According to the HDB Annual Report (2017/2018), there are 81% of the Singapore residents living in an HDB flat. Hence, it is not surprising in many divorces that the spouse will want to know what will happen to their HDB flat upon a divorce.

Spouses acquire together an HDB flat through a marriage and forming the family nucleus under the HDB eligibility scheme. Upon a divorce, the family nucleus is no longer in existence. HDB will require that such flat be dealt with by the divorcing couple.

There are a few possible ways to dealt with the HDB flat.

1) Agreement for Lease

The couple will be signing the HDB Agreement for Lease after the booking of their HDB flat. Once the HDB flat is completed, they will collect the key to their HDB flat.

Upon a divorce, the Agreement for Lease will be terminated. Consequently, the deposit paid to the HDB will be used to pay all monies due to the HDB. Additionally it will be used to refund the couple’s CPF accounts of the CPF monies used and its accrued interest. Meanwhile, the divorcing couple will need to agree on the sharing of the costs and expenses of the surrendering the HDB flat. This will include the sharing of the balance or which is the usual case, the shortfall. The Court will determine the ratio of sharing if the divorcing couple cannot agree on this.

What if there is insufficient money to refund back the CPF? The CPF Board will not require the couple to top up the difference to their CPF accounts. Instead, the difference will be treated as the couple has lost this amount in their CPF accounts.

2) Surrender

There is a minimal occupation period (commonly known as “MOP”) before a couple can sell their HDB flat. The MOP is calculated from the day that the key to the HDB flat is collected. For a direct purchase from the HDB, the MOP is 5 years. For a purchase in the open market, the MOP can be 3 years or 5 years.

Upon a divorce, the divorcing couple is required to surrender their HDB flat to the HDB if the MOP is unfulfilled.

The HDB will compensate the divorcing couple for the surrender. The amount is usually below value. The compensation money will be used to pay all monies due to the HDB. Additionally it will be used to refund the couple’s CPF accounts of the CPF monies used and its accrued interest. The divorcing couple will need to agree on the sharing of the costs and expenses of the surrendering the HDB flat. This includes the balance or which is the usual case, the shortfall. The Court can make an order on the ratio of sharing if the divorcing couple cannot agree on this.

If there is insufficient money to refund back the CPF, the CPF Board will not require the parties to top up the difference to their CPF accounts. That is to say that the difference will be treated as the parties have lost this amount in their CPF accounts.

3) Sale in open market

The divorcing couple can sell the HDB flat in the open market if the MOP is fulfilled.

 

They should try to agree on the followings without the Court’s determination:

  • Firstly, what should be the sale price?

It is common to be “a sale price to be agreed by the parties”. Alternatives to this would be “a sale price at $________ above market value”, “at market value” or “not below $__________”.

  • Secondly, what to do with the net sales proceed?

The net sales proceed means the sales proceed after repaying of the balance mortgage loan.

The net sales proceed can be divided in an agreed percentage or amount. Thereafter from the couple’s own shares, each party can refund back to their own CPF accounts of the CPF moneys used and its accrued interest.

The other options can be that the net sale proceeds can be used to refund both parties’ CPF accounts of the CPF moneys used and its accrued interest. Thereafter the balance be divided in an agreed percentage or amount.

 

  • Thirdly, how to share the costs and expenses of the sale including agent’s commission?
  • Finally, how about the continuation of the payments for the HDB flat pending its sale?

4) Transfer

One party can transfer his or her share of the HDB flat to the other former spouse. In most cases, the HDB flat is near the child’s school. With this mind, the couple can opt for a former spouse to retain the HDB flat. A transfer is also a popular alternative to the surrender of the HDB flat. Albeit, the former spouse who is taking over will have to satisfy the HDB’s criteria.

In a transfer situation, the former spouse that is transferring his or her share of the HDB flat may ask for any of the below:

  • Partial or no refund of his/her CPF accounts of the moneys used and its accrued interest.
  • Full refund of his/her CPF accounts of the moneys used and its accrued interest.
  • Full refund of his/her CPF accounts of the moneys used and its accrued interest plus a cash sum.

The costs and expenses of the transfer will also need to be agreed to by the divorcing couple and if not, be determined by the Court.

5) Other arrangements

Other arrangements are possible to suit each family’s needs. Primarily, we all know that no two families are alike. This can be possible subject to your lawyers’ creativity and the HDB’s approval.  

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