Sunday, April 09, 2006

Q&A : What happens to property if a co-owner dies?

Q MY FATHER bought a private landed property in his name a few years ago and subsequently added my name as a co-owner with a 30 per cent share.
I have since been contributing to the loan repayments through my Central Provident Fund (CPF) account.
My father is now 76 and he has a wife and five children, including myself.
What will happen to the property if my father dies before I do or I die before he does, assuming that there is no will?
Will the house be force-sold after one of us dies and if so, who will get the money? Will there be a 70:30 split of the sale proceeds according to the percentage of the property ownership?
If my father wrote a will to distribute the money equally to his wife and five children, what will happen to the CPF money that I used to help pay for the loan?

 
A A PROPERTY can be held either under a joint tenancy or tenancy-in-common. Under a joint tenancy, when an owner dies, the surviving joint owner(s) takes ownership of the property completely.
A joint owner cannot will away his 'share' of the property because there are no distinct shares to begin with.
In the case of tenants-in-common, each owner holds a distinct share. When one owner dies, his share goes to the beneficiaries named in his will.
If he did not make a will, it would be distributed according to the Intestate Succession Act (for non-Muslims) or the Administration of Muslim Law Act (for Muslims).
As you hold a specific share of 30 per cent, I shall assume that you and your father are tenants-in-common.
  • If your dad passes away before you and there is no will: Your mother will receive half of his 70 per cent share and the balance will be distributed equally among his five children. Your share would thus be more than your original 30 per cent.
  • If you die before your dad and you do not leave a will: Your 30 per cent share of the property will also be distributed according to the Intestate Succession Act.
    The eventual distribution will depend on whether you are married and/or have children.
    If you are not married and have no children, your parents will be entitled to your share in equal proportions.
    Will the house be force-sold upon the death of you or your father? No - unless you or the owners are unable to continue to pay the outstanding mortgage.
    If the house is sold, let's assume that after the outstanding loan is paid and all monies are refunded to the respective CPF accounts, there are surplus proceeds. Then, as a general rule, the proceeds would be distributed according to each party's, or each beneficiary's, share.
    I note that although you did not provide any consideration for your father to add you as a co-owner, you have been making financial contributions towards its acquisition through your CPF payments. This would entitle you to a share of the property.
    If your dad had made a will, he would only be able to state in the will the names of the beneficiaries of his estate.
    He would not be able to dictate how the sale proceeds are to be distributed simply because he cannot compel you to sell your share of the property.
    Generally, the property can be sold only with your consent.
    Assuming you agree to sell, the CPF Board would require all monies used from your CPF account to be returned to that account (provided you are under 55 years of age) before it gives its consent to the sale of the property.
    The only exception is where the charge by the bank ranks ahead of the CPF charge (which is common nowadays but was not 10 years ago), and the sale proceeds are insufficient to repay all the CPF monies spent.
    You can then seek consent from the CPF Board for you to sell your property with the sale proceeds going to pay off the bank loan first and the balance returning to your CPF account.
  • In this case, there will not be any monies left for distribution after that.

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    // posted by Shajahan @ 11:57 AM


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