SINGAPORE Law and Practice Contributed by: Dorothy Marie Ng, Monica Yip, Tay Peng Cheng and Tan Shao Tong, WongPartnership LLP
representations or warranties regarding the real estate. Where commercial properties are large or trans - actions are complex, buyers will negotiate with sellers to provide warranties. The scope and extent of the warranties will depend largely on the bargaining power of the sellers and buyers. Typical seller warranties include the following: • good title to the property; • there being no outstanding notices from gov - ernment agencies; • related contracts being valid, binding and enforceable; and • there being no breach of approved use. The continuance of the COVID-19 pandemic did not result in any significant insistence by par - ties on new representations and warranties in transactions. If there is a breach of a warranty, the buyer’s remedies will be governed by the agreement negotiated between the seller and the buyer. It is typical in commercial real estate transac - tions for parties to agree on a timeframe for the expiry of the seller’s liability and on a limit on the amounts that may be claimed against the seller for breach of its representations and warranties. As the requirements and bargaining positions of parties will vary between transactions, there is no customary timeframe for the expiry of sell - er’s representations and warranties. Similarly, there is no standard cap on a seller’s liability for breach, although in many transactions the cap on breach of warranty on title to the property may be an amount equivalent to the purchase consideration. Representation and warranty insurances have been used in some transactions, but have not
always found favour with many parties, given the premiums to be incurred. 2.6 Important Areas of Law for Investors An investor in real estate should consider: • the laws governing the ownership of real estate (eg, prohibitions against foreigners purchasing “residential property” as defined under the Residential Property Act 1976 and terms and conditions that may be imposed where the approval of the state or a statutory board is required for a purchase and subse - quent sale); • the laws governing the usage (or proposed usage) of the real estate; and • zoning requirements. As a significant portion of land ownership in Sin - gapore is derived under leases from the state or statutory boards, it is important to consider specific restrictions imposed under the terms of the relevant lease (eg, prevailing policy with respect to subletting caps and rights of first refusal granted to the lessor in the case of a subsequent sale). In addition, where an investor intends to purchase land for development, laws and regulations relating to rights of development and terms and conditions imposed on approvals granted for development should be considered. Taxation laws (eg, stamp duties imposed on pur - chases as well as subsequent sale and property tax) should also be taken into account. 2.7 Soil Pollution or Environmental Contamination An owner or occupier will generally be liable for any pollution. Accordingly, a buyer will become responsible once they become the owner, even if they did not cause the pollution or contamina - tion.
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