The number of divorces in Singapore has been on the rise: a total of 7,344 marriages ended in divorce or annulment in 2018, compared to 1,721 in 19801.
In 1980, there were 505 divorces under the Administration of Muslim Law Act (AMLA), or what will be referred to as ‘Muslim divorces’ in this article. The figure increased more than threefold to 1,682 in 2018. Following a divorce, one of the most significant issues for the separating couple to consider is what will happen to the matrimonial home. This will be determined in the Divorce Decree granted by the Syariah Court.
THE DECREE
The Decree will state whether the home is 1) to be sold in the open market, or 2) to be transferred to one party. In the case of the latter, the party who the property is to be transferred to has to buy over the shares of the transferring party.
SELLING IN THE OPEN MARKET
The Decree will also determine the percentage share of the cash proceeds if the home is sold in the open market. For instance, the Decree might prescribe a 30/70 share for the defendant and plaintiff respectively. As such, if the cash proceeds are $100,000, the defendant will be entitled to $30,000 while the remaining $70,000 goes to the plaintiff.
Besides this, the Decree will state if there can be any claims from the other party’s Central Provident Fund (CPF) proceeds. While all CPF refunds must be refunded to the respective accounts upon the sale of a property, this allows one to receive some of his/her ex-spouse’s CPF funds.
This usually happens in two scenarios:
One is when a spouse, usually the ex-wife, had been a stay-at-home mother and not worked outside the home for several years, and hence, has no CPF contributions of their own. In this case, some of the ex-husband’s CPF can be transferred to the ex-wife.
Second is when the ex-husband is unable to pay nafkah iddah (the financial support a husband is expected to provide during the period of iddah, i.e. the waiting period in which a Muslim woman cannot marry following a divorce) and mutaah (a “consolatory”gift upon divorce, the sum of which is determined based on a specific sum of money multiplied by the number of days the marriage lasted, or a specified lump sum) in cash, especially where the sale of the home is a negative sale (i.e. sale with no cash proceeds). The ex-husband, instead of paying for nafkah iddah and mutaah in cash, can pay via his CPF funds.
TRANSFER OF SHARES
The Decree might rule for the property to be transferred to one spouse, in the event that one party chooses to retain that property. For instance, if the wife wishes to retain the home, she will have to buy over her ex-husband’s share (i.e. refund what was paid from his CPF). The distribution for refunds of any cash paid by the ex-husband towards the home will be decided mutually by the couple and included in the Court Order.
SELLING BEFORE FINALISATION OF THE DIVORCE
Some couples decide to sell their property before the Decree, moving on with their separate lives ahead of the divorce being finalised.
As they are still legally married, the sale of property will proceed like a typical sale, with CPF proceeds being refunded to respective accounts and any sales proceeds to be shared by way of mutual agreement between the couple, as they deem fit.
IMPEDIMENTS TO SALE OF MATRIMONIAL HOME
Anecdotally, most ex-spouses tend to be cooperative as it is in the interest of both parties to settle the housing matters, thereby allowing them both to move on with their lives.
However, this is not always the case. Here are some scenarios that may unfold.
Uncooperative Ex-Spouse
One spouse might not agree to the sale of the property, or due to lack of housing options, choose to try to retain the home for as long as possible. Some might try to hinder the sale of the property by making viewing sessions very difficult such as only allowing viewings on alternate Wednesday mornings at 8 am, a timing where most potential buyers are not likely to be viewing homes.
Others refuse to remove their belongings, thereby cluttering the home and making it unattractive for sale. Some others might repeatedly refuse any price offered by buyers, claiming they want a higher and oftentimes an unrealistic amount for their home in that particular market.
Missing Ex-Spouse
Recently, I sold the flats of two divorcing couples where their ex-husbands were not contactable – their old mobile numbers were no longer in use, and their immediate family members did not know of their whereabouts.
This slowed down the selling process, as there were more steps to be taken, such as getting the law firm to start an enforcement process and getting a Court Registrar to sign on behalf of the missing party. This makes the property less attractive for sale, as the legal completion of the case will be delayed for at least an additional one to two months. Potential buyers have to be willing to wait this out, and obtain their new flat keys slightly later.
Fulfilling of Minimum Occupation Period
For the sale of Housing and Development Board (HDB) flats, owners must fulfil the Minimum Occupation Period (MOP) of five years before they are allowed to sell their property, unless the Decree instructs for it to be sold, and special approval to sell has been sought from the HDB.
For the sale of private property within the period of three years, the couple may be liable to pay Seller Stamp Duty fees of up to 12% of the actual selling price or market value of the property, whichever is higher2.
OBSTACLES TO MOVING ON
Once the matrimonial home has been sold, there is still another hurdle for the couple to overcome – can they buy another home?
Common hindrances include:
Insufficient Funds to Buy a Home
Oftentimes, this affects a spouse who has been a stay-at-home parent for many years, usually the wife. She would not have amassed CPF savings or cash savings from income earned working outside the home. On top of that, some have not worked for a long time and finding a job is challenging. Divorcees who are older and have been out of the workforce for decades face an even more arduous challenge: when the work skills they possess might be obsolete, as they attempt to enter a largely technology-driven workforce today.
Lack of Family Nucleus
Divorcees who are below 35 years old and do not have custody, care and control of their children face difficulty when they want to buy a HDB flat. They neither qualify to buy under the Single Scheme (they need to be at least 35 years old)3, nor are they eligible under the Public Scheme (buying with a family nucleus).
CONCLUSION
The old adage, “Marriage is grand, but divorce is a hundred grand” rings true. Besides the emotional and psychological effects of divorce, it poses a huge financial burden on both parties. They are now expected to shoulder greater financial loads on their now single income. It is not uncommon for divorcees to take many years to stabilise their finances – some stay with relatives or rent a home for as long as ten years or even more, before finally being able to afford a home of their own. Some wait for their children to reach 21 years old, and buy a flat together with their grown up children. Yet others only buy their next home upon remarriage and being in a dual-income household once more.
It is recommended that couples who are considering divorce, or in the midst of divorce proceedings seek professional advice regarding their housing matters, such as division of the matrimonial home, claiming of CPF as well as their eligibility to sell and buy, before the divorce is finalised. Once the Decree is out, any requests to make amendments to it will cost time and money. A real estate professional will be able to map out realistic options and timeline, so as not to prolong the process for both parties as well as ensure they do not end up without a home. ⬛
1 Department of Statistics Singapore. Statistics on Marriages and Divorces, Reference Year 2018. Available at: https://www.singstat.gov.sg/-/media/files/publications/population/smd2018.pdf.
2 Inland Revenue Authority of Singapore. Determining SSD liability, Section D. Rates applicable. Available at: https://www.iras.gov.sg/irashome/other-taxes/stamp-duty-forproperty/working-out-your-stamp-duty/selling-or-disposing-property/seller-s-stamp-duty–ssd–for-residential-property/.
3 Housing and Development Board. Residential – Eligibility Criteria. Available at: https://www.hdb.gov.sg/cs/infoweb/residential/buying-a-flat/resale/eligibility-?anchor=ssc-scheme.
Risdian Isbintara is an award-winning real estate agent with ERA Realty Network, with a decade experience in the industry. Having helped clients over 500 transactions, Risdian utilises his unique, dynamic marketing to help him and his clients’ homes stand out.
