Couple fight over ‘windfall’ from BTO flat in Tampines

Being allotted a new Build-To-Order flat in a mature estate is akin to winning the real estate lottery, but a man wanted to return his prized apartment to the Housing Board rather than let his estranged wife have it in a bitter divorce.

The man was so determined to deny his former wife a “windfall” by selling the new flat in the future that he clashed with her over the property three times, all the way to the appeals court.

Their property dispute was unusual because they had not even obtained the keys to or finalised their purchase of the $470,000 flat in Tampines.

At the time of the split in 2021, the couple, who had been married for five years and had two children, had paid only about $32,000 from their Central Provident Fund accounts, or $16,000 each, for the home.

The woman, who wanted the man to transfer his share of the flat to her, lost her initial claim before the Family Court and the High Court, partly because she did not offer to refund her former husband’s deposit payment of $16,000.

She switched tactics at the Appellate Division of the High Court, this time offering to refund the $16,000 plus accrued interest.

The woman, who earned $5,000 a month as a nurse, added that she would be willing to shoulder the responsibility of paying the mortgage for the flat herself so that she and her children would not have to continue staying with her parents.

Her former husband, who also earned about $5,000 as an operations executive, stuck to his guns, contending that she did not deserve to own the flat by herself.

The Appellate Court granted the woman’s appeal in 2023 and made an order for the flat to be transferred to her because the needs of children were important factors that were considered when dividing the parties’ matrimonial assets.

Justice Woo Bih Li said: “The wife has care and control of two children of the marriage and it would be in their interest to have a permanent roof over their heads even though it was fortunate that all three of them could stay with her parents in the meantime.”

While it is not uncommon for dating couples to terminate applications for their new HDB flats when they break up before getting hitched, it is not common for married couples to return their flats to the HDB when they split up.

In most cases, the flats would be sold in the resale market, or one parent would continue living there with the children.

Even divorcing couples who have yet to fulfil the minimum occupation period (MOP) of five years are likely to hang on to the unit because such resale flats can fetch good prices due to higher demand for newer apartments.

Here are three important points on how new HDB flats are dealt with when couples split up.

The value of the new flat

Even if you have not set foot in your new home, it does not mean you have no stake in it.

The wife in this case argued that the new flat should not be divided as part of their matrimonial property because the purchase had not been completed and the mortgage had yet to kick in.

But the court disagreed, noting that the couple had obtained the right to buy the flat during their marriage and this made it a matrimonial asset even though the purchase had not been completed.

The court agreed with the valuation report from the woman that the new flat was worth $470,000, which was the purchase price from the HDB. The flat would not have a higher open-market value then because it could not be sold until after the five-year MOP.

The former husband put in a much higher valuation report, pricing the unit at $660,000 because the valuer was instructed to assume that the flat was eligible for resale in the open market. But the court rejected this valuation because it was done on “an incorrect premise” that did not consider the five-year sale prohibition.

As the value of the flat was the same as its purchase price, the woman only had to refund the former husband the $16,000 he had initially paid plus the 2.5 per cent interest that had accrued during the duration of the purchase.

‘Windfall’ not considered in a split

All HDB owners know that the new flats they buy are priced lower than even a similar-sized and older resale unit in the same area. That means owners who sell their apartments after the MOP can expect to make decent gains.

The man knew that such new flats generally sell for much more than the purchase price, so he did not want the apartment to be transferred to his former wife, as it would be tantamount to giving her a windfall.

But the court noted that these “concerns” were not relevant because there was no windfall to speak of at that point, as the flat could not be sold until the MOP had elapsed. “It is not open to this court to speculate what the potential price of the flat would be if it is sold in the future,” Justice Woo added.

Moreover, he pointed out that there was “no real prejudice” to the husband because he was willing for the flat to be returned to the HDB.

If this was done, there was even a chance that he may not get back the $16,000 he had paid because that sum comprised the deposit, which could be forfeited if the owners did not complete the purchase. Also stamp duties and conveyancing fees that were incurred were non-refundable expenses.

“Even if the wife gained a windfall, that should not matter if there was no prejudice to the husband,” the judge said.

The subject of windfall is also not considered in cases involving private property because a court’s decision is based on the parties’ assets at the time of the split. For instance, if one party is awarded the entire property, that would be the end of the matter and no consideration would be given as to whether the asset would become more valuable.

Interest of the family

When a couple break up, it is never just about the money because the court’s primary concern would be to ensure that the parties receive fair treatment and that the welfare of the children is taken care of.

In this case, the court noted that if the couple’s flat was returned to the HDB, the woman would be deprived of a home.

“She would also have to go through the entire process of applying for an HDB flat afresh and waiting to be allocated one at a location which may be different from the present one. There was no good reason to make her go through all this,” Justice Woo said.

The needs of her two young children were also considered, and the court found that it would be in the interests of the single mother and the children to have their own home.

As a result, the court ordered the former husband to transfer the flat to her.

There is an obvious lesson to be learnt from this case – it is futile to launch a scorched earth campaign that ultimately benefits no one. After all, the law would not side with parents who are only keen to go after each other’s throat without any consideration for their children.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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