Buying a HDB flat is a significant financial responsibility. In Singapore, it’s common for HDB flats to be bought and owned by more than one owner. This is because many of us buy an HDB flat with our loved ones – be it our spouse, parents, children or siblings. We can even buy it with other singles whom we are not related to once we turn 35.
However, circumstances may change after buying the HDB flat. You may get into a disagreement with your co-owner(s) about decisions relating to the flat. Or your co-owner may get into financial difficulties and be unable to keep up with monthly mortgage repayment. What happens to your flat in these tricky situations? What are the options available to you as a flat owner?
Flat Ownership Transfer Or Sale Of Flat
If you and your co-owner cannot reconcile on your differences but are on amiable enough terms such that you can jointly agree on a course of action, you have two viable options.
# 1 Flat Ownership Transfer
Under existing HDB regulations, you can opt to change the flat ownership structure. This allows one owner to continue owning the flat, if he or she is eligible to do so under HDB eligibility criteria.
Transfer of Flat Ownership: You may transfer the flat that you own without any monetary consideration.
Resale of Part-Share: You may change flat ownership through a partial sales/purchase between family member at a mutually agreed price. Do note that resale part-share is not allowed between a married couple.
# 2 Sales of Flat
The second option is simple. You both agree to sell your flat. You cannot sell your flat without the permission of your co-owner(s).
What Happens If Both Of You Cannot Agree On A Course Of Action?
Since the flat is jointly owned by both owners, this makes an already tricky situation even more complicated, if both you are unable to agree on a course of action.
This includes situations such as 1) if your co-owner gets into financial challenges and cannot continue paying his share of the mortgage or 2) if your co-owner files for bankruptcy or even 3) he refuses to contribute to the mortgage but also refuses to sell the flat (i.e. he expects you to pay for everything).
Scenario 1: Your co-owner gets into financial challenges and cannot continue paying his share of the mortgage
When you buy a flat with another co-owner, both of you jointly own the flat. Legally speaking, both of you are obliged to ensure prompt and full payment of your monthly mortgage. If your co-owner gets into financial difficulty and cannot pay his promised share of the mortgage, you are still required to ensure full payment of the mortgage. You cannot get out of the situation by claiming that your co-owner isn’t helping you to pay for his share.
Remember the flat is still (jointly) owned by you. This means that you need to pay for the entire home mortgage if the need arises. This is an important reason why it’s important to be mindful of who you want to co-own a home with.
Scenario 2: Your co-owner files for bankruptcy
Here’s a piece of good news. Similar to your CPF monies, HDB flats are protected from creditors in the event that an owner declares for bankruptcy. If your co-owner declares for bankruptcy, the HDB flat that you jointly own with him is safe.
Just because your HDB flat is safe during a bankruptcy doesn’t mean you cannot lose your flat. If you have taken a home loan and are unable to service the mortgage repayment, the bank which issues the home loan can get HDB approval to foreclose on an HDB flat.
Scenario 3: Your co-owner refuses to contribute to the mortgage but also refuses to sell the flat
Everyone needs a place to stay so it’s natural that your co-owner would be reluctant to sell the flat, even if he is unable to meet the monthly mortgage repayment, as this means he would have no place to stay and may require additional funds to rent a place to stay.
It’s important to remember that you cannot kick your co-owner out, or sell a flat, without his consent. All legal decisions made with regards to the flat has to be made jointly, regardless of who contributes more to the flat. If your co-owner refuses to pay the monthly mortgage, or sell the flat, there is nothing you can do about it.
What Can I Do To Protect Myself From Such A Situation?
This is a subjective matter and the right decisions depend on individual circumstances. Here’s what we think.
If your co-owner is unable or refuses to make monthly mortgage repayment, you only have three options available.
The first is to pay for his share and continue keeping the home. Do note however that any repayment that you made towards the mortgage will build up home equity that would ultimately belong to both of you, not just you. This may not seem like a fair or sustainable outcome to you in the long run.
Alternatively, and this could be an ideal situation, you can offer to buy out the share of your co-owner, if you can afford to. This way, you can legally own the HDB flat on your own and have full control over future decisions pertaining to the flat.
For example, you can continue making the monthly mortgage repayment on your own without being worried that part of the home equity would belong to your co-owner, who isn’t contributing.
If your co-owner has financial difficulties, the funds that you use to buy out your co-owner share of the home could also come in handy for him. You may even allow your co-owner to stay in the home for a small monthly rent, or for free, thus allowing him to continue having a place to live in.
However, if your co-owner refuses to sell or contribute, your options are limited. The threat of a foreclosure would make it a more sensible option for your co-owner to sell his share of the home to you, at market value, which would give him a place to live in and some immediate liquid cash.
Otherwise, you can default on your home repayment which would eventually lead to a foreclosure. The bank would sell the flat and recoup back the remaining amount due. After which, you and your co-owner will receive and divide the remaining amount between the two of you.
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