Professional Documents
Culture Documents
Objectives
- Explain some of the important considerations in preparing and advising on leases
- Describe the functions of the Strata Titles Board
- Outline the steps involved in obtaining approval for a collective sale - very popular in market now – owners
agree to put bloc up in market
- Refer to the excellent Practice Paper in pages 276 to 290 of your manual
Applicable Law
• Landlord (LL) and tenant relationship created by contract is called a lease.
• Relationship governed by:
o Terms and conditions of contract
o General law of LL and tenant
• S.53(1) of CLPA
o Lease exceeding 7 years must be made by deed (less than tt may be made by writing under hand
only)
o Legal assignment of leases must be effected by a deed in the English language: “conveyance”
includes assignments
S53. of CLPA —(1) A conveyance of any estate or interest in land other than a lease for a
period not exceeding 7 years at a rack rent shall be void at law unless it is by deed in the
English language.
(2) This section shall only apply to conveyances executed on or after 1st March 1994.
o However, Courts may act in absence of written memorandum, provided oral agreement is clearly
proved, and has been performed by the Plaintiff to the extent inequitable for Defendant to set out
defence of absence of writing.
• Short term leases for terms not exceeding 3 yrs referred to as tenancy agreements
• Agreement to Lease =
o Executed when intention that relationship of LL and tenant is not established until the stipulations
of the agreement have been complied with.
o Usu followed by eceuction of formal lease to give effect to demise agreed and form of lease
annexed or incorp as sched to agremenet for lease
• Conveyance under s53.1 CLPA includes assignments
• S25 of Registration of Deeds Act and S87 of the Land Titles Act
o Leases > 7 years may be registered.
S25 RDA
(1) Nothing in this Act shall extend to any lease for a term not exceeding 7 years or any
assignment thereof where accompanied by actual possession from the making of the lease
or assignment.
(2) For the purposes of determining whether or not an instrument may be registered
under this Act —
(a) the right or option to extend the term of a lease for any further period granted
by the lessor to the lessee shall be deemed to be part of the term of years granted by
the lease; and
(b) no account shall be taken of the fact that the lease may be determined on the
happening of an event during the duration of the lease.
- Look at term of extension – if shall grant – then takes it beyond 7 yrs. If worded in manner tt
at terms to be agreed/ price to be agreed then open as to whether or not taken into account
- Case auth – way extension defined is prob – if wording to effect tt SHALL grant but price/
rental nt determined then not obiged to grant extension
o but where YOU SHALL GRANT and price shall be the market rate – courts have
ruled that in such stn, landlord is obliged to grant extension because market is easily
determinable.
• S 87 LTA
(1) Registered land may be leased for any term of years exceeding 7 years by an
instrument of lease in the approved form.
(4) A lease is not unregistrable by reason only of the fact that the possession of the
lessee is expressed to be non-continuous.
o Leases 7 years or less may be registered under general law (S87 (5) of LTA )
S 87 LTA
(5) Nothing in this Part shall affect the law relating to tenancies for terms of 7 years
or less.
o Caveat can be lodged: S46(1) (vi) of the LTA provides statutory protection – tenant under such lease who is
not in occupation can prxt interest
46. —(1) Notwithstanding —
(a) the existence in any other person of any estate or interest, whether derived by grant from the
State or otherwise, which but for this Act might be held to be paramount or to have priority;
(b) any failure to observe the procedural requirements of this Act; and
(c) any lack of good faith on the part of the person through whom he claims,
any person who becomes the proprietor of registered land, whether or not he dealt with a
proprietor, shall hold that land free from all encumbrances, liens, estates and interests except such
as may be registered or notified in the land-register, but subject to —
(vi) the rights of any person in occupation of the land under a tenancy when the proprietor became
registered as such, being a tenancy the term of which does not exceed 7 years and could not have
been extended by exercise of the option of renewal to exceed an aggregate of 7 years
o Immigration Act
S 57(1)(d):
• Offence to harbour illegal immigrants – mandatory custodial sentence
• PP V Ong Phee Hoon James [2000] 3 SLR 293
o Leasing premises constitute “habouring”
(ii) subject to subsection (1A) (N.B for (e) – irrelevant to our purposes), in the
case of an offence under paragraph (b), (d) or (e), shall be punished with
imprisonment for a term of not less than 6 months and not more than 2 years
and shall also be liable to a fine not exceeding $6,000
S 57(7):
• presumption of mens rea
• S57(7): Where, in any proceedings for an offence under subsection (1) (d), it is
proved that the defendant has given shelter to any person who has remained in
Singapore unlawfully for a period exceeding 90 days after the expiration of any
pass issued to him or who has entered Singapore in contravention of section 5
(1) or 6 (1), it shall be presumed, until the contrary is proved, that the defendant
has harboured him knowing him to be a person who has acted in contravention
of the provisions of this Act or the regulations.
