What happens to your Built-To-Order (“BTO”) Flat in an event of a divorce before the Minimum Occupation Period (“MOP”)?

Firstly, it is useful to calculate the MOP, which is calculated 5 years from the date the keys to the Flat are collected. If the MOP is not reached in the event of an intended divorce, the common perception is that the BTO Flat is to be surrendered to HDB. However, there are a few options that are available, including retaining the Flat.

Wait for the 5-year MOP to pass

While some parties prefer to wait out the 5-year MOP as that the option to sell the flat is available to them, some parties may be placed in a situation where an early closure to their divorce is preferred and waiting for the 5-year to pass is not ideal. If waiting out for the 5-year MOP to pass is an available option, entering into a Deed of Separation would be ideal so that the obligations between parties during the period of separation would be documented.

Taking Over the Flat

A party may elect to transfer his or her share in the Flat if the other party is eligible to retain the Flat under the Single Singapore Citizen (“SSC”) Scheme before the 5-year MOP is fulfilled. The party retaining the Flat would also need to be eligible for loan to retain the flat solely. However, meeting HDB eligibility rules and approval for loans are subjected to considerations such as the existing mortgage loan, the Central Provident Fund (“CPF”) refunds, and so on.

Appeal to HDB to Sell the Flat

If the above 2 options are not available, parties may attempt to make an appeal to the HDB to sell the Flat in the open market before the 5-year MOP. Each appeal application is considered on a case-by-case basis. In the event that the appeal to HDB is successful, the Flat can be sold in the open market.

Before the Flat is sold, parties should consider and agree on a few factors:

1. When the Flat is to be sold;
2. Whether there should be a sole or joint conduct to the sale of the Flat;
3. What should be done with the balance sale proceeds (usually after redeeming the outstanding mortgage loan, refunding of parties’ CPF monies including accrued interest, payment of costs and expenses of sale);
4. What would be done if the sale proceeds are insufficient to repay the outstanding mortgage loan and/or parties’ CPF monies withdrawn for the purchase of the Flat.

The above list is non-exhaustive.

Surrender the Flat to HDB

Finally, if neither of the above options are available, parties are to surrender the Flat to HDB. BTO Flats surrendered to HDB are normally valued below the purchase price and would usually result in a loss. Nonetheless, parties should consider the proportions which the losses or profits, if any, is to be apportioned.

An experienced family lawyer will know how to advise you to minimize losses to your newly acquired asset. In many cases, our lawyers have the expertise to help you keep the flat, or keep the damages to the lowest. Consult a professional family lawyer at Yeo & Associate LLC on 62203400.