It’s a joyous ritual almost as old as Singapore itself: A young couple get hitched, buy an HDB flat, renovate it and then hold the formal wedding ceremony once the dream home is ready.
All heartwarming so far, but in one recent case, the happy-ever-after was over in the blink of an eye and the couple ended up fighting over their newly bought flat.
This young couple’s union made it only to the three-year mark before hitting the rocks and before their customary wedding for relatives and friends.
They had paid $370,000 for a resale Housing Board flat and splurged close to $80,000 on renovations to turn it into a coveted matrimonial home. But things went downhill from there, and they called it quits even before the five-year minimum occupancy period (MOP) for their flat was up.
The final straw probably happened during the five-month renovation period because the couple actually lived in the flat while work was going on. Inevitably, their stay was short-lived because of the dust and noise.
So instead of building a new home together, the flat became the focus of their divorce as both sides wanted a bigger share of the asset.
Indeed, the flat was the only asset being contested as they had yet to formally live together as a married couple in the eyes of their families and the law.
When the case went before the High Court, Justice Choo Han Teck did not have to go through the usual steps of looking at their incomes or considering their indirect contribution to the marriage.
He noted that the parties not only did not undergo a customary marriage ceremony, “there was no consummation, and there were no children to take care of”.
“It seemed to me on the evidence and the statement of particulars that parties were unable to get along from the start, and the consortium of marriage failed before it even had the opportunity to form. I thus give no weight to indirect contributions,” he added.
So everything came down to how much each of them had spent on the flat, which was bought with a loan and money from their CPF accounts. This was crucial because without other compelling evidence, the shares in a property will be determined by the amount each joint owner contributed.
In this case, the woman put in more money for the purchase and also paid for most of the renovation costs. So Justice Choo ruled that she was entitled to 67 per cent of the flat, leaving 33 per cent to the ex-husband.
Here are two important points from the case that home owners should note.
Direct contribution to property
Buying a home entails paying the purchase price and other costs, such as stamp duties and legal fees. So when it comes to determining your share of the home, all such costs will be considered in the calculation and not just the money that went into the purchase price.
But what about funds spent on renovating the property soon after purchase?
In this case, the couple spent about $76,000 on renovations after they bought the resale flat in August 2019 – $36,000 in cash and $40,000 in the form of a renovation loan from a bank.
During an earlier hearing at the Family Court, the district judge declined to add the renovation costs to the calculation because he considered that the improvement work was basic and did not significantly alter the property.
As a result, he determined the couple’s shares based on what they paid for the flat, a ratio of 41 per cent for the husband and 59 per cent for the wife.
As it was the wife who shelled out the $36,000 in cash for the renovations, her lawyer, Mr Sarbrinder Singh, filed an appeal to the High Court, arguing that such costs should give her a bigger share in the flat.
Justice Choo allowed the appeal and noted that the direct financial contributions of parties should not be limited to funds used to buy the asset, but also include expenses incurred for the “improvement of the matrimonial asset”.
Home renovation often involves substantial facelifts and customisation. In this case, the renovation cost about 20 per cent of the purchase price.
“It would not be just and equitable for the court to ignore sizeable sums of monies expended to improve matrimonial assets,” the judge added.
At the hearing, the man argued that his former wife did not wholly contribute to the renovation cost and he also claimed that he had reimbursed her with cash later. He initially said he paid $15,500, but later said that he had given her $29,000.
Despite his claim of contributing the bulk of the costs, he did not produce any document or proof to support his argument. Not surprisingly, the Family Court had earlier ruled against him and found that his ex-wife paid all the $36,000.
Justice Choo said that given the lack of a consistent position and cogent evidence, he upheld the lower court’s finding that the man did not come up with any cash for the renovation. As a result, the ex-wife’s payment of $36,000 should be counted towards her direct financial contributions.
Dividing a couple’s assets
When couples split up, the courts will divide their assets based on their contributions to the marriage. This means that while financial inputs are an important part of the consideration, other non-monetary contributions, such as taking care of the children and running the household, also matter.
Indeed, for most long marriages, the courts are inclined to award housewives who take care of their families half of the matrimonial assets because a marriage is deemed an equal partnership between the spouses.
But in this case, there were no indirect contributions because the union ended even before the couple started formally living together in their new flat. So the division of their HDB flat was based solely on their financial contributions.
Justice Choo noted that the man withdrew about $63,000 from his CPF account to pay for the flat while his ex-wife used $91,000 for the purchase. As she also paid for the renovation in cash, her total contribution came to $127,000.
So the court ruled that she had a 67 per cent stake in the flat, while her ex-husband was entitled to 33 per cent.
But they cannot yet get their respective share of sale proceeds from the flat because it cannot be sold until the MOP expires in August 2024.
The lesson from this case is that when it comes to buying property, it does not pay to let your co-owner foot all the costs.
While you may think it is smart to let others bear the costs, just remember that every dollar counts and you will end up with a smaller share of the proceeds when the home is sold later.
“Source:[Newly-weds divorced and fought over HDB flat even before moving in] © Singapore Press Holdings Limited. Permission required for reproduction”
