in a manner pursuant to the Order of Court. The percentage that each party is entitled to is not by default 50%/50%. This is a misconception. The percentage is either obtained by parties’ agreement or the judge determined the percentage based on parties’ respective direct and indirect contribution to the family and flat.

Is there a need to top up CPF account?

An issue arises when the Order of Court purports to divide the sale proceeds between parties before refund is made to their CPF Account(s) which is in contrary to CPF Board’s regulations. If a party’s share of the sale proceeds is insufficient to refund to his/her CPF Account, he/she will have to top up the shortfall with cash failing which the CPF charge on the flat cannot be discharged and the sale transaction cannot be completed. To overcome this, parties can opt to refund the CPF monies first before dividing the sale proceeds and/or go back to their divorce lawyer to apply for a summons for variation of order to ensure that parties get their fair share of the proceeds, for example including a clause to have CPF Board transfer CPF monies to the other party after the sale has been completed.

Conclusion

Divorce lawyers should be conscious that the terms in the Order of Court might give rise to unintended consequences if insufficient attention is paid while drafting them and should take the time to examine the terms to see if it raises any of the issues identified in this article which might just save a whole lot of costs and inconvenience moving forward.

To minimize your costs, time and distress, it is essential to consult a professional divorce lawyers well-versed in drafting financial settlement terms. Call 62203400 or fill up the Advice Request form for assistance.