What Happens to My HDB Flat if I Divorce Before MOP?
This article is written in light of divorces in short marriages and our clients’ questions to us regarding the consequences of a divorce on their Built to Order (“BTO”) flat if the divorce takes place before the Minimum Occupation Period (“MOP”) has been reached.
Firstly, it is important to understand that in general, the MOP is calculated from the date the sellers collect the keys to the flat. For flats purchased directly from the Housing and Development Board (“HDB”), the MOP is 5 years from the date of the key collection of the flat.
It is possible for parties to wait for the 5 year MOP to pass to sell the flat however, it is not uncommon for parties to opt to sell the flat as soon as they can, during the period of MOP, to bring about closure to their separation or divorce. We have briefly listed some possible actions parties could consider and agree upon regarding the flat before MOP is reached and before proceeding with a divorce. Individual cases differ, and our Specialist Divorce Lawyers will be able to give you specific advice regarding your options regarding the handling of your flat.
Take Over of the Flat
If either party is eligible to retain the flat before the 5-year MOP is fulfilled under the Single Singapore Citizen (SSC) Scheme, and also successfully obtains the bank’s approval (for the party’s eligibility for loans) in retaining the flat solely, the other party may elect to transfer his or her share, in the matrimonial property to the eligible party. It is useful to note that fulfilment of HDB eligibility rules and approval for bank loans are not automatic. Some other considerations that parties should take note of are cash considerations, issues on Central Provident Fund (“CPF”) refunds, and the existing mortgage loans, if any.
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An Appeal to HDB to Sell the Flat in Open Market
Parties could attempt to make an appeal application to HDB to sell the flat in open market before the MOP is reached. It is highlighted that HDB considers applications on a case by case basis, and there is no guarantee that the appeal application will be successful. However, in the fortunate event that the said appeal is successful, the flat can be sold by the parties accordingly.
Before the flat is sold, it may be useful for parties to consider and agree on when the flat should be sold, the party with the responsibility to sell the flat, and what should be done with the sale proceeds after the flat is sold. In most cases, the sale proceeds are used to redeem the outstanding HDB mortgage loan, refund parties’ CPF monies used for the purchase of the flat, together with accrued interests, and for the payment of costs and expenses of sale.
It may also be useful for parties to consider:
- What will happen to the balance of the sale proceeds if there are any;
- The situation that the flat is sold at a loss and net sales proceeds after repayment of the outstanding HDB mortgage loan is insufficient to fully refund to parties’ withdrawn CPF monies.
Parties should consider the proportions which parties should share the losses and profits, if any is incurred.
Surrender of Flat to HDB
Alternatively, parties can consider that the flat be surrendered to HDB, and should further consider the proportions in which they should bear the losses or profits if any.
The above mentioned options should also be considered against what the Court would normally order for flats owned which have not met MOP when parties reach divorce and ancillary proceedings. The suitability of the options above for you depends on the specific circumstances of your case. Our Family Lawyers will be better able to guide you through the process with knowledge on your specific circumstances. For more detailed advice on legal options regarding your flat and important factors to consider when making a decision for the best option for you, you can contact our Specialist Divorce Lawyers.