S 57(7A):
• not a defence to prove that person harboured possessed a pass or permit unless
Defendant further rproves tt he exercised due diligence to ascertain tt pass or
permitwas at material time valid under immig act or regulations
• period of validity of pass shld be eq to or exceed period of lease
REGISTRABLE LEASES
• Leases for duration of more than 7 years registrable (s 25 RODA, s87 LTA)
s25(1) RODA:
Nothing in this Act shall extend to any less for term not exceeding 7 years………
s87(2)(a) LTA:
Registrar shall not register any lease unless term is expressed to be more than 7 years
• After 1/4/98, s4 Planning Act made it clear that certain types of leases are not to be regarded as disposal of
land
- Importance lay in fact that if subdivide land, need subdivision approval
- ‘Subdivision’ occurs when person by deed/instrument disposes of any part of land registrable under
RODA/LTA
Golden Village Multiplex Pte Ltd v Marina Centre Holdings Pte Ltd (2001) 3 SLR 452
- 15 year lease to run cinema complex
- Held:
- Correct interpretation of s2(2) Planning Act is that it applies to instruments in an approved form
- Thus if lease were to be in approved form and were to be executed but there was no certificate of
subdivision, lessor would be in breach but not otherwise
- As present lease was not in approved form, no breach
- Even if lease were to constitute subdivision of land and were to be in breach of relevant provisions of
Planning Act, did not necessarily follow that that would render lease void and unenforceable
FEES DUE
8 LEASE or AGREEMENT for a lease of any When the Lease is for a period
immovable property including any furniture, chattels,
fittings or equipment and for securing the payment
for the provision of services or facilities or to other
matters or things in connection with such lease —
Not Exceeding Exceeding 3
exceeding one year but years or for
one year not any
exceeding 3 indefinite
years term
(a) without premium and executed on or after 1st $1 $2 $4
April 2003, for every $250 or any part thereof of the
average rent and other consideration calculated for a
whole year
(b) in consideration of a premium only The same duty as for a conveyance for a
sum equal to the amount of such
consideration
(c) in consideration of a premium and reserving a The same duty as for a conveyance on
rent or other consideration sale in consideration of the premium and
a lease for the rent and other
consideration
(d) lease executed in pursuance of a duly stamped $2
agreement for the same on production of the
agreement to the Commissioner
(e) lease of any other kind whatsoever not otherwise $10
specially charged with duty
Exemption:
Any lease or agreement for a lease referred to in
paragraph (a) or (c) executed on or after 1st April
2003 where the average rent and other consideration
calculated for a whole year does not exceed $1,000.
