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Collaterals - Land as Security (Land Ownership (Types of Co- Ownership (a.…
Collaterals - Land as Security
Land Ownership
Types of Land Ownership
a.
Freehold
1) belongs to the owner absolutely &
forever
2) Can lease out & transfer ownership to anybody
b.
Leasehold
1) belongs to the lessee for a
specified
no. of years 2) Industrial Premises (30 YRS) & Public Housing (99 YRS)
Evidences of Ownership
a.
Title Deeds
(Common law system of
evidencing ownership
& applies to land that has not yet been brought under the Land Titles Act) ; (All Doc affecting land must be
retained
by proprietor) ; (Evidence may comprise a
bulky set of doc
, all are necessary to
complete
chain of title)
b.
Certificate of Title
(Issued by Singapore Land Authority,
SLA
); Other people may also have an interest in the property and all these are recorded in the
Land Registry
Types of Co- Ownership
a.
Joint Tenancy
(
2 Parties
w/ same rights, & individual rights against each other;
Right of Survivorship
; NO INDIVIDUAL OWNS A DISTINCT SHARE IN PROPERTY)
b.
Tenancy-in-Common
(
No right of survivorship
, Each tenant can will his share of property to anyone)
Matrimonial Property
(customer known to be married , spouse to join in the mortgage
Mortgage
- Instrument used to take land as security for a debt, a right of redemption (interest re-conveyed upon repayment of the loan)
Types of Mortgages
a.
Legal Mortgage (
Interest in the property is conveyed to the Bank by means of a mortgage as security for the indebtedness of the borrower) -
PREFERRED
b.
Equitable Mortgage
(Title deeds are deposited w/ the Bank together w/ an agreement evidencing the intention that the title deeds are held by the bank as a security for the indebtedness of the borrower)
DO NOT HAVE POWER OF SALE, POWER TO APPT A RECEIVER BCUZ NO INTEREST IN PROPERTY
- Need court order before he can dispose of the property
Taking Land as Security
Procedures
Requires a solicitor: Report on the title
state the full names of the estate owner
give a full description of the property
indicate whether any restrictive covenants likely to affect security
whether property will be affected by Land Acquisition Act or any other statutes to ensure the bank obtains a valid title
Land searches would have been done at the SLA to show details of ownership (names of owners and land
check that property is unencumbered
check that there is no pending actions on the land
If all is in order, the mortgage is finally registered!!
ADV & DISADV
Adv
: Land tends to
increase
in value overtime (guarantee which can never be worth more than the agreed limit)
Disadv
: 1)
Property not easily realisable
(type of property) 2)
Professional Valuation
is a standard requirement - diff to make accurate valuation + additional cost + legal services(fees) 3)
Not good publicity
for bank to realise its security on the house when the borrower defaults in repaying loan
FIRST MORTGAGEE:
Bank
, SECOND MORTGAGEE:
CPF BOARD
- When property cold, CPF Board must be refunded
Value of the Property
a.
Open Market Value
- Indication of BEST PRICE at which property might be
reasonably expected to be sold
, assuming, a willing seller and a reasonable period taken to
negotiate
the sale taking into a/c the
nature
of the property and the
state of market
b.
Forced Sale Value
- Indication of price which may be
Obtained
for a sale initiated by Bank, usually has to be done quickly & may be under
unfavourable market conditions