18/03/2016

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Buying property as a corporate entity

It is not just individuals and families who buy homes in Singapore. Sometimes, a corporate entity may purchase a residential property for investment purposes. If you and your business partners are considering doing so, here’s what you need to know.

1) You can buy only private property

HDB flats are meant for owner-occupiers (especially families, married couples and senior citizens), HDB tenants and tenants of non-corporate landlords. The HDB does not permit corporate entities to purchase its flats for investment purposes. Condominiums and landed homes, however are legally permitted for corporate entities to purchase.

2) Consensus is compulsory

The corporate entity involved in the purchase should engage a lawyer to draw up a contract which is mutually agreed upon by all buying parties. All parties must then sign the contract and transfer documents individually before the sale of the property can proceed. Details like each party’s share of ownership in the property and the purpose of the property must be determined and stated in the
contract. If the purpose of the purchase is to lease the property, all parties must also sign the tenancy agreement to lease it.

3) Your share of ownership of the property is not necessarily equivalent to your share in the company

It all depends on the contract, whose terms must be discussed thoroughly among all involved parties. You may have a straightforward situation whereby your share in the company reflects your share of ownership of the property, or it could be that your contractual terms are more complex than that. It is vital to determine amongst all relevant parties what works best before drawing up a
contract and signing it. However, a private limited company is seen as a separate legal entity from its shareholders, and the extent of each shareholder’s liability is limited to his stake in the company.

4) Death has no power here

Unlike in a tenancy-in-common or joint tenancy agreement, the death of any of the owners of a residential property held by a corporate entity will not affect the company, property-wise. If a shareholder wants to relinquish his ownership, this is subject to the company’s Memorandum & Articles of Association (M&AA). He can then sell his shares to either his fellow shareholders or to a third party.

Picture Source & Source copied: http://www.propertyguru.com.sg/property-management-news/2016/1/116195/buying-property-as-a-corporate-entity

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