• For short term leases parties usu enter into negotiations subj to tenant’s execution of forma lease and
tenant’s solicitors need not send out legal requisitions/requisitions on title
- However, should make a search to ascertain if landlord is registered owner of property and whether there are
any existing mortgages/other encumbrances on property
• If existing mortgage, tenant’s solicitors to check terms to ascertain whether mortgagor’s power of leasing
under s23 CLPA has been varied
- If so, must get prior written consent of landlord’s mortgagee for creation of lease otherwise it will not bind
mortgagee who would be entitled to evict tenant in event that mortgagee decides to exercise power of
sale/foreclosure
• Tenant’s solicitors would review draft Lease forwarded by landlord’s solicitors/housing agents, propose
amendments to reflect instructions received from client relating to principal sums and terms fairer to tenant
- When terms agreed, engrossment of lease in duplicate and sent to tenant’s solicitors for execution by tenant
- After signing, returned to landlord’s solicitors for execution by landlord after which it gets stamped by
landlord’s solicitors and original stamped copy is returned to tenant’s solicitor for tenant’s retention
- If lease to be registered, presented for registration at registry of deeds by tenant’s solicitor for unregistered
land and at land titles registry by landlord’s solicitor for unregistered land –
- Reason why landlord’s solicitor presents lease for Regis at LTR is because duplicate cert of title which
is in landlord’s possession is reqd to be produced for Regis purposes
1) Premises
• Contain date, names, description of parties, recitals (if any), consideration, operative words, parcels,
exceptions and reservations
• Recitals
• Seldom reqd
• Consideration – when only of rent and tenant’s covenants, appears suff fr subseq parts of lease, not nec
to refer to it in premises thgough often done
• Description – must be with absol certainty; if large scale plan available then include and made to
prevail
• Rights – s6 CLPA – lease by deed to include all easemtns, righyts and advantages subj to contrary
intention; but tenant’s sol shld stil isit tt rights which are reqd are specicially granted – s6 operat fr date
of demise; also s6 only applies to property right and not services; parking needs to be considered since
no implied right to park
• Exceptions an reservations – to cover all rights to which demised presmies are subj –
• Distinction bet exception and reservation – former is subtraction fr demise in existence at time of
lease; reservation is right wich prev had no sep existence and comes into being by virtue of lease
eg rent
2) Habendum
• Specifies commencement and duration of term for which lease granted
• State ‘from and incuding the ___ day of 20__
3) Reddendum
• Fixes amount of rent and specifies dates upon which it is to be paid
• Also the mechanism for ascertaing rent for part of term fr wchr ent becomes payable, amt of first payment
etc also to be stated
4) Covenants
• Tenant’s Covenants:
- Payment of rent, rates and taxes
- To repair and not make alterations
- In absence of provn relating to repairs, netiher party laible apart fr law relating to waste
- In long term leases, entire liab usu taken by tenant
- For short term leases and tenancies, liab og tenant limited to maintaining inside f premises in proper
state of repair while landlord maintains exterior
- Note tt ‘interor’ may be vague – incudes several lawyers of walls etc. for avoidance of doubt, be
specific
- To permit landlord to enter and view state of premises
- To insure
Insurance
- For leases 7yrs and above, usual for landlord or tenant to enter covenant to insure demised premises and
in event of loss or destruction by dire aply policy monies in reinstating or rebuilding premises
- For less tha n 7 yrs, usu insurance effected by landlord
- In absence of agremenet to contrary, rent will cont to be payable notwithstanding destruction of
premises by ire, whether tenant liable to rebuild or not – so tenant’s sol shld enure tt lease contains
proviso for abatement of rent and service charge while premises rendered uninhabitable
- Also consider n of ownbership of insurance monies in event of rebuilding being prvrented or frustrated
– expressly deal with in lese
- Usually landlord would insure and recover premium from tenants by way of service charge
- Argue for abatement of rent and service charges when premises destroyed else still liable to pay rent
- If after 6 months not ready, argue for tenant’s right to cancel tenancy
- To comply with statutory obligations
- This may be wide – eg if soe new eyipment reqd by lw to be instilled, falls to tenant to install it at his
expense
- To use premises for permitted purposes only
- Not to assign/underlet without landlord’s consent
- Absol covenant preventing tenant fr delaing th demised premises shd be resisted, and shld let client to
deal demised presmies with landlord consent suc consent not to be unreasonably withheld or delayed
- Covenant shld be comprehensive an refer to assigning, underletting, subletting, holding on trust for
another, parting with or sharing possession or occupation – ref made to whole or part of premises
- S17 CLPA – unless lease with covenant agisnt assignment without consent contains express provision
to conitrary, deemed to be subj to proviso to effect tt no fine payable for such consent but tt proviso
shall not preclude right to req payment of resnalbe sum for legal or other expenses incurred wrt such
consent
Under the common law, no subletting of the premises is permitted unless such a clause is present in the
tenancy agreement.
If all the clause states is that there would be “no subletting without the prior consent of the landlord”,
then the landlord has absolute discretion not to consent.
Cf the clause stating that there would be “no subletting without the prior consent of the landlord which
shall not be unreasonably withheld”.
