Commercial developer sales sit outside the Housing Developers regime
A worked RES examination question on commercial sales, from our Paper 2 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
An investor buys an uncompleted commercial shop unit and assumes the defects-liability and forfeiture arrangements mirror a residential purchase. Her lawyer highlights several differences that flow from commercial sales sitting outside the Housing Developers regime.
Consider the following statements.
- (i) A developer building commercial premises solely for lease of up to seven years is not covered by the Act.
- (ii) The commercial defects retention is typically held by the developer's own lawyer, not the Singapore Academy of Law.
- (iii) A commercial development of more than four separate units engages the Sale of Commercial Properties regime.
- (iv) A commercial developer's booking fee may not exceed 10% of the purchase price.
The answer, and why
Answer: D
The rule. Commercial developer sales sit outside the Housing Developers regime. A development built solely for a lease of up to seven years is not caught; the defects retention is typically held by the developer's own lawyer, not the SAL; a development of more than four separate units engages the Sale of Commercial Properties regime; and the booking fee is capped at 10% of the purchase price.
Why D is correct. All four describe the commercial position correctly.
The other options.
- A drops (ii), the developer's-lawyer retention.
- B drops (i), the seven-year lease exemption.
- C drops (iii), the more-than-four-units threshold.
Exam note. Commercial ≠ residential: a seven-year lease-only exemption, lawyer-held retention, its own more-than-four-units threshold, and a booking fee capped at 10%.
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