PROSPECTS AND PROBLEMS IN CONVEYANCING RELATED PRACTICE IN THE 1990s.
| Date | 01 December 1990 |
| Published date | 01 December 1990 |
| Citation | (1990) 2 SAcLJ 240 |
| Author | RAJAN MENON |
On this topic, I wish to deal with only 3 aspects for discussion with primary reference to their bearings on land investment and development in Singapore.
Since 1968, the Government has adopted the policy of alienating land only under 99 years’ or shorter State Leases. This has come a very long way from the old colonial policy underlying the introduction of the Crown Lands Ordinance in 1886. That Ordinance, though practically stopping new freehold grants, spearheaded a long period of land alienation under Statutory Land Grants and 999 years’ Leases. The Statutory Land Grant, as we all know, is a local hybird between a fee simple and a lease in the sense that it creates an estate which has a perpetual duration and is subject to convenants and conditions befitting leases.
The convenants and conditions governing the Statutory Land Grants and 999 years’ Leases were generally kept to those set out in that Ordinance which as amended from time to time is the present State Lands Act. Only in very exceptional cases, a 999 years’ Lease may be found to have one or two additional convenants. For example: a convenant requiring the lessee to surrender any part of the land which the lessor wants back for public purposes. I suppose, such a convenant was added because of the absence at that time of compulsory acquisition legislation.
The Agricultural Leases had almost always been granted for only 99 years and they contained a bit more conditions, the most important of which is the one that prohibits the subdivision of the land for building. If a developer acquires land held under such an old 99 years’ Lease without knowing about that prohibition he is sure to be taken aback when he finds out later that the lessor would only lift the prohibition upon receiving payment of a substantial premium (assessed on the basis of the market value difference).
Experienced conveyancers who are familiar with the simple convenants and conditions of the Statutory Land Grants and the old Leases, generally do not double check them but know when to check in special cases. For example, if his client is buying a large site somewhere, say, in Changi, he would read the original Crown Lease carefully. It is certainly wrong to
assume that the general practice is not to check the original grants or leases.
The recent 99 years’ or shorter State Leases invariably contain much more convenants and conditions which are not always the same. One can only find out what they are from reading the particular Lease, on a case to case basis.
A solicitor acting for a client who is negotiating with the Land Office for obtaining a new State Lease, should carefully examine and advise his clients on the contents of the draft lease proposed by the Land Office. When acting for a purchaser who is to acquire a title under such a State Lease, the solicitor should check whether it contains any special or unusual conditions which may adversely affect his client’s interest. One would not be surprised to find, in some cases, that the lessor’s consent is required for the sale or that the lessor is entitled to call for the surrender of the lease in certain circumstances.
In cases where the Government uses statutory agencies (such as JTC and URA) to alienate land for various sorts of development, the leases granted to the private sector may either be direct State leases or indirect subleases (such as the JTC leases). These leases have very elaborate provisions which appear to be modelled on private commercial leases. It goes without saying that investigation of title necessarily requires perusing those leases without fail.
I will take an example. As regards a URA project, normally the lessee requires an unrestricted right of disposal after the completion of the project (excepting the area the lessee has to retain). But, in some cases, the lessee’s right of disposal is made subject to the lessor’s consent throughout the duration of the lease.
In a recent matter, while a purchaser of a URA project was prepared and happy to accept such a restriction, his banker intending to finance the purchase was not willing to accept a mortgage on that leasehold title because the restriction could adversely affect the practical enforceability of the security. Eventually, URA agreed to certain amendments in that case. A solicitor acting for an intending mortgagee in such a case would have failed in carrying out his duty if he had not examined the contents of the State Lease.
It is not correct to assume that there is little room for bargaining...
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