- To yield up premises (without additions) at expiry of term
- Right of tenant to remove fixtures – ensure tt tese can be removed
- Covenant against harbouring
- See immig act above
• Landlord’s Covenants:
- Quiet enjoyment (implied even if not express)
- Where covenant by tenant to pay service charge as contribn towards all cost incurred by landlord in manaing
and maintiangn bulding, tenatn’s sol to ensure tt corresp covenant on part of landlord to perform services in
respect of which landlord claiming reimbursement
- Covenant to renew
- To be assred of enforceable option – mechanism for third party to determine rent for further term in
event of landlord and tenant failing to reach agreement as to rent
- If terms and conds favourable to tenant in current lease, then sol shld ensure tt lease fo frutehr term
contains ame terms and conds with exception of option to renew
- Tenant would propose ‘on same terms and conditions except that rent to be pegged to prevailing market
rate’ (But could be struck down for uncertainty OR court could decide that option enforceable and
decide market rate itself)
- Landlord would propose ‘on terms to be mutually agreed and in even that parties fail to reach
agreement, 3rd party will determine rent for further term’
- Service charge
5) Provisos
Other matters
GST issues
- Is it payable on rent?
o Read GST act – landlord is supplier. He is a taxable person then yes GST payable
o But exemption on residential property, even if landlord is taxable person – see act
GST is only payable when:
(a) the lease is a commercial or mixed lease (and not a residential lease); and
(b) the landlord is GST-registered.
o Eg Far East - But if landlord charges maintenance charges – whether this is part of
exemption? – check – NO it does not fall in exemption
o So rent x attract GST but maintenance charges does
o Stimes may break up rent for premises anda rent for maintenance and hiring charges – then
GST payable on the second part
o Commercial property – gst payable on all components if landlord is taxable
- Who pays?
o According to GST act – supplier who has oblig to collect GST fr person to whom gds and
services supplied
o See law soc conds
When Law Soc conditions apply, purchaser to pay GST
o Must provide in tenancy agreement or lease otherwise lqndlord may have to fork out of own
pocket
o Landlord is supplier - if a taxable person, he/it must charge GST, and provide in TA or L for
tenant/lessee to pay
o Liability to collect GST = on supplier.
o If nothing in contract stating GST has to be paid by tenant, then the landlord has to account
GST out of own pocket.
• Under s8(3) GST Act, GST is liability of person making supply (i.e. landlord)
• S8(3) of GST Act: Tax on any supply of goods or services is a liability of the person
making the supply and (subject to provisions on accounting and payment) becomes due at
the time of supply.
- But if landlord wishes to pass on GST to tenant, express provision must be made for it
- If silent, tenant not liable to bear GST
- Look to new landlord for refund of any monies paid after expiration of their tenancy
agreement
- Payable on what?
o GST is chargeable on rent for non-residential premises
o Payable on rent for commercial premises, not for rent on commercial remises, on hiring
charges for furniture and fittings for both residential and commercial properties, and where
applicable maintenance fees for both types of properties, and any other goods or services
supplied
This applies to both residential and non-residential premises
o Rent on residential properties AND refundable rental deposit is NOT subject to GST.
o If landlord is ‘taxable person’ who rents out property in course of business, then GST
chargeable on rent, service charge and other payments made by tenant, in respect of leases
made on/after 1/4/94 of premises not within exemptions set out in Fourth Schedule
o Residential properties exempt, but commercial/industrial property subject to GST (i.e. GST
registrable)
o But if residential lease includes any lease/hire of any furniture/furnishings/fittings/
appliances/effects, GST chargeable in respect of lease/hire of furniture etc
- Implications for lease agreement
o When acting for the landlord of a GST-registered company, you must remember to insert in
the clause that “if there is any GST payable in respect of any GST supply, the lessee will pick
up the GST”.
o Because GST is a consumer tax, we assume that it is the consumer who will be liable for the
GST i.e. that the tenant is legally liable to pay the GST if it is payable.
o This is a wrong assumption. The primary liability to pay GST is that of the landlord to the
Controller.
