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What Will Happen to Your HDB Flat After a Divorce?
When marriages end in divorce, matrimonial assets are divided in a just and equitable manner. Such assets usually include a HDB flat, which is a key and possibly the largest asset to be divided in most cases. So, how is a HDB flat divided after a divorce and who gets to keep it?
In this article, we cover two possible scenarios: first, one where both parties reach a mutual agreement on how to manage their HDB flat; and second, one where there is no mutual agreement and the Court has to intervene.
The General Premise
If the parties own a HDB flat, they may sell the flat subject to HDB rules. HDB homeowners are restricted from selling or renting out the entire flat during the first 5 years of moving in, i.e. the HDB minimum occupation period ("MOP") rule.
If the parties have met the MOP, they may sell the flat provided all eligibility conditions set by HDB are met, after the divorce proceedings have concluded. If they have not met the MOP after the conclusion of the divorce proceedings, they may try appealing to HDB with their divorce documents.
In this article, we cover two possible scenarios: first, where both parties reach a mutual agreement regarding how to manage their HDB flat; and second, where there is no mutual agreement and the Court has to intervene.
Scenario 1: If There Is a Mutual Agreement
In an ideal scenario, both parties agree on what happens to their HDB flat after the divorce. The division can be done in two ways: the first is where one party transfers all his/her shares to the other party, with or without consideration. Where CPF funds have been utilised for the flat, parties can agree on whether any refund needs to be made to the CPF account of the transferring party.
The other option is to sell the property in the open market and divide the net sales proceeds (the sales proceeds after repaying the balance mortgage loan) according to their agreed proportion or amount. CPF refunds must also be made after the flat has been sold.
Scenario 2: If There Is No Mutual Agreement
In cases where both parties fail to reach an agreement, they may need to contest their positions at the ancillary stage of the divorce proceedings; which means that the Court will have to intervene and decide what will happen to the flat. Usually, parties cannot agree on their respective share of the flat. If one party wishes to buy over the other party’s flat, there can also be a dispute on the value of the flat. There can also be a dispute if both parties wish to retain the flat.
How will the Court come to a decision? Generally speaking, if the marriage is a short one with no children, the Court will accord weight based on the direct contributions of the parties. If there are children, the Court will be inclined to allow the party who has been awarded the care and control of the children to retain the HDB flat, provided other eligibility conditions are met (such as the ability to finance the mortgage payments).
An order to sell the flat and to divide the proceeds can be the easier solution where both parties have financing difficulties. You may only sell the flat if you have met the MOP at the conclusion of the divorce proceedings. If you have not, you may try appealing to HDB for permission to sell the flat in the open market. In the alternative, the flat may have to be surrendered. If you do surrender the flat to HDB, it will be at the prevailing compensation price set by HDB, which is usually below market value.
FAQs
We just got our keys to our matrimonial flat 3 years ago. We do not want to keep the flat. Can we sell the flat based on our divorce?
As you have not met MOP requirements, you may appeal to HDB upon the conclusion of the divorce for permission to sell the flat. HDB will assess your eligibility depending on the circumstances of the case.
What should we do if we cannot sell our flat and we do not want to stay there anymore?
If none of you want to stay in the flat, you may consider renting out your rooms to earn some income instead of leaving the flat. However, please note that you are not allowed to rent out the entire flat during the MOP.
My spouse and I have agreed to divide the flat 50/50. However, I would like to have my CPF monies refunded first before and only divide the ‘profits’. Is this the correct position?
As CPF monies are also regarded as a matrimonial asset, it is not correct to only divide the profits. The position taken by the Court is to divide the sale proceeds after repayment of the outstanding loan, any payment due to HDB and any costs and expenses of sale (legal costs, agent’s commission etc), with each party to make the CPF refunds from their share.
Example: Jack and Sally sold their flat for $500,000. There is an outstanding loan of $200,000. Jack used CPF monies including interest of $50,000. Sally Used CPF monies including interest of $70,000. The legal fees and agent’s commission is about $15,000. They have agreed to divide the sale proceeds equally. As such, the computation should be:
$500,000 (sale price) - $200,000 (loan) - $15,000 (costs and expenses) = $285,000.
Jack and Sally each receive $142,500 (50% of $285,000).
Jack returns $50,000 from his $142,500 to his CPF Account and has cash of $92,500.
Sally returns $70,000 from her $142,500 to his CPF Account and has cash of $72,500.
Whilst Sally has less cash, she has more CPF monies which she can still use to purchase a new property.
I contributed to the loan repayments, but the property is in my spouse's name. What rights do I have?
If the flat is the matrimonial home, then the Court will consider your direct and indirect contributions in dividing the flat.
We have agreed for the flat to be sold but my ex-spouse now refuses to cooperate and does not allow any potential buyers to view the flat, and is unlikely to sign the sale and purchase agreement. What can I do?
We may have to return to Court to obtain an Order for you to have sole conduct of the sale. It is also possible to apply for a Family Court Judge to sign the necessary documents in relation to the sale, on behalf of the non-cooperative spouse.
Can I evict my spouse?
If your spouse is a joint owner of the flat, he has a legal right to remain in the flat. However, you if your spouse has committed family violence, you are advised to make a police report and apply for a Personal Protection Order together with a Domestic Exclusion Order. Depending on the circumstances, for example, if there are sufficient rooms in your house, the Court may restrict your violent spouse from entering your room and some other boundaries within the house or exclude him from the home altogether.
Can I ask my cheating husband to transfer the HDB flat to me as we have agreed that our children will follow me upon divorce and I do not want to pay him anything, not even pay back his CPF funds that he had utilised.
Yes, however we should clarify that it is not a legal position that a spouse that cheats must ‘compensate’ the spouse. Your husband may only agree to transfer the flat if you buy over his share based on the current market value or if you refund his CPF monies.
Who will pay for the transfer fees to HDB?
Usually, the party who gets the flat will pay for the transfer fee unless otherwise agreed by both parties.
Talk to our experienced divorce lawyer today on the best options concerning your flat, or any other matrimonial asset.