• Letter of offer

This is usually the first document to be signed in any real estate transaction. The letter of offer records the parties’ mutual intent to sell/buy the property and the key terms (i.e., price, time and manner of payment of the price, conditions precedent, if any, description of the property including conditions of title, if any, time for handover and time period to negotiate and finalize the formal sale and purchase agreement). The letter of offer is normally binding against the parties and pending the execution of the formal sale and purchase agreement, the letter of offer will bind the parties to the transaction.

• Searches/due diligence report (where necessary)

Depending on the nature and value of the property, the buyer may instruct their solicitor to conduct due diligence on the real property prior to the execution of the sale and purchase agreement. It is the norm that the buyer’s solicitor conducts a land search on the real property (where a separate issue document of title is available) to ascertain ownership of the seller and also whether there are any issues arising from the land that are relevant to the buyer.

• Sale and purchase agreement

The sale and purchase agreement will record all relevant terms in respect of the transaction and the property. The sale and purchase agreement should also contain the typical rights and benefits accruing to the buyer and the representations and warranties of the seller.

• Instrument of transfer

This refers to the instrument of transfer prescribed by the NLC to be presented to the relevant land registry / land office to effect registration and is applicable where title to the property has been issued.

Where the separate title document to the property is not available, the parties will sign a deed of assignment to effect legal assignment (by way of transfer) of the title, rights and interests to the buyer.

In addition to warranties in relation to title to the property, a seller usually gives the following warranties:

• The seller has all appropriate authority to dispose of the property, including no resolution and petition against the seller has been made or presented in respect of insolvency and winding-up proceedings
• The due diligence materials including documents and information given to the buyer for the purpose of due diligence are correct and accurate
• There are no encumbrances on the property (usually save for a legal charge/assignment in favor of the seller’s current financier)
• The seller shall not further encumber the land in any way whatsoever without the buyer’s consent
• The seller has complied with all restrictions in interest and conditions on title to the property (express and implied)
• The seller is not aware and has not received any notice for compulsory acquisition in respect of the property
• The seller has not received any notices from the authority for the breach of any applicable laws affecting the land
• The seller observed and complied with any applicable laws affecting the land (including environmental laws)
• The construction of the building forming part of the property complies with any applicable laws and is issued with the requisite certificate of completion and compliance (certifying that such building is fit for occupation)

Parties are usually bound upon the execution of the letter of offer. Where the letter of offer is expressed as not binding, then upon execution of the sale and purchase agreement (subject to any conditions precedent provided in the agreement).

Under the NLC, the legal title in land vests on the buyer upon registration of the instrument of transfer in the form prescribed by NLC at the relevant land registry / land office. Although the relevant land registry / land office may take some time to complete the registration of the instrument of transfer after the presentation of the instrument of transfer, upon completion of the registration process, title/interest is deemed to have transferred to or vested in the buyer as of the date of presentation of instrument of transfer at the relevant land registry/office.

The buyer usually pays for:

• Stamp duty on all copies of the sale and purchase agreement
• Stamp duty payable on the instrument of transfer or other dealings
• The ’buyer’s own legal costs (including due diligence costs, professional consultation charges, valuation charges etc.) in connection with the preparation and completion of the transaction
• Application fees and registration fees for the transfer or other dealing and for any approvals/consents required to be obtained by the buyer
• Costs and expenses relating to any external financing as may be obtained by the buyer to finance the purchase including stamp duty on the loan or financing documents and the registration fee of any land charge which is required to be registered over the property (as security for the external financing)

The seller usually pays for:

• The ’seller’s own legal costs (including seller due diligence costs (if required), professional consultation charges, valuation charges etc.) in connection with the preparation and completion of the transaction
• Fees for any approvals/consents required to be obtained by the seller for the disposal or sale of the property pursuant to any restriction-in-interest endorsed on the title document or the applicable laws
• Tax relating to disposal of property, including real property gains tax payable under the Real Property Gains Tax Act 1976
• Costs of removal, discharge or release of any encumbrance created over the property (including any charge that the seller has created in favor of its financier)