o ∴If the lessee does not pay the GST to the landlord, the landlord will have to pick up the GST:
Love v Norman Wright (Eng) and Kuo Ching Yun v H&L Investment Holding Pte Ltd
[1996] 1 SLR 47.
o If GST is payable, unless the lease specifies that it is the lessee who is to pay, the default
position is that the landlord will have to pay for it:
• Landlord can use this deposit for enforcing covenants but which should be released at end of lease interest
free
• Clause does not run with land and does not pass to assignee/3rd parties
• Right to refund of deposit is personal covenant (with original landlord)
• Original landlord to state that tenant should look to new B for total recourse
• Possibility of novation, but tenant must consent
• Hence ask for consent before signing agreement for tenancy else tenant might not be bound by it
• Original landlord to transfer deposit to new landlord
In the standard lease, a security deposit is paid by the tenant on the signing of the lease.
The security deposit will be returned if the tenant does not breach any covenant and the
landlord does not need to set off.
If the landlord sells the property, the purchaser will take over the security deposit, because
both encumbrances and benefits pass on to the purchaser.
In a Privy Council case (appeal from Hong Kong), it was held that the liability to pay the deposit to the
tenant is personal.
∴The original landlord has to pay back the security deposit to the tenant at the end of the lease if
the purchaser is unable to do so.
∴Draft the lease such that in the event of sale of the land, the tenant agrees to transfer the security
deposit to the new landlord and looks to him solely for the refund of the deposit.
If you are acting for the tenant, advise him to agree to the above term because at least the new
landlord as an asset in the form of the land. Also, if the new landlord becomes insolvent, the tenant
can offset the security deposit by not paying rent for the last 2-3 months.
Novation Agreement
In the event of sale of the land, the tenant is to enter into a novation agreement with the purchaser.
Because in an assignment, the assignor can only assign the benefits but not the obligations
under the lease.
A novation agreement is a new agreement that rises from the ashes of the old agreement –
ensures that the only landlord who is liable to the tenant after the sale of the land is the
purchaser.
Bailment
• If tenant at expiration of lease/sooner leaves, his things can be sold and landlord can take proceeds to cover
such expenses and indemnify landlord against any loss
• Else, would have to get court order
• Especially for commercial leases
Option to renew:
- length of term: usually 3 month before expiry
o note how long
o stimes option to renew only 1 more yr when agreement for 2 yrs – because unsure of property
market
- Procedure
o When is time in which tenant must write in to rewquest for teeancy to renew
o One mth/2 mths/3 mths
o The longer, the better for the landlord so tt he can prepare
o Three mths prior to expiry, he can start advertising and look for new tenants
- New rate: Market rate, rate mutually agreed upon, present rate, or rate at Landlord’s discretion……
o Peg it to old rent and not more than ten percent plus minus?
o Or at prevailing market rate
o Don’t use at rent to be agreed upon because then no certainty of agreement – will be
renegotiating lease all over again
- Usu clause will say renew tenancy for x no of yrs on same terms contained in ease or tenancy
agremenet except for renewal calsue (because x want perpetuity of renewal)
If the tenant thinks that the rent will fall in future, it is good to have such an option.
An option to renew “on terms/rent mutually agreed” is unenforceable for uncertainty – the landlord does
not even have to pretend to negotiate when the time comes.
∴Make sure that the option is on secure terms and conditions except for the rent, which shall
be:
(a) at the prevailing market rent, or
(b) to be decided by the average value of the valuer that each party appoints or the
referee of the 2 valuers should they not agree.
(c) Even if there is no mechanism to decide on the amount of rent payable, the option to renew is
sufficiently certain for the court to impose a mechanism of its own to enforce the option.
- S28(4) of Civil Law Act: Tenant who wrongly holds over after determination liable for 2X rent.
LL’S REMEDIES – if non paymen of rent or breach of terms specified in any partr proviso
LL can:
1. sue for rent
2. exercise right to distrain for arrears of rent upon the goods of tenant
a. subject to Distress Act – must ex right only in manner provided for by act
3. Re-entry: if lease contains usual proviso for reentry – must do so by: -
a. Physically enter with intention of determining the lease
b. Where peaceful reentry not possible, Issue and service of proceedings for recovery of
possession. Service of writ of possession operates as final determination of the lease.