Article on Law Society Conditions of Sale 2020

Author: Patrick Tan and Andrew Wong

Introduction

  1. The Law Society Conditions of Sale 2020 were introduced as an update to the previous Law Society Conditions of Sale 2012. The Law Society’s Conditions of Sale are frequently incorporated into the terms of Options to Purchase and Sale & Purchase Agreements for real estate transactions.
  1. There are three main amendments to the Conditions of Sale, namely amendments to clauses 9.5 and 9.6, amendments to clause 10, and the introduction of a new clause 16.

Amendments to Clauses 9.5 and 9.6

  1. Under the previous Law Society Conditions of Sale 2012, clause 9.5 provided for the reasonable postponement of any scheduled Completion Date (of not more than 3 months) in the event of the death of the vendor or purchaser, during which period no late completion interest is payable. This provides time for the personal representatives of the vendor or purchaser to apply for and obtain a Grant of Probate or a Grant of Letters Administration.
  1. With the new amendments to clause 9.5 in the Law Society Conditions of Sale 2020, there is now an added provision for a reasonable postponement of any scheduled Completion Date (of not more than 3 months) in the event of the loss of mental capacity of the vendor or purchaser, to allow for deputies to be appointed to represent the said vendor or purchaser.
  1. The amended clause 9.5 is a welcome change especially given Singapore’s aging demographics and the increasing possibility or risk that parties to real estate transactions lose their mental capacity midway through a sale/purchase of real estate.
  1. Clause 9.6 of the Law Society Conditions of Sale has also been amended. Under the previous Law Society Conditions of Sale 2012, a vendor was supposed to furnish the mode of payment of the purchase price to the purchaser 5 clear business days prior to the Completion Date, failing which there would be no interest payable in the event the purchaser fails to complete the sale.
  1. With the new amendments to clause 9.6 in the Law Society of Sale 2020, vendors must now furnish the mode of payment to the purchaser 7 clear business days prior to the Completion Date.

Amendments to Clause 10

  1. Clause 10 of the Law Society Conditions of Sale has been amended to reflect changes to bankruptcy and insolvency law with the introduction of the new omnibus Insolvency, Restructuring and Dissolution Act (“IRDA”).
  1. Whereas a vendor would have to warrant that 5 years had passed if the property had been the subject of a gift or an undervalue transaction under the previous Law Society Conditions of Sale 2012, a vendor would now instead have to warrant that 3 years had passed if the property in question had been the subject of a gift or an undervalue transaction.
  1. The amended clause 10 thus reflects the shortened relevant period (3 years instead of the previous 5) under the IRDA where properties which are the subject of gifts or undervalue transaction can be clawed back in the event of a donor’s bankruptcy. This may be a welcome change as recipients of gifted property can now potentially look forward to resell such property after a shorter waiting period of 3 years instead of 5 years.

New Clause 16

  1. Finally, the Law Society Conditions of Sale 2020 introduce a new clause 16, which extols parties with disputes to consider mediation as a means of dispute resolution. It is noted however that this provision is salutary in nature, and does not impose any legal obligations on parties to attempt mediation.
  1. Nevertheless, parties are always encouraged to consider mediation as a cost-efficient, amicable and confidential way of resolving disputes.

Table Comparison of Changes

  1. In summary, the changes included in the new Law Society Conditions of Sale 2020 provide a welcome update to the previous Law Society Conditions of Sale 2012. Moving forward, it is anticipated that an increasing number of Options to Purchase and Sale and Purchase Agreements would incorporate the new Law Society Conditions of Sale 2020.
  1. If you require legal advice on conveyancing or other real estate matters, please do not hesitate to contact us at FORTIS LAW CORPORATION.

Written by: Patrick Tan and Andrew Wong

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