fbpx

20180611 2.5% payment for issuance of title

20180611 (Mon)

What about the 2.5% progress payment for issuance of title? Do I have to pay as purchaser of subsale Condo?

Now, when you buy a subsale, the title has NOT been issued in most of the recent completed projects. This amount has not been paid to the developer. Should you as the new purchaser replace the existing purchaser in paying for this outstanding amount?

In other words, when you are buying a work-in-progress – property is incomplete. Should you take over at an intermediate (incomplete) stage or you are taking over the whole unit assuming it is completed from the seller?

For an incomplete property, the Occupation Permit has not been issued, hence the property cannot be transacted as a subsale.  This restriction is put inside SPA by the developer to avoid complication of ownership exchange hand during construction. For most properties, the percentage of completion is set at 95% beyond which the purchaser can conduct subsale of his property. The last two portions are 2.5% on issuance of OP, and 2.5% issuance of Title.

However, in theory, you can buy a incomplete house as long as you understand what you are getting at, and there is no fraud, undue influence, coercion and misrepresentation. Notwithstanding, most developer would NOT allow transaction before Occupation Permit is issued. This is called “Developer Consent”.
An easy example is when you go to buy a train ticket from someone else who resale it to you. Can you take over the train half-way journey or whole way journey from the original ticket value?

This can be argumentative as well. It depends on how desperate you are/he is. But the train journey is the original intended journey and not the specific journey that you wanted. It is just lucky that your trip happen to be exactly the stop that you want in the ticket. If it is not, you either have to disembark at earlier stop, or add on with a taxi in the last stop.

The idea is you have inherited the entire condition of the property. Indeed, the 2.5% is a duty to the new buyer, for it is part of the contingent item for the developer to proceed to issue the title. However, for a completed property, this is the only part which is not done (title not issued). For administrative purpose, developer would only consent for the transfer of ownership after all obligations in the Sale & Purchase Agreement have been fulfilled, part of it is this 2.5% payment. Hence, the developer would want to collect this amount from the original purchaser to ensure full payment before giving consent to transfer.

Thus, this 2.5% is usually paid by the original purchaser before the new Sale and Purchase Agreement is consented by the developer.

Leave a Reply

